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Company Law and Practice · Distribution of Profits

Unpaid and Unclaimed Dividend and IEPF Transfer

Updated 11 October 2026 · Fact-checked

If a declared dividend is not paid or claimed within 30 days, the company must transfer it within the next 7 days to an Unpaid Dividend Account in a scheduled bank. After 7 years unclaimed, the money, and the shares with 7 consecutive years of unclaimed dividend, go to the IEPF under Sections 124 and 125.

Understand Unpaid and Unclaimed Dividend and IEPF

When a company declares a dividend, it owes that money to the shareholders. Some shareholders do not collect it. They may have moved, died, or lost their warrant. The law does not let the company keep this money. It sets a fixed route for it.

The first step is the Unpaid Dividend Account under Section 124. The company has 30 days from the date of declaration to pay. If any dividend stays unpaid or unclaimed after that, the company has 7 more days to move the total unpaid amount into a special account in a scheduled bank. Within 90 days of the transfer, it must prepare a statement of 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.

Any person entitled to the money can apply to the company for it while it sits in this account. If the company is late in transferring, it pays interest at 12% per annum from the date of default. This interest benefits the members in proportion to the amount unpaid to them.

The second step 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. Also, 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 dividend is paid or claimed in any one of those years, the shares are not transferred.

Transfer to the IEPF does not end the shareholder's right. A claimant can apply to the IEPF authority for the money, and can claim transferred shares by the prescribed procedure and documents. Section 126 adds a related rule: if a transfer instrument is lodged but not registered, the dividend on those shares goes to the Unpaid Dividend Account unless the registered holder authorises payment to the transferee in writing.

Key rules to remember

Transfer to Unpaid Dividend Account (Section 124(1))
Declaration + 30 days (unpaid or unclaimed) → transfer within 7 days after those 30 days
The whole unpaid amount goes to a special account in a scheduled bank called the Unpaid Dividend Account.
Statement of unpaid dividend (Section 124(2))
Within 90 days of transfer: names, last known addresses, amount due → company website and approved website
The Central Government approves the other website.
Interest on default (Section 124(3))
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. It is not paid to the Government.
Transfer of money to IEPF (Section 124(5))
Unpaid or unclaimed for 7 years from the date of transfer to the account → transfer to IEPF with interest, if any
The company sends a statement in the prescribed form, and the authority issues a receipt.
Transfer of shares to IEPF (Section 124(6))
Dividend not paid or claimed for 7 consecutive years or more → shares transferred in the name of IEPF
If dividend is paid or claimed in any year in the period, the shares are not transferred.
Penalty (Section 124(7))
Company: ₹5,00,000 to ₹25,00,000. Each officer in default: ₹1,00,000 to ₹5,00,000
Both are fines, with a minimum and a maximum.
Liquidation account (Section 352)
Unpaid for 6 months in a winding up → Company Liquidation Dividend and Undistributed Assets Account; unclaimed 15 years → general revenue account
A separate rule for companies being wound up. The Registrar settles a claim within 60 days.

How to solve Unpaid and Unclaimed Dividend and IEPF questions

Use this method for any question on unpaid dividend, the Unpaid Dividend Account or the IEPF. Put the dates on a timeline first.

  1. 1Find the date of declaration of the dividend. This is the starting point for every count.
  2. 2Add 30 days. Check whether the dividend was paid or claimed by then. If so, no transfer arises for that amount.
  3. 3Add 7 more days. This is the last date to transfer the unpaid amount to the Unpaid Dividend Account in a scheduled bank.
  4. 4Check the follow-up duties: statement of names, addresses and amounts within 90 days of transfer, placed on the website.
  5. 5Count 7 years from the date of transfer for the money. Count 7 consecutive years of non-payment or non-claim for the shares. Then apply Section 125 for IEPF.
  6. 6Check for default. Compute interest at 12% per annum from the date of default, if asked. State the fine range for the company and for officers in default.
  7. 7Write the conclusion: state what the company must do, the section, and the consequence of default.

Quickest way: 30-7-90-7-7 timeline

When to use it: Use it for date-based questions and for short notes where you must recall the numbers quickly.

  1. Write the chain: 30 days, then 7 days, then 90 days, then 7 years (money), 7 consecutive years (shares).
  2. Pin each number to its action: pay, transfer, publish, IEPF money, IEPF shares.
  3. Add the figures: 12% interest; fines ₹5 lakh to ₹25 lakh and ₹1 lakh to ₹5 lakh.
  4. Check for a single paid or claimed dividend in the 7 years. That stops the share transfer.
  5. Close with the claim route: company for the Unpaid Dividend Account; IEPF authority afterwards.

Common mistakes in Unpaid and Unclaimed Dividend and IEPF

  • Saying the dividend must be transferred within 30 days of declaration.

    The 30 days and the 7 days get merged.

    Fix: Remember that 30 days is the time to pay or claim. The company then has 7 days after that period expires to transfer.

  • Counting the 7 years for IEPF from the date of declaration.

    Students assume all periods run from declaration.

    Fix: For money, the 7 years run from the date of transfer to the Unpaid Dividend Account. Only the first 30 days run from declaration.

  • Transferring shares to IEPF when dividend was claimed in one of the 7 years.

    Students forget the Explanation to Section 124(6).

    Fix: Transfer only if dividend has not been paid or claimed for 7 consecutive years. One paid or claimed year breaks the chain.

  • Saying interest at 12% goes to the Government.

    Interest is mixed up with penalty.

    Fix: The interest benefits the members in proportion to the amount remaining unpaid to them. The fine is the separate penalty.

  • Thinking the shareholder loses the right after transfer to IEPF.

    The word 'transfer' sounds final.

    Fix: A claimant can apply to the IEPF authority for the money, and can claim the shares in the prescribed manner.

  • Mixing up Section 124 with Section 352.

    Both deal with unpaid dividend accounts.

    Fix: Section 124 is for a going concern. Section 352 is for a company being wound up, with the liquidator, a 6-month period and a 15-year period.

Worked examples

Example 1

Sundaram Textiles Ltd declared a dividend on 1 September. Dividend of ₹4,00,000 remained unclaimed after 30 days. By what date must the company transfer the amount to the Unpaid Dividend Account, and what must it do after that?

Show the solution
  1. The 30-day period runs from the date of declaration, 1 September. It expires on 1 October.
  2. Under Section 124(1), the company must transfer the unpaid or unclaimed total within 7 days from the expiry of that period. The last date is 8 October.
  3. The amount of ₹4,00,000 goes to a special account in a scheduled bank called the Unpaid Dividend Account.
  4. Under Section 124(2), within 90 days of the transfer, the company must prepare a statement of names, last known addresses and unpaid amounts. It must place it on its website, if any, and on the website approved by the Central Government.
  5. If the company misses the transfer, Section 124(3) requires interest at 12% per annum from the date of default.

Answer: The company must transfer ₹4,00,000 to the Unpaid Dividend Account by 8 October. It must publish the statement within 90 days of the transfer. Delay attracts 12% per annum interest, for the benefit of members.

Example 2

Bharat Metals Ltd transferred unpaid dividend of ₹6,00,000 to its Unpaid Dividend Account on 10 March 2020. Explain what the company must do on 10 March 2027. Also state the consequence if it fails to comply with Section 124.

Show the solution
  1. Under Section 124(5), money that remains unpaid or unclaimed for 7 years from the date of transfer must go to the IEPF.
  2. 7 years from 10 March 2020 ends on 10 March 2027. So the unclaimed money is due for transfer, with interest accrued, if any.
  3. The company sends a statement of details in the prescribed form to the authority administering the Fund. The authority issues a receipt as evidence.
  4. Under Section 124(6), shares on which dividend has not been paid or claimed for 7 consecutive years or more are also transferred in the name of the IEPF. If dividend was paid or claimed in any year of the period, those shares are not transferred.
  5. Under Section 124(7), failure to comply makes the company punishable with fine of not less than ₹5,00,000 but up to ₹25,00,000. Each officer in default faces a fine of not less than ₹1,00,000 but up to ₹5,00,000.
  6. The shareholder can still apply to the IEPF authority under Section 125(4) for the money, and claim shares by the prescribed procedure.

Answer: The company must transfer the ₹6,00,000 with interest, if any, to the IEPF and send the prescribed statement. Shares with 7 consecutive years of unclaimed dividend also move to the IEPF. Default means a fine of ₹5 lakh to ₹25 lakh on the company and ₹1 lakh to ₹5 lakh on each officer in default.

Exam tips

  • Write the section number with each rule: 124 for the account and transfers, 125 for the Fund, 126 for pending transfers, 352 for liquidation.
  • Draw a small timeline in your answer. It shows the 30, 7, 90 and 7-year steps at a glance and earns easy marks.
  • Learn the fine ranges for both the company and the officer in default. Questions often ask for both.
  • In case-based questions, check whether dividend was claimed in any year. This decides the share transfer.
  • Always end with a conclusion line: what the company must do and the consequence of default.

Practice questions from Distribution of Profits

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 for payment of dividend after declaration?

The dividend must be paid within the 30 days after declaration. If any part remains unpaid or unclaimed after that, the company must transfer it to the Unpaid Dividend Account within 7 days of the expiry of the 30 days.

How do I claim unclaimed dividend from IEPF?

Once the money is in the IEPF, you apply to the IEPF authority under Section 125(4). For transferred shares, you follow the procedure and submit the documents the rules prescribe. The exact forms come from the rules, so learn the principle for the exam.

When do shares go to the IEPF?

Shares go to the IEPF when dividend has not been paid or claimed for 7 consecutive years or more. If dividend was paid or claimed in any of those years, the shares are not transferred.

What is the penalty for default under Section 124?

The company is liable to a fine of not less than ₹5,00,000, extending to ₹25,00,000. Each officer in default faces a fine of not less than ₹1,00,000, extending to ₹5,00,000.

How is Section 352 different from Section 124?

Section 352 applies to a company being wound up. The liquidator deposits unpaid dividends or undistributed assets after 6 months into the Company Liquidation Dividend and Undistributed Assets Account. Section 124 applies to a running company.