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CS Executive · Company Law and Practice · Distribution of Profits

Mehta Pharma Ltd's shareholder Mr Anil Rao did not claim dividends for FY 2017-18 to FY 2022-23, but he encashed the dividend for FY 2020-21 within the seven-year window. The company's records show the dividends for the other years were unclaimed. Under the Companies Act, 2013, what is the position about transferring his shares to the Investor Education and Protection Fund?

The shares are not transferred to the Investor Education and Protection Fund. Transfer needs dividend to be unpaid or unclaimed for seven consecutive years, and the Explanation says that payment or claim in any year during the period prevents the transfer.

  1. AShares must be transferred because most of the years' dividends were unclaimed
  2. BShares are not transferred, because dividend was paid or claimed for one year during the seven consecutive yearsCorrect
  3. CShares must be transferred after any six years of non-claim
  4. DShares are transferred only if the shareholder consents in writing

Explanation

Shares are transferred where dividend has not been paid or claimed for seven consecutive years or more. The Explanation clarifies that if dividend is paid or claimed for any year during the seven-year period, the shares are not transferred. Because Mr Rao claimed one year's dividend, the run of seven consecutive unclaimed years is broken.

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