Declaration of Dividend is one crucial thing in any Company as it is their way of keeping their Shareholders happy. This also is an indicator to some extent about a Company’s performance. Section 123 of the Companies Act, 2013 deals with the process of Declaration of Dividend.

However, it is not the declaration, but the process after that, which requires a lot of attention especially if your company is having unpaid and unclaimed dividend amount lying in your Company’s Bank account. With all the new amendments coming in from IEPF authority, this indeed has become an important aspect for every company.

DIVIDEND on cube dice on working table , finance concept.

I have tried to simplify the process of what to do after the Dividends remained unpaid by the Company or unclaimed by the Shareholders.

  • Company Declares Dividend
  • Within 5 days- Dividend Amount has to be deposited in a Separate Bank Account.
  • Within 30 days- Dividend to be paid through Cheque/Warrant/ any other electronic mode to the person entitled for the same.
  • If the dividend remains Unpaid or Unclaimed after the expiry of above mentioned 30 days then within 7 days of Expiry of these 30 days period – Transfer this Unpaid amount to a separate Bank account opened by the Company in the name of “Unpaid Dividend Account”
  • Within 90 days from this transfer – Prepare a statement containing the names of the person entitled to receive the sum, their last known addresses and the unpaid dividend amount to each person.
  • Place this statement on the web-site of the company, if any and on any other website as prescribed by the Central Government in this regard.
  • In the meanwhile, any person claiming to be entitled to the dividend amount transferred to the Unpaid Dividend Account of the company may apply to the company for payment of the money claimed.
  • When this amount remained Unpaid or Unclaimed for a period of 7 Consecutive years- Transfer it to Investor Education Protection Fund online within a period of 30 days from the date it become due to be transferred. i.e. on the completion of seven years.
  • Along with this, Company has to file a statement in Form IEPF-1 containing the amount of Unpaid or Unclaimed Dividend which needs to be transferred to IEPF.
  • Amount to the IEPF authority has to be transferred online through Pay miscellaneous fees option at the MCA portal after filing of Form IEPF-1.
  • After filing of Form IEPF-1 a Statement of amount credited to IEPF in excel format has to be filed with the IEPF authority within 7 days of upload of the Form failing which the form will get rejected.

Yearly Compliance

  • Every Company shall within a period of sixty days after the holding of Annual General Meeting or the date on which it should have been held, whichever is earlier and every year thereafter till completion of the seven years period
  • Should Identify the unclaimed amounts under section 125 (2) as on the date of closure of financial year the accounts of which are to be adopted in the Annual General Meeting and
  • Shall prepare a statement or information of unclaimed and unpaid amounts separately for each of the previous seven financial years containing the names, last known address, nature of amount, amount entitled to each person, due date of transfer to IEPF and such other information as may be considered necessary.
  • Upload it on the website of the Company and on the website of IEPF authority through Form IEPF-2.

After filing of both the forms IEPF-1 and IEPF-2 we have to start the procedure of Transfer of Shares to the IEPF authority, which i will be discussing in my next post.

Author Bio

Qualification: CS
Company: Solitaire Machine Tools Limited
Location: Vadodara, Gujarat, IN
Member Since: 23 Oct 2019 | Total Posts: 3

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October 2021