Section 124 of the Companies Act, 2013
Section 124 of the Companies Act, 2013 deals with the Unpaid Dividend Account.
Here is a detailed summary:
🔹 Section 124 – Unpaid Dividend Account
1. Transfer of Unpaid Dividend:
When a dividend has been declared by a company but not paid or claimed within 30 days from the date of declaration, the company must:
Within the next 7 days, transfer the unpaid amount to a special account called the Unpaid Dividend Account, opened in a scheduled bank.
2. Disclosure of Unpaid Dividend:
Within 90 days of transferring the amount to the Unpaid Dividend Account, the company must prepare a statement containing the names, last known addresses, and amount unpaid for each shareholder.
This statement must be placed on the company's website, if any, and also on any other website approved by the government.
3. Claiming the Amount:
Any person whose dividend remains unpaid can apply to the company for payment, and the company is required to process the claim after proper verification.
4. Transfer to Investor Education and Protection Fund (IEPF):
Any amount remaining unpaid in the Unpaid Dividend Account for 7 consecutive years must be transferred to the IEPF.
Along with the amount, all shares in respect of which the dividend has not been claimed for 7 consecutive years must also be transferred to the IEPF.
5. Penalty for Non-Compliance:
If the company fails to transfer the unpaid dividend amount as required:
The company is liable to pay interest at 12% p.a. on the amount not transferred.
The interest amount benefits the members in proportion to the unpaid dividend amount.
6. IEPF Authority:
The Central Government has established the Investor Education and Protection Fund Authority, which allows investors to reclaim their dividends and shares transferred to the IEPF after due verification.
✅ Key Objective:
To protect shareholders' interests, ensure transparency, and prevent companies from indefinitely holding unclaimed dividends.
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