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CS Executive · Corporate Accounting and Financial Management · Dividend Decisions

A company has declared dividend but some shareholders have not encashed their dividend warrants. Under the Companies Act, 2013, what must the company do with the unpaid or unclaimed dividend?

Unpaid or unclaimed dividend must be transferred within seven days of the expiry of the 30-day period to a special Unpaid Dividend Account with a scheduled bank. If still unclaimed for seven years, it is transferred to the Investor Education and Protection Fund.

  1. ATransfer it to the general reserve immediately
  2. BTransfer it within 7 days of expiry of 30 days to a special Unpaid Dividend Account in a scheduled bankCorrect
  3. CTreat it as income of the company after 30 days
  4. DKeep it in the company's current account until claimed

Explanation

Where dividend is not paid or claimed within 30 days of declaration, the company must transfer the amount within 7 days to a special account called Unpaid Dividend Account with a scheduled bank. Amounts remaining unclaimed for seven years go to the Investor Education and Protection Fund. Treating it as income or reserve is not permitted.

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