Question

Justify the following statement.

Unpaid/Unclaimed Dividend is governed by some rules.

Answer 1

The dividend declared by the company but has not been paid by it or claimed by a shareholder within 30 days of its declaration is termed an Unpaid and Unclaimed Dividend.

The following rules govern the Unpaid/Unclaimed Dividend:

1. The total amount of dividends that remain unpaid/ unclaimed should be transferred to the 'Unpaid Dividend Account' opened in a scheduled Bank by the company. This transfer should be within 7 (seven) days at the end of the 30 days within which payment was to be made. In other words, this transfer should happen within 37 (Thirty-seven) days from the declaration of the dividend.
2. Within 90 (Ninety) days of the transfer of the amount in the 'Unpaid Dividend Account', the company is required to put on its website or any other website as approved by the Central Government, a statement that shows names, last known addresses, and the unpaid amount payable to each shareholder.
3. Any claimant to the Unpaid Dividend Account may apply to the company for the payment of money claimed.
4. Any amount in the Unpaid Dividend Account of a company that remains unpaid/unclaimed for a period of 7 (seven) years from the date of such a transfer shall be, transferred by the company to Investors Education and Protection Fund (IEPF).
5. The claimant of money will have to follow the procedures and submit the necessary documents to get a claim from IEPF along with a statement in the prescribed form that gives details of such transfers.