1. Transfer of unpaid or unclaimed dividend to a special bank account
If any dividend declared by a company has been not been claimed or remained unpaid within the period of 30 days from the date of declaration, the company shall within 7 days of the expiry of the period of 30 days, transfer the total amount of dividend which remains unpaid or unclaimed to special bank account to be opened by the company in any scheduled bank to be called the Unpaid Dividend Account.
2. Statement showing the details of share holders to whom the dividend remains unpaid
The company shall, within the period of 90 days of transferring in the Unpaid Dividend Account, prepare a statement showing the following details:
- Names of the shareholders.
- Last know addresses of the shareholders
- Amount of unpaid dividend.
Company shall the statement on its website (if any), and also on any other website as may be approved by the CG.
3. Penal Interest
If any default is made by the company in transferring the amount to the Unpaid Dividend Account, company shall pay, from the date of such default, interest on so much of the amount, as has not been transferred to the Unpaid Dividend Account, at the rate of 12% p.a. and the interest accruing to on such amounts shall ensure to the benefit of the members of the company in proportion to the amount reaming unpaid to them.
4. Payment of the amount out of Unpaid Dividend Account
Any person claiming to be entitled to the amount transferred to the Unpaid Dividend Account may make any application to the company for payment of the money.
5. Transfer of amount to Investor Education and Protection Fund (IEP Fund)
Any amount transferred to the Unpaid Dividend Account of a company remains unpaid or unclaimed for a period of 7 year from the date of transfer shall be transferred by the company along with interest accrued, if any, to the Investor Education and Protection Fund (established under section 125) and the company shall send a statement( in the Form Div 5 ) containing the details of the transfer to the authority which administers the fund and that authority shall issue a receipt to the company as evidence of such transfer.
6. Transfer of shares to the Investor Education and Protection Fund
All the shares in respect of which unpaid or unclaimed dividend has been transferred by the company to the Investor Education and Protection Fund, shall also be transferred to the Investor Education and Protection Fund.
Any claimant of the shares transferred to the Investor Education and Protection Fund shall be entitled to claim the transfer of shares from the Investor Education and Protection Fund in accordance with such procedure and on submission of such documents as may be prescribed.
If any company fails to comply with the provisions of this section, the company shall be punishable with:
- Fine: Minimum- Rs. 5,00,000 and Maximum- Rs. 25,00,000
- Every officer and employee who is in default shall be punishable with
Fine: Minimum- Rs. 1,00,000 and Maximum- Rs. 5,00,000.