(i) Meaning: The dividend which has not been paid to the shareholders
within 30 days of its declaration is called ‘unpaid dividend’. If the declared
dividend is not claimed by the shareholders and remains unpaid with the company’s
bankers, it is called ‘unclaimed dividend’ The amount of final dividend as well
as interim dividend may remain unpaid/unclaimed.
(ii) Provisions: The provisions in respect to unpaid
or unclaimed dividend as incorporated under section 205 of the Companies Act,
1956 are stated as follows:
a. Unpaid dividend account:
When dividend is not paid to or claimed by shareholders within a period
of 30 days from the date of its declaration, the company is required to
transfer the amount of unpaid or unclaimed dividend to a separate account
called “Unpaid Dividend Account of ……… Company Limited/Company (Private)
Limited.” In any scheduled bank within 7 days after the expiry of 30 days of
declaration of dividend.
b. Penal Interest: If a company fails to deposit the
amount of unclaimed dividend into a separate bank account within a period of 7
days from the date of expiry of declaration of dividend, it is liable to pay
interest on the amount not transferred @ 12% p.a. Such amount of interest is
paid to the members who have not been paid or claimed dividend in proportion to
their dues.
c. Transfer of Investors’ Education and Protection Fund: According to the provision of
Section 205(A) of the Companies Act, 1956, if the amount of unpaid dividend
remains in the account for 7 years from the date of transfer to this account, a
company is required to transfer such amount together with interest due on it to
“Investors’ Education and Protection Fund” (IEPF), as established by the
Central Government.
d. Payment of unpaid /unclaimed dividend: Any person entitled to any amount
transferred to IEPF is required to make application for refund to the authority
or committee appointed by the Central Government. On verifying the evidences or
documents. If the authority or committee is satisfied that such person is
legally entitled to receive refund, it makes an order for payment of such
amount due.
e. Penalty: If any company commits default in compliance of
above requirements, such company and every officer of the company responsible
for the lapse or default shall be punishable with fine upto Rs. 5000 per day
during which the default continues.
