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CA Intermediate · Corporate and Other Laws · Declaration and Payment of Dividend

Ganga Pharma Ltd declared a dividend, but a shareholder, Mr Rohit, did not receive it within the period allowed. The company has deposited the amount in the Unpaid Dividend Account. Mr Rohit claims the amount remains unclaimed for 7 years. What is the legal position regarding such amount under the Companies Act, 2013?

Dividend that stays unpaid or unclaimed for seven years from the date it was transferred to the Unpaid Dividend Account must be transferred by the company to the Investor Education and Protection Fund. The company cannot keep it as a reserve or redistribute it among other shareholders.

  1. AThe company may keep it permanently as a free reserve
  2. BThe amount must be transferred to the Investor Education and Protection Fund after the unpaid period of seven years from the date of transfer to the Unpaid Dividend AccountCorrect
  3. CThe amount is transferred to the Consolidated Fund of India after three years
  4. DThe amount must be distributed equally among other shareholders after five years

Explanation

Dividend that remains unpaid or unclaimed for seven years from the date of transfer to the Unpaid Dividend Account must be transferred by the company to the Investor Education and Protection Fund. The company cannot retain it or redistribute it, and the Consolidated Fund route and five-year redistribution do not exist in the Act.

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