Skip to content

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

Kaveri Foods Ltd. declared a dividend for 2025-26, but a dividend of Rs 4,00,000 remained unpaid in a separate Unpaid Dividend Account. Nobody claimed it for seven years from the date of transfer to that account. What must the company do with this amount?

The company must transfer the amount to the Investor Education and Protection Fund. Dividend remaining unpaid or unclaimed for seven years from the date of transfer to the Unpaid Dividend Account must be moved to this Fund, and the company cannot keep it or reallocate it.

  1. ATransfer it to the general reserve of the company
  2. BTransfer it to the Investor Education and Protection FundCorrect
  3. CDistribute it among the directors as remuneration
  4. DRetain it permanently in the Unpaid Dividend Account

Explanation

Money lying in the Unpaid Dividend Account for seven years from the date of transfer must be transferred to the Investor Education and Protection Fund. Transfer to general reserve or retention is not permitted, and distribution to directors is illegal.

Did you get it right without looking?

One question tells you little. A timed set on Declaration and Payment of Dividend shows your real accuracy, how long you take and where you lose marks.

Practise Declaration and Payment of DividendFree diagnostic mock

More Declaration and Payment of Dividend questions