{"id":40927,"date":"2022-03-07T12:12:11","date_gmt":"2022-03-07T06:42:11","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=40927"},"modified":"2022-03-23T17:51:21","modified_gmt":"2022-03-23T12:21:21","slug":"unpaid-dividend-account","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/unpaid-dividend-account\/","title":{"rendered":"Unpaid Dividend Account: Norms under Companies Act, 2013"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Section 124 of the Companies Act 2013\ntalks about the matters relating to the unpaid dividend account. This section\nprovides for the channelization of the unclaimed or unpaid dividends to the\nspecial account created by the company in the designated bank. As per this\nsection, this account is known as an unpaid dividend account. Section 124\nfurther sets out the time requirement for pursuing such undertaking. <\/p>\n\n\n\n<div class=\"mt-3 mb-3 embed-responsive embed-responsive-16by9\"><iframe class=\"embed-responsive-item\" src=\"https:\/\/www.youtube.com\/embed\/dUpNaYgjTsc\" frameborder=\"0\" allow=\"accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen=\"\"><\/iframe><\/div>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/unpaid-dividend-account\/#Time_requirements_for_opening_Unpaid_Dividend_Account\" >Time requirements for opening Unpaid Dividend Account<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/unpaid-dividend-account\/#Preparation_of_Statement_relating_to_the_transaction_in_Unpaid_Dividend_Account\" >Preparation of Statement relating to the transaction in Unpaid Dividend\nAccount<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/unpaid-dividend-account\/#Imposition_of_interest_in_case_of_non-transfer_of_amount\" >Imposition of interest in case of non-transfer of amount<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/unpaid-dividend-account\/#Facility_for_shareholders_to_claim_unpaid_dividend\" >Facility for shareholders to claim unpaid dividend<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/unpaid-dividend-account\/#Transfer_of_unclaimed_dividend_to_funds_set_up_under_subsection_1_of_section_125\" >Transfer of unclaimed dividend to funds set up under subsection (1) of\nsection 125<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/unpaid-dividend-account\/#Transfer_of_unclaimed_shares_to_the_Investor_Education_and_Protection_Fund\" >Transfer of unclaimed shares to the Investor Education and Protection Fund<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/unpaid-dividend-account\/#Penalties_for_not_complying_with_Section_124_of_Companies_Act_2013\" >Penalties for not complying with Section 124 of Companies Act 2013<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/unpaid-dividend-account\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Time_requirements_for_opening_Unpaid_Dividend_Account\"><\/span>Time requirements for opening Unpaid Dividend Account<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to the said section, if the\ndeclared dividends remain unclaimed beyond the prescribed timeline, i.e. 30\ndays, the company must route such dividends in the special account within seven\ndays from the expiration of the said timeline, i.e. 30 days. Therefore, Unpaid\nDividend Account can be referred to as a voluntary account opened by the\ncompany for routing the unclaimed dividends. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Preparation_of_Statement_relating_to_the_transaction_in_Unpaid_Dividend_Account\"><\/span>Preparation of Statement relating to the transaction in Unpaid Dividend\nAccount<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As per Section 124 of the Companies Act 2013, the company shall, within 90 days of transferring a dividend amount under subsection (1) to the special account (Unpaid Dividend Account) is required to draft a statement enclosing the names and addresses of the concerned shareholders and post it on the company&#8217;s website, if any, and on other designated portal for this purpose, in such form and other details as may be cited. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Imposition_of_interest_in_case_of_non-transfer_of_amount\"><\/span>Imposition of interest in case of non-transfer of amount<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If any error is made in transferring the\namount referred to in sub-section (1) to the Unpaid Dividend Account, it shall\npay interest from the date of such default in proposition to the amount\nawaiting for transaction at the rate of 12 per cent\/annum. <\/p>\n\n\n\n<p>The interest building upon such amount\nshall benefit the company&#8217;s members in proportion to the sum remaining unpaid\nto them.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Facility_for_shareholders_to_claim_unpaid_dividend\"><\/span>Facility for shareholders to claim unpaid dividend<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Section 124 of the Companies Act 2013\nalso facilitates a facility that enables shareholders to claim unpaid dividend\namounts routed under sub-section (1) to the Unpaid Dividend Account. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Transfer_of_unclaimed_dividend_to_funds_set_up_under_subsection_1_of_section_125\"><\/span>Transfer of unclaimed dividend to funds set up under subsection (1) of\nsection 125<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Any dividend amount routed to the Unpaid\nDividend Account which remains unclaimed or unpaid for seven years from the\ndate of such transfer shall be channelized by the entity along with interest\naccrued, if any, thereon to the fund set up under <strong>subsection (1) of section\n125.<\/strong><\/p>\n\n\n\n<p>The company\nshall send a statement via a standard form enclosing the detail of such\ntransfer to the authority that managed the said fund,. The said authority shall\ngrant a receipt as proof of\nsuch transfer to the company. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Transfer_of_unclaimed_shares_to_the_Investor_Education_and_Protection_Fund\"><\/span>Transfer of unclaimed shares to the Investor Education and Protection Fund<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>All shares relating to which dividend has\nnot been claimed or paid for seven continuous years or more shall be routed to\nInvestor Education and Protection Fund. The said transaction shall be\naccompanied by a statement enclosing such particulars as may be prescribed: <\/p>\n\n\n\n<p><strong><em>Here are some worth noting points to\nremember in this context <\/em><\/strong><\/p>\n\n\n\n<ul><li>The\nclaimant of such shares transferred has the right to claim the share from the\nsaid fund pursuant to such procedure and on submission of such documentation as\nrequested. <\/li><li>No\ndividend shall be transferred to <strong><em>Investor Education and Protection Fund<\/em><\/strong>*\nif it is claimed or paid at any instance during the timeline above, i.e. seven\nconsecutive years. <\/li><\/ul>\n\n\n\n<p><strong><em>Investor Education and Protection Fund<\/em><\/strong>*<\/p>\n\n\n\n<p>The Central Government launched the <em><a href=\"https:\/\/corpbiz.io\/learning\/investor-education-and-protection-fund-iepf\/\"><strong>Investor Education and Protection Fund<\/strong><\/a><\/em> to safeguard the interest of investors and advocate awareness. It is set up u\/s 125 of the Companies Act, 2013. The unclaimed or unpaid sums belonging to the concerned shareholders are polled and transferred to the same. <\/p>\n\n\n\n<p>The <strong><em>Investor Education and\nProtection Fund <\/em><\/strong>are used for several purposes as described under the\nAct. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Penalties_for_not_complying_with_Section_124_of_Companies_Act_2013\"><\/span>Penalties for not complying with Section 124 of Companies Act 2013<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If a company fails to ensure adherence to\nany of the conditions of this section, the company shall be subjected to a\npenalty amounting to Rs 5 00,000. Keep in mind that this fine amount can be\nextended to twenty-five lakh rupees depending on a case-wise basis. <\/p>\n\n\n\n<p>There is a provision for individual-based\npenalty under which every defaulting officer shall be liable to address the\npenalty amounting to Rs 1 00,000- which further can be extended to Rs 5 00,000.\n<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> Section 124 of the <strong>Companies Act 2013<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Companies_Act_2013\"><strong>[1]<\/strong><\/a><\/sup> provides grounds for the transparent management of unclaimed or unpaid dividends held by the company. Further, it seeks to protect unclaimed dividends from mis-utilization and improper transfer. It protects the interest of shareholders and companies against any dispute relating to fund management and dividend distribution. The set up of Unpaid Dividend Account under this Section acts as a safe fund reservoir for the company intending to ensure apt management of unclaimed dividends.  <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our Article<\/b>:<mark style=\"background: #fffd03 !important\"><a href=\"https:\/\/corpbiz.io\/learning\/register-of-members-under-the-companies-act-2013\/\">Register of Members under the Companies Act, 2013\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Section 124 of the Companies Act 2013 talks about the matters relating to the unpaid dividend account. This section provides for the channelization of the unclaimed or unpaid dividends to the special account created by the company in the designated bank. As per this section, this account is known as an unpaid dividend account. Section [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":40929,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[120],"tags":[2169],"acf":{"service_id":"321"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":10633,"readingTime":3,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/40927"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=40927"}],"version-history":[{"count":10,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/40927\/revisions"}],"predecessor-version":[{"id":41381,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/40927\/revisions\/41381"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/40929"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=40927"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=40927"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=40927"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}