Corporate and Economic Laws · Dividends
Unpaid Dividend Account and IEPF Transfer Rules
Updated 11 October 2026 · Fact-checked
If a declared dividend is not paid or claimed within 30 days, the company must move it to an Unpaid Dividend Account within the next 7 days. If it stays unclaimed for 7 years from that transfer, it goes to the IEPF. Shares also go to the IEPF if dividend is unclaimed for 7 consecutive years.
Understand Unpaid and Unclaimed Dividend and IEPF
A company declares a dividend, but some shareholders may not collect it. They may have changed address, lost the warrant or died. The law does not let the company keep that money. Section 124 forces it into a separate bank account, so it stays safe and visible.
The process runs in stages. First, the company has 30 days from the date of declaration to pay. Then it has 7 more days to transfer whatever is unpaid or unclaimed to a special account in a scheduled bank, called the Unpaid Dividend Account. Within 90 days of that transfer, it must publish a statement of names, last known addresses and amounts on its website (if any) and on the website approved by the Central Government.
A shareholder can still claim from the company while the money sits in the account. If nobody claims it for seven years from the date of transfer, the company must pay it, with any accrued interest, to the Investor Education and Protection Fund (IEPF) set up under Section 125. A claimant can then apply to the IEPF authority.
Shares are treated separately. All shares on which dividend has not been paid or claimed for seven consecutive years or more must be transferred in the name of the IEPF. If dividend is paid or claimed in any one year of that period, the shares are not transferred. A claimant can later ask the IEPF for the shares by the prescribed procedure.
Section 126 adds a related rule. If a transfer instrument is lodged but the company has not registered the transfer, the dividend goes to the Unpaid Dividend Account unless the registered holder authorises payment to the transferee in writing. Rights shares and bonus shares for those shares are kept in abeyance.
Key rules to remember
- Time to pay or claim
- 30 days from the date of declaration
- After this, dividend that is unpaid or unclaimed must be transferred.
- Transfer to Unpaid Dividend Account
- Within 7 days after the 30 days expire
- Section 124(1). The account is opened in any scheduled bank.
- Statement on website
- Within 90 days of the transfer to the Unpaid Dividend Account
- Names, last known addresses and amounts, on the company website (if any) and the Government-approved website.
- Interest on default in transfer
- 12% per annum from the date of default, on the amount not transferred
- Section 124(3). The interest benefits the members in proportion to the amount unpaid to them.
- Transfer of money to IEPF
- Unclaimed for 7 years from the date of transfer to the Unpaid Dividend Account
- Section 124(5). Sent along with accrued interest, if any.
- Transfer of shares to IEPF
- Dividend unpaid or unclaimed for 7 consecutive years or more
- Section 124(6). Not transferred if dividend was paid or claimed in any year of the period.
- Penalty for non-compliance
- Company: ₹5 lakh to ₹25 lakh. Officer in default: ₹1 lakh to ₹5 lakh
- Section 124(7). Fine, with a minimum and a maximum.
- Deposit of declared dividend
- Separate scheduled bank account within 5 days of declaration
- Section 123(4). Applies to final and interim dividend.
How to solve Unpaid and Unclaimed Dividend and IEPF questions
Most questions give dates and ask what the company must do or what has gone wrong. Build a timeline and test each step against the statutory period.
- 1Identify the date of declaration and any amounts or shares involved.
- 2Add 30 days to get the last date for payment. Dividend not paid or claimed by then is in scope.
- 3Add 7 days to that date. This is the last date to transfer to the Unpaid Dividend Account.
- 4Add 90 days from the actual transfer date for the website statement.
- 5Add 7 years from the transfer date for the money to move to the IEPF. For shares, count 7 consecutive years of dividend not paid or claimed.
- 6Check for breaks: was any dividend paid or claimed in that period? If yes, the shares are not transferred.
- 7State the consequence of default: 12% interest on the untransferred amount and the fine under Section 124(7).
- 8Close with a clear conclusion and the section number.
Quickest way: Timeline 30-7-90-7
When to use it: For MCQs and case-scenario questions that give a declaration date or ask for a time limit.
- Write 30, 7, 90, 7 on your paper.
- 30 days: pay or claim. 7 days: transfer to the Unpaid Dividend Account.
- 90 days: website statement. 7 years: money to IEPF.
- For shares, ask one question: was dividend claimed in any of the 7 consecutive years? If yes, no transfer.
- If the question mentions interest, the answer is 12% per annum on the untransferred amount.
Common mistakes in Unpaid and Unclaimed Dividend and IEPF
Saying the transfer must happen within 30 days of declaration.
The 30 days and the 7 days get merged into one period.
Fix: Remember it as 30 days to pay, then 7 more days to transfer. The transfer deadline is 37 days from declaration.
Counting the 7 years for IEPF money from the declaration date.
Students assume the clock starts when the dividend is declared.
Fix: For money, the 7 years run from the date of transfer to the Unpaid Dividend Account.
Transferring shares even when the shareholder claimed dividend in one year.
Students overlook the word consecutive.
Fix: Shares go only if dividend remained unpaid or unclaimed for seven consecutive years or more. Payment or claim in any year of the period stops the transfer.
Treating the 90-day statement as due from declaration.
The three periods are confused.
Fix: The 90 days run from the date of making the transfer to the Unpaid Dividend Account.
Thinking a shareholder loses the right once money reaches the IEPF.
Transfer is mistaken for forfeiture.
Fix: A claimant can still apply to the IEPF authority for the money, and for the shares by the prescribed procedure.
Ignoring Section 126 when a share transfer is pending.
Students focus only on Section 124.
Fix: If a transfer is lodged but unregistered, the dividend goes to the Unpaid Dividend Account unless the registered holder authorises payment to the transferee in writing.
Worked examples
Example 1
Bharat Textiles Ltd declared a final dividend at its AGM on 10 September. Some shareholders did not claim their dividend. State the last date for transfer to the Unpaid Dividend Account, and the consequence of a delay in transfer.
Show the solution
- The company has 30 days from 10 September to pay. 10 September plus 30 days is 10 October.
- The company then has 7 days from the expiry of that period. 10 October plus 7 days is 17 October.
- The unpaid or unclaimed amount must be transferred to the Unpaid Dividend Account in a scheduled bank by 17 October.
- If it defaults, it must pay interest at 12% per annum from the date of default on the amount not transferred. The interest benefits members in proportion to the amount unpaid to them.
- The company and every officer in default are also liable to fine under Section 124(7).
Answer: The last date is 17 October. On default the company pays 12% p.a. interest from the date of default, plus fine of ₹5 lakh to ₹25 lakh on the company and ₹1 lakh to ₹5 lakh on each officer in default.
Example 2
Sundaram Engineering Ltd transferred ₹8,40,000 of unclaimed dividend to its Unpaid Dividend Account on 15 June 2020. Mr Rao holds shares on which no dividend has been claimed for the last seven consecutive years, except that Mr Rao claimed the dividend of one year in the middle of the period. Advise the company on the money and on Mr Rao's shares.
Show the solution
- The money is in the Unpaid Dividend Account from 15 June 2020. If it remains unpaid or unclaimed for seven years from that transfer, it must go to the IEPF with any accrued interest.
- Seven years from 15 June 2020 ends on 15 June 2027. The company must then transfer the balance, with interest, to the IEPF and send the prescribed statement. The authority issues a receipt.
- Amounts claimed and paid to shareholders before that date reduce the balance to be transferred.
- For Mr Rao's shares, Section 124(6) requires transfer to the IEPF only if dividend has not been paid or claimed for seven consecutive years or more.
- Mr Rao claimed dividend for one year in the period. The Explanation states that in that case the shares shall not be transferred to the IEPF.
Answer: The unclaimed balance of the ₹8,40,000, with accrued interest, goes to the IEPF after 15 June 2027. Mr Rao's shares are not transferred because dividend was claimed in one year of the seven-year period.
Exam tips
- Memorise the four periods as 30 days, 7 days, 90 days and 7 years. Most MCQs test only these.
- Always state from which date each period runs. Examiners award marks for the starting point.
- For case questions, build the timeline in a short table-like list before writing the conclusion.
- Remember the penalty ranges for company and officer in default are different. Do not mix them up.
- Quote Section 124 for the account and the IEPF transfer, Section 125 for the Fund, and Section 126 for pending share transfers.
Practice questions from Dividends
- Dividend declared by Kaveri Textiles Ltd. has not been paid, nor the warrant posted, to a shareholder within the statutory period from the d…
- Under Section 127, a company that fails to pay a declared dividend within thirty days is liable to pay simple interest at which rate per ann…
- Which of the following is the interest liability of a company that defaults in paying a declared dividend, as per Section 127?
- Under the Companies Act, 2013, a company may pay dividends in proportion to the amount paid-up on each share if:
- Which of the following situations means NO offence is deemed committed under Section 127 for non-payment of a declared dividend within thirt…
Unpaid and Unclaimed Dividend 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 and IEPF: frequently asked questions
What is the time limit to pay dividend under the Companies Act, 2013?
Dividend must be paid or claimed within 30 days from the date of declaration. Dividend not paid or claimed by then must be moved to the Unpaid Dividend Account within 7 days from the expiry of those 30 days.
After how many years does unclaimed dividend go to the IEPF?
Money in the Unpaid Dividend Account that remains unpaid or unclaimed for seven years from the date of transfer must be transferred to the IEPF with accrued interest. Section 124(5) governs this.
When are shares transferred to the IEPF?
Shares are transferred when dividend has not been paid or claimed for seven consecutive years or more. If dividend is paid or claimed in any year of that period, the shares are not transferred.
Can a shareholder claim money or shares after transfer to the IEPF?
Yes. A person entitled to the money can apply to the IEPF authority under Section 125(4). A claimant of shares can claim them back from the IEPF by the prescribed procedure and documents.
What does Section 126 say about dividend when a share transfer is pending?
If the transfer instrument has been delivered but the transfer is not registered, the dividend must go to the Unpaid Dividend Account. The exception is where the registered holder authorises payment to the transferee in writing.