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

Mahesh Pharma Ltd. has not paid or claimed dividend of Rs 3 lakh declared in 2018. The amount was transferred to the Unpaid Dividend Account and remained unpaid for seven years. Which statement correctly states what the company must do?

Dividend that stays unpaid or unclaimed in the Unpaid Dividend Account for seven years from the date of transfer must be transferred by the company to the Investor Education and Protection Fund. It cannot be retained, added to reserves or redistributed to other shareholders.

  1. ARetain it permanently in the Unpaid Dividend Account
  2. BTransfer it to the Investor Education and Protection FundCorrect
  3. CTransfer it to the general reserve of the company
  4. DDistribute it among other shareholders pro rata

Explanation

Money lying in the Unpaid Dividend Account for seven years from the date of transfer must be transferred by the company to the Investor Education and Protection Fund. The company cannot keep it, add it to reserves or redistribute it. The shareholder can later claim from the Fund authority.

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