Amended and updated notes on section 124 of Companies Act 2013. Detail discussion on provisions and rules related to Unpaid Dividend Account read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.
Chapter VIII (Sections 123–127) of the Companies Act, 2013 (CA 2013) deals with the provisions related to declaration and payment of dividend. Section 124 of CA 2013 provides for Unpaid Dividend Account.
Recently, we have discussed in detail section 123 (Declaration of dividend) of CA 2013. Today, we learn the provisions of section 124 of Companies Act 2013 as amended by the Companies (Amendment) Act 2020 vide MCA Notification No. S.O. 1303(E) dated 24.03.2021.
Section 124 of the Companies Act, 2013 has been notified by the Ministry of Corporate Affairs (MCA) vide Notification No. S.O. 2866(E) issued dated 05.09.2016. This notification shall come into force from 7th September, 2016 i.e. the commencement date of section 124 is 07-09-2016.
| Name of Act | The Companies Act 2013 |
|---|---|
| Enacted by | Parliament of India |
| Administered by | Ministry of Corporate Affairs (MCA) |
| Number of Chapters | 29 |
| Number of Sections | 484 (470-43+57) |
| Number of Schedules | 7 |
| You are reading: | |
| Chapter No. | VIII |
| Chapter Name | Declaration and Payment of Dividend |
| Section No. | 124 |
| Section Name | Unpaid Dividend Account |
| Monthly Updated Edition | Company Law PDF |
Section 124 of Companies Act 2013: Unpaid Dividend Account
Section 124 shall come into force on 7th September, 2016 vide Notification No. S.O. 2866(E) issued dated 05.09.2016 and last amended vide Notification No. S.O. 1303(E) issued dated 24.03.2021.
Section 124(1) of Companies Act
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 to a special account to be opened by the company in that behalf in any scheduled bank to be called the Unpaid Dividend Account.
Section 124(2) of Companies Act
The company shall, within a period of ninety days of making any transfer of an amount under sub-section (1) to the Unpaid Dividend Account, prepare a statement containing the names, their last known addresses and the unpaid dividend to be paid to each person and place it on the website of the company, if any, and also on any other website approved by the Central Government for this purpose, in such form, manner and other particulars as may be prescribed.
Section 124(3) of Companies Act
If any default is made in transferring the total amount referred to in sub-section (1) or any part thereof to the Unpaid Dividend Account of the company, it shall pay, from the date of such default, interest on so much of the amount as has not been transferred to the said account, at the rate of twelve per cent per annum and the interest accruing on such amount shall enure to the benefit of the members of the company in proportion to the amount remaining unpaid to them.
Section 124(4) of Companies Act
Any person claiming to be entitled to any money transferred under sub-section (1) to the Unpaid Dividend Account of the company may apply to the company for payment of the money claimed.
Section 124(5) of Companies Act
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 along with interest accrued, if any, thereon to the Fund established under sub-section (1) of section 125 and the company shall send a statement in the prescribed form of the details of such transfer to the authority which administers the said Fund and that authority shall issue a receipt to the company as evidence of such transfer.
Section 124(6) of Companies Act
All shares in respect of which dividend has not been paid or claimed for seven consecutive years or more shall be transferred by the company in the name of Investor Education and Protection Fund along with a statement containing such details as may be prescribed:
Provided that any claimant of shares transferred above shall be entitled to claim the transfer of shares from Investor Education and Protection Fund in accordance with such procedure and on submission of such documents as may be prescribed.
Explanation: For the removal of doubts, it is hereby clarified that in case any dividend is paid or claimed for any year during the said period of seven consecutive years, the share shall not be transferred to Investor Education and Protection Fund.
Section 124(7) of Companies Act
If a company fails to comply with any of the requirements of this section, such company shall be liable to a penalty of one lakh rupees and in case of continuing failure, with a further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of ten lakh rupees and every officer of the company who is in default shall be liable to a penalty of twenty-five thousand rupees and in case of continuing failure, with a further penalty of one hundred rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees.
[Sub-section (7) of section 124 was amended (substituted) w.e.f. 24-03-2021 by the Companies (Amendment) Act, 2020 vide MCA Notification S.O. 1303(E) dated 24.03.2021.]