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

Zenith Pharma Ltd has an unpaid dividend account holding Rs 8 lakh for the dividend declared for 2017-18, which has not been claimed. The company wants to deal with this amount. Under the Companies Act, 2013, which statement is correct?

Unpaid or unclaimed dividend that stays in the Unpaid Dividend Account for seven years from the date of its transfer there must be moved to the Investor Education and Protection Fund. The company cannot move it to reserves or hold it indefinitely.

  1. AThe company can transfer the amount to its general reserve after three years
  2. BThe amount must be transferred to the Investor Education and Protection Fund after seven years from the date of transfer to the Unpaid Dividend AccountCorrect
  3. CThe amount must be transferred to the IEPF after five years from the date of declaration
  4. DThe company may retain the amount indefinitely as unclaimed liability

Explanation

Money in the Unpaid Dividend Account which remains unpaid or unclaimed for seven years from the date of transfer to that account must be transferred to the IEPF. Transfer to general reserve is not permitted, and the period is not five years from declaration. Retention indefinitely is not allowed. The company must also transfer unpaid dividend to the special account within seven days after the 30-day period expires.

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