Unpaid Dividend Account
Dividend declared by a company should be paid to the shareholders within thirty days from the date of declaration.
Section 124 of the Companies Act, 2013 contains provision regarding transfer of unclaimed dividend to Unpaid Dividend Account.
Where it has been not paid or claimed within such period, the company shall, within seven days from the date of expiry of the said period of thirty days, transfer the total amount of dividend which remains unpaid or unclaimed to a special account to be opened by the company in that behalf in any scheduled bank to be called the Unpaid Dividend Account.
The company shall, within a period of ninety days of making any transfer of an amount to the Unpaid Dividend Account, prepare a statement containing –
(i) the names,
(ii) their last known addresses and
(iii) the unpaid dividend to be paid to each person
and place it on the web-site of the company, if any, and also on any other web-site approved by the Central Government for this purpose.
Interest on default
If any default is made in transferring the total amount or any part thereof to the Unpaid Dividend Account of the company, it shall pay –
(i) from the date of such default, interest on so much of the amount as has not been transferred to the said account, at the rate of twelve per cent per annum and
(ii) the interest accruing on such amount shall enure to the benefit of the members of the company in proportion to the amount remaining unpaid to them.
Any person claiming to be entitled to any money transferred to the Unpaid Dividend Account of the company may apply to the company for payment of the money claimed.
Transfer to Investor Education and Protection Fund
Any money transferred to the Unpaid Dividend Account of a company which remains unpaid or unclaimed for a period of seven years from the date of such transfer shall be –
(i) transferred by the company along with interest accrued, if any, thereon to the Fund established under Section 125(1) and
(ii) the company shall send a statement in the prescribed form of the details of such transfer to the authority which administers the said Fund and
(iii) that authority shall issue a receipt to the company as evidence of such transfer.
All shares in respect of which dividend has not been paid or claimed for seven consecutive years or more shall be transferred by the company in the name of Investor Education and Protection Fund along with a statement containing such details as may be prescribed.
It is clarified that in case any dividend is paid or claimed for any year during the said period of seven consecutive years, the share shall not be transferred to Investor Education and Protection Fund.
Penalty for non-compliance
If a company fails to comply with any of the requirements of this section,
(i) the company shall be punishable with fine which shall not be less than five lakh rupees but which may extend to twenty-five lakh rupees and
(ii) every officer of the company who is in default shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.
Right to dividend, rights shares and bonus shares to be held in abeyance pending registration of transfer of shares –
Where any instrument of transfer of shares has been delivered to any company for registration and the transfer of such shares has not been registered by the company, it shall, notwithstanding anything contained in any other provision of this Act,—
(a) transfer the dividend in relation to such shares to the Unpaid Dividend Account unless the company is authorized by the registered holder of such shares in writing to pay such dividend to the transferee specified in such instrument of transfer; and
(b) keep in abeyance in relation to such shares, any offer of rights shares under clause (a) of sub-section (1) of section 62 and any issue of fully paid-up bonus shares in pursuance of first proviso to sub-section (5) of section 123.
Unpaid Dividend Account
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