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CS Executive · Company Law and Practice · Distribution of Profits

Sagar Chemicals Ltd has money lying in its Unpaid Dividend Account that has remained unpaid or unclaimed for seven years from the date of transfer to that account. What must the company do?

The company must transfer the money, with any accrued interest, to the Investor Education and Protection Fund under section 125(1) and send a prescribed statement to the administering authority, which issues a receipt as evidence of the transfer.

  1. ATransfer it with accrued interest, if any, to the Fund under section 125(1) and send a statement to the administering authority, which issues a receiptCorrect
  2. BTransfer it to the company's general reserve
  3. CRetain it for another three years before any transfer
  4. DDistribute it among the other shareholders in proportion to their holdings

Explanation

Money unpaid or unclaimed for seven years from the date of transfer to the Unpaid Dividend Account must be transferred with interest accrued, if any, to the Investor Education and Protection Fund. The company sends a statement in the prescribed form to the authority administering the Fund, and the authority issues a receipt as evidence. The company cannot keep it or redistribute it.

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