Unpaid or Unclaimed Dividend (Section 205A of the Companies Act, 1956) :
Where a dividend has been declared by a company but has not been paid, or claimed within thirty days from the date of the declaration, to any shareholder entitled to the payment of the dividend, the company shall, within seven days from the date of expiry of the said period of thirty days, transfer the total amount of dividend which remains unpaid or unclaimed within the said period of thirty days, to a special account to be opened by the company in that behalf in any scheduled bank, to be called “Unpaid Dividend Account of Company Limited/Company (Private) Limited”.
The expression “dividend which remains unpaid‟ means any dividend the warrant in respect thereof has not been encashed or which has otherwise not been paid or claimed.
Where the default is made in transferring the unpaid or unclaimed amount of dividend to the unpaid dividend account of the company, the company shall, from the date of such default, pay interest on so much of the amount as has not been transferred to the said account, at the rate of 12% per annum and the interest accruing on such amount shall ensure to the benefit of the members of the company in proportion to the amount remaining unpaid to them.
Any money transferred to the unpaid dividend account of a company in pursuance of this section which remains unpaid or unclaimed for a period of seven years from the date of such transfer shall be transferred by the company to the Investor Education and Protection Fund established under sub-section (1) of section 205Cof the Companies Act, 1956.
If a company fails to comply with any of the requirements of this section, the company, and every officer of the company who is in default, shall be punishable with fine which may extend to Rs.5000 for every day during which the failure continues.