Chapter VIII - Declaration and Payment of Dividend
Section 124
Section 124: Unpaid Dividend Account
A declared dividend that is unpaid or unclaimed after thirty days must be moved, within seven more days, to a special Unpaid Dividend Account in a scheduled bank.
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This article is for general information. Refer to the Companies Act, 2013 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) 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. (2) 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. (3) 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. (4) 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. (5) 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. (6) 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. (7) 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.
Introduction
Section 124 sets a fixed timetable for dividends that do not reach shareholders. The company moves the unpaid amount to an Unpaid Dividend Account, publishes a statement of the unpaid amounts, and later transfers amounts unclaimed for seven years to the Investor Education and Protection Fund under section 125.
Shares on which dividend has not been paid or claimed for seven consecutive years or more are also transferred to the Fund. The Companies (Amendment) Act, 2015 settled that wording and added the Explanation. The Companies (Amendment) Act, 2020 replaced the fine in sub-section (7) with a civil penalty. India Code records that change as effective from 24 March 2021.
Key takeaways
30 + 7 days
Dividend unpaid or unclaimed 30 days after declaration must be transferred within the next 7 days to the Unpaid Dividend Account.
Seven years to IEPF
Money left unclaimed in the account for seven years from transfer goes to the Fund with any interest; shares with seven consecutive years of unpaid or unclaimed dividend are transferred too.
Civil penalty
Company: ₹1 lakh plus ₹500 a day for continuing failure, up to ₹10 lakh. Each officer in default: ₹25,000 plus ₹100 a day, up to ₹2 lakh.
Transfer to the Unpaid Dividend Account
Count thirty days from the date of declaration. Any dividend that is still unpaid or unclaimed then must be moved, within seven days after those thirty days end, to a special account opened by the company in a scheduled bank and called the Unpaid Dividend Account. If the company transfers late or transfers less than the full amount, it pays interest at twelve per cent a year from the date of default on the amount not transferred. That interest goes to the members in proportion to the amounts still unpaid to them.
Publish the unpaid dividend statement
Within ninety days of each transfer, prepare a statement of names, last known addresses and the unpaid dividend payable to each person. Place it on the company website, if any, and on any other website approved by the Central Government, in the form and manner prescribed by the rules.
Claims and transfer to the Fund
A person entitled to money in the account can apply to the company for payment. Money that stays unpaid or unclaimed for seven years from its transfer must be moved, with any interest accrued, to the Investor Education and Protection Fund. The company sends a statement of the transfer in the prescribed form to the authority that administers the Fund, which issues a receipt.
Shares on which dividend has not been paid or claimed for seven consecutive years or more are transferred in the name of the Fund with the prescribed statement. If any dividend on the share was paid or claimed in any year of that period, the share is not transferred. A claimant can later reclaim transferred shares from the Fund under the prescribed procedure.
Practical preparation
Diary the declaration date, the thirty-day date and the seven-day transfer deadline. Reconcile amounts paid and unpaid, then transfer the full unpaid amount. Publish the statement within ninety days. Keep records of claims and payments. Track the seven-year dates for both money and shares, and check the current IEPF rules and forms before each transfer.
Practical checklist
Do
- Reconcile the dividend bank account before the seven-day transfer deadline.
- Track seven-year dates for each dividend year separately.
- Check whether any dividend on a share was paid or claimed during the seven-year period before transferring it.
Avoid
- Do not keep unpaid dividend money in the company’s general accounts after the transfer deadline.
- Do not transfer shares where a dividend was paid or claimed in any year of the seven-year period.
Illustrative example
Hypothetical: unclaimed final dividend
A company declares a dividend, and some warrants remain unencashed after thirty days.
Transfer
Move the unpaid total to the Unpaid Dividend Account within the next seven days.
Publish
Place the statement of unpaid amounts on the website within ninety days.
Monitor
Pay valid claims from the account and diarise the seven-year transfer of money and eligible shares to the Fund.
Outcome
- The company follows the section 124 timetable and avoids default interest and penalty.
Glossary
- Unpaid Dividend Account
- The special account a company opens in a scheduled bank for dividend that is unpaid or unclaimed after thirty days.
- Investor Education and Protection Fund
- The Fund established under section 125 that receives amounts and shares transferred under section 124.
Frequently asked questions
When must unpaid dividend be moved to the Unpaid Dividend Account?
Within seven days after the end of thirty days from the date of declaration.
What happens if the transfer is late?
The company pays interest at twelve per cent a year on the amount not transferred, for the benefit of the members concerned, and the section 124(7) penalty can also apply.
Are shares transferred to the Fund if one dividend was claimed during the seven years?
No. The Explanation says a share is not transferred if any dividend was paid or claimed for any year during that period.
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Contact BizeneedLast updated 11 October 2026