Corporate and Other Laws · Declaration and Payment of Dividend

Unpaid and Unclaimed Dividend Account and IEPF

Updated 4 October 2026 · Fact-checked

If a declared dividend stays unpaid or unclaimed for 30 days, the company must move it within the next 7 days to a scheduled bank's Unpaid Dividend Account (Section 124). If it stays unclaimed for 7 years, the money goes to the IEPF. Shares with no dividend claimed for 7 consecutive years also go to the IEPF.

Understand Unpaid and Unclaimed Dividend Account and IEPF

A company declares a dividend, but some shareholders never collect it. Maybe the bank details are wrong, the holder has died, or the address has changed. The law does not let the company hold this money forever. Sections 124 to 126 give a fixed route for such money.

Stage one is the Unpaid Dividend Account. If a declared dividend is not paid or claimed within 30 days of declaration, the company must transfer the total unpaid amount to a special account in a scheduled bank. It must do this within 7 days after those 30 days expire. Within 90 days of making the transfer, it must prepare a statement with names, last known addresses and amounts due, and place it on its website, if any, and on any other website approved by the Central Government.

Stage two is the Investor Education and Protection Fund (IEPF), set up by the Central Government under Section 125. Money in the Unpaid Dividend Account that stays unpaid or unclaimed for 7 years from the date of transfer goes to the IEPF with interest accrued, if any. The company also sends a statement of the transfer to the authority that administers the Fund, and that authority issues a receipt.

Stage three concerns shares. All shares on which dividend has not been paid or claimed for 7 consecutive years or more are transferred by the company in the name of the IEPF. If a dividend is paid or claimed in any year within those 7 years, the shares are not transferred. A claimant can later claim the shares back from the IEPF by the prescribed procedure and documents.

A related rule is in Section 126. If a share transfer instrument has been delivered but the transfer is not yet registered, the dividend on those shares goes to the Unpaid Dividend Account, unless the registered holder authorises in writing that it be paid to the transferee. Rights and bonus offers on those shares are kept in abeyance.

Key rules to remember

Transfer to Unpaid Dividend Account: Not paid or claimed within 30 days of declaration → transfer within 7 days after expiry of the 30 days; Transfer the total unpaid amount to a special account in a scheduled bank, called the Unpaid Dividend Account. Section 124(1).
Statement of unpaid dividend: Within 90 days of the transfer → prepare statement and place on website; Statement gives names, last known addresses and amount due to each person. Section 124(2).
Interest on default: 12% per annum on the amount not transferred, from the date of default; The interest benefits the members in proportion to the amount unpaid to them. Section 124(3).
Money to IEPF: Unpaid or unclaimed for 7 years from the date of transfer → transfer to IEPF with interest accrued, if any; Section 124(5). The company sends a statement to the Fund's authority, which issues a receipt.
Shares to IEPF: Dividend not paid or claimed for 7 consecutive years or more → shares transferred in the name of IEPF; Section 124(6). If dividend is paid or claimed in any one of the 7 years, the shares are not transferred.
Penalty for non-compliance: Company: ₹5,00,000 to ₹25,00,000. Every officer in default: ₹1,00,000 to ₹5,00,000; Section 124(7). Fine is not less than the lower figure and may extend to the higher.
Pending share transfer: Transfer instrument delivered but not registered → dividend to Unpaid Dividend Account; Exception: registered holder authorises payment to the transferee in writing. Rights and bonus offers are held in abeyance. Section 126.
Liquidation account: Unpaid for 6 months in winding up → deposit in Company Liquidation Dividend and Undistributed Assets Account; Section 352. Unclaimed for 15 years, the money goes to the Central Government's general revenue account, but claims can still be made.

How to solve Unpaid and Unclaimed Dividend Account and IEPF questions

Most questions give a date or a period and ask what the company must do, or whether a penalty applies. Use this order.

1Identify the stage: dividend just declared, money already in the Unpaid Dividend Account, or shares with long-unclaimed dividend.
2Count the days from the declaration date. Is the dividend unpaid or unclaimed after 30 days? If yes, the transfer is due within the next 7 days.
3Check the 90-day statement. It runs from the date of transfer to the Unpaid Dividend Account, not from declaration.
4For money in the account, count 7 years from the date of transfer. If unclaimed, it goes to the IEPF along with interest accrued, if any.
5For shares, check whether dividend was unpaid or unclaimed for 7 consecutive years. If any year had a dividend paid or claimed, the shares do not go to the IEPF.
6Apply the consequence: 12% interest for delay in transfer, and fines for non-compliance with the section.
7State the section number, the facts, and a clear conclusion. Mention claim rights for the investor where relevant.

Quickest way: The 30-7-90-7 chain

When to use it: Use this for MCQs and short case questions on timelines under Section 124.

Write 30, 7, 90, 7 on your rough sheet. They are: 30 days unclaimed, 7 days to transfer, 90 days for the website statement, 7 years to IEPF.
Ask what starts each clock. 30 days starts at declaration. 7 days starts when the 30 days expire. 90 days and 7 years start at the transfer.
For shares, think 7 consecutive years of no dividend claimed. One claim resets it.
For MCQs, watch for distractors such as 12% interest on all unpaid dividend, or a 30-day period for shares. Interest applies only to the amount not transferred.
In written answers, use this format: Provision, Facts applied, Conclusion. Cite Section 124 and show each date calculation line by line to earn step marks.

Common mistakes in Unpaid and Unclaimed Dividend Account and IEPF

Counting the 7-day transfer period from the declaration date.
Students merge the 30 days and the 7 days into one period.
Fix: Count 30 days from declaration first. The 7 days begin only after those 30 days expire.
Counting the 7-year IEPF period from the declaration date.
The word 'seven years' is remembered without its starting point.
Fix: For money, the 7 years run from the date of transfer to the Unpaid Dividend Account.
Saying shares go to the IEPF when dividend was claimed in some year of the seven.
Students forget the word 'consecutive' and the Explanation to Section 124(6).
Fix: If a dividend is paid or claimed for any year during the 7 consecutive years, the shares are not transferred.
Applying 12% interest to the whole dividend or from declaration.
Students remember the rate but not the base.
Fix: Interest is at 12% per annum on the amount not transferred, from the date of default, and it benefits the members in proportion to the amount unpaid to them.
Confusing the Unpaid Dividend Account with the Company Liquidation Dividend and Undistributed Assets Account.
Both deal with unclaimed money and both mention 12% interest.
Fix: Section 124 applies to a going concern's declared dividend. Section 352 applies to a company in winding up, with a 6-month rule and a 15-year rule.
Mixing up the penalty amounts for the company and the officer.
Both ranges start with 'lakh' and look alike.
Fix: Company: ₹5,00,000 to ₹25,00,000. Officer in default: ₹1,00,000 to ₹5,00,000. The company's range is higher.

Worked examples

Example 1

XYZ Ltd declared a dividend on 1 July. Dividend of ₹8,00,000 remained unpaid or unclaimed to some shareholders. (a) By which date must the company transfer it to the Unpaid Dividend Account? (b) When does the money go to the IEPF if it stays unclaimed? Assume the transfer is made on the last permitted day.

Show the solution

Provision: Under Section 124(1), a dividend not paid or claimed within 30 days from declaration must be transferred within 7 days from the expiry of those 30 days to the Unpaid Dividend Account in a scheduled bank.
Facts: Declaration is on 1 July. Counting 30 days from declaration, the period expires on 31 July.
The 7 days after expiry end on 7 August. So the transfer must be made by 7 August. The amount is the total unpaid sum, ₹8,00,000.
The company must also place the statement of names, last known addresses and amounts on its website within 90 days of the transfer.
Under Section 124(5), money unpaid or unclaimed for 7 years from the date of transfer goes to the IEPF along with interest accrued, if any. Transfer on 7 August means the 7-year period ends on 7 August seven years later.
Conclusion: transfer to the Unpaid Dividend Account by 7 August, and to the IEPF after 7 years from that transfer date.

Answer: The company must transfer ₹8,00,000 to the Unpaid Dividend Account by 7 August. If still unclaimed, it goes to the IEPF with interest accrued, if any, after 7 years from the transfer date.

Example 2

Delta Ltd failed to transfer ₹2,00,000 of unpaid dividend to the Unpaid Dividend Account on the due date. It transferred the money 73 days later. Calculate the interest payable under Section 124(3) and state who benefits. Use a 365-day year.

Show the solution

Provision: If the company defaults in transferring the amount, it must pay interest at 12% per annum from the date of default on the amount not transferred. The interest benefits the members in proportion to the amount unpaid to them.
Facts: Amount not transferred is ₹2,00,000. Period of default is 73 days. Rate is 12% per annum.
Interest = ₹2,00,000 × 12% × 73 ÷ 365.
73 ÷ 365 = 0.2. So interest = ₹2,00,000 × 0.12 × 0.2 = ₹4,800.
Penal consequence: Under Section 124(7), the company is also punishable with fine of not less than ₹5,00,000 and up to ₹25,00,000. Every officer in default is punishable with fine of not less than ₹1,00,000 and up to ₹5,00,000.
Conclusion: interest of ₹4,800 is payable, and it benefits the members in proportion to the amount unpaid to them.

Answer: Interest payable is ₹4,800. It accrues for the benefit of the members in proportion to the amount remaining unpaid to them. The fines under Section 124(7) may also apply.

Exam tips

Learn the four numbers 30, 7, 90 and 7 along with their starting points. Most MCQs test exactly this.
In case-law style questions, write Provision, Facts, Conclusion. Quote Section 124 sub-section numbers if you are sure, such as (1) for transfer, (5) for money to IEPF, (6) for shares.
For interest questions, show the formula: amount × 12% × days ÷ 365. Step marks are given even if arithmetic slips.
Do not forget the investor's remedy. A person claiming to be entitled can apply to the company for money in the Unpaid Dividend Account, and to the IEPF authority for money transferred to the Fund.
If the question mentions a pending share transfer, think of Section 126 first. The dividend goes to the Unpaid Dividend Account unless the registered holder gives written authority to pay the transferee.

Practice questions from Declaration and Payment of Dividend

Unpaid and Unclaimed Dividend Account and IEPF in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Unpaid and Unclaimed Dividend Account and IEPF: frequently asked questions

After how many days must unpaid dividend be moved to the Unpaid Dividend Account?

If the dividend is not paid or claimed within 30 days from declaration, the company must transfer it within 7 days after those 30 days expire. The account must be opened in a scheduled bank. The law calls it the Unpaid Dividend Account.

When does unclaimed dividend go to the IEPF?

Money in the Unpaid Dividend Account that remains unpaid or unclaimed for 7 years from the date of transfer goes to the IEPF. The company transfers it along with interest accrued, if any. It also sends a statement to the Fund's authority, which issues a receipt.

Which shares are transferred to the IEPF?

Shares on which dividend has not been paid or claimed for 7 consecutive years or more are transferred in the name of the IEPF. If a dividend was paid or claimed in any of those years, the shares are not transferred.

Can an investor get the money or shares back from the IEPF?

Yes. A person claiming to be entitled to the money can apply to the IEPF authority for payment. A claimant of transferred shares can claim them back by following the prescribed procedure and submitting the prescribed documents.

What is the penalty if a company does not follow Section 124?

The company is punishable with a fine of not less than ₹5,00,000, extendable to ₹25,00,000. Every officer in default is punishable with a fine of not less than ₹1,00,000, extendable to ₹5,00,000.