Section 352 Of The Companies Act 2013

Section 352: Company Liquidation Dividend and Undistributed Assets Account

A company is a legal entity that exists independently of the individuals that make up its membership. The Companies Act of 1956 has given birth to legal fiction. This distinct corporate personality bestowed upon a business at its formation has several distinguishing characteristics. A partnership, for example, has no existence outside of its members.

A liquidating dividend is a payout paid as part of a company's liquidation procedure. Liquidation is the process of a corporation ceasing operations and exiting the market. Liquidation can take place either voluntarily or involuntarily (forced).

Because it includes the transfer of semi-liquid and liquid assets among the company's shareholders, a liquidation dividend is also known as a liquidating distribution or a terminal distribution. When a company's operators decide they can no longer maintain operations, they wind down the company and distribute its assets to shareholders in the form of dividend payments.

Provisions of Section 352 of Companies Act 2013

(1) If the event that a firm is already being wound up and the liquidator has any money representing—

• (a) dividends payable to any creditor but unpaid for six months after the date on which they were declared; or (b) dividends payable to any creditor but unpaid for six months after the date on which they were declared.

• (b) assets refundable to any contributions that have continued undistributed for 6 months after their refundable date,

The liquidator must immediately deposit the funds into a separate special account at a scheduled bank designated as the Company Liquidation Dividend and Undistributed Assets Account.

(2) Upon the company's dissolution, the liquidator must deposit any money reflecting unpaid dividends or undistributed assets in his possession at the time of dissolution into the Company Liquidation Dividend and Undistributed Assets Account.

(3) The liquidator shall furnish to the Registrar when making any payment referred to in subsections (1) and (2), a statement in the prescribed form, setting forth the nature of all sums included in such payment, the names and the last known addresses of the persons entitled to participate therein, this same amount to which each is entitled and the nature of his claim thereto, and other particulars as may be prescribed.

(4) The liquidator is entitled to a receipt from the scheduled bank for any money paid to it under subsections (1) and (2), and such receipt is an effective discharge of the Company Liquidator.

(5) Where a company is being wound up voluntarily, the Company Liquidator shall, when filing a statement pursuant to sub-section (1) of section 348, indicate the sum of money payable under semi (1) and (2) of this section during the six months preceding the date on which the said statement is prepared, and shall pay that sum into the Company Liquidation Dividend and Undistributed Assets within fourteen days of the date of filing the said statement.

(7) Any payment made into the Company Liquidation Dividend and Undistributed Assets Account b this section that remains unclaimed for fifteen years shall be transferred to the Central Government's general revenue account, but a claim to any cash so transferred may be preferred under sub-section (6) andreaties t if no such transfer had been made, and the order, if any, for payment on the claim will be treated as an order for payment on the claim.

Provided, however, that the Registrar shall satisfy such person's claim within sixty days of receipt of such claim, failing which the Registrar shall issue a report to the Regional Director explaining why such failure occurred.

(7) Any payment made into the Company Liquidation Dividend and Undistributed Assets Account in accordance with this section that remains unclaimed for fifteen years shall be transferred to the Central Government's general revenue account, but a claim to any cash so transferred may be preferred under sub-section (6) and treated as if no such transfer had been made, and the order, if any, for payment on the claim will be treated as an order for payment on the claim.

(8) Any liquidator who fails to pay any money into the Company Liquidation Dividend and Undistributed Assets Account as required by this section must—

• (a) pay interest at a rate of 12% per year on the amount so kept, as well as any penalty imposed by the Registrar: Provided, however, that the Central Government may, in appropriate circumstances, remit the amount of interest that the liquidator is obliged to pay under this article in part or in whole.

• (b) be responsible for any expenditures incurred as a result of his failure to comply; and

• (c) if the Tribunal is winding up, be subject to have all or part of his salary rejected, as the Tribunal deems reasonable and proper, and to be removed from his office by the Tribunal.