Dividend Payment, Unpaid Dividend Account and IEPF Transfer
Anand Ltd, a listed company, declared a final equity dividend of 25% (₹2.50 per share of ₹10) on 28 August for FY 2023-24. It has 80 lakh shares, so the dividend outgo is ₹2 crore. The record date was 20 August. The company had transferred ₹6.2 lakh of unpaid dividend for FY 2016-17 to the Unpaid Dividend Account on 30 September 2017; that amount has not been transferred to IEPF. Mrs. Kapoor, holding 10,000 shares, died on 5 September. Her son lodges transmission papers on 20 September. A dividend warrant for ₹4,500 sent to another shareholder was returned undelivered on 10 September. A third shareholder, who has not updated bank details, demands cash at the registered office. The company secretary must advise the board on the last date for payment, the unpaid dividend account, the IEPF transfer, and the three claims. The company has sufficient profits and has provided depreciation.
1. State the last dates for payment of the dividend, transfer to the Unpaid Dividend Account, and transfer of the ₹6.2 lakh to IEPF.
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- Payment: within 30 days of declaration, i.e. by 27 September (28 August + 30 days).
- Unpaid Dividend Account: within 7 days after the 30-day period, i.e. by 4 October.
- IEPF: the ₹6.2 lakh was transferred to the Unpaid Dividend Account on 30 September 2017. Seven years complete on 30 September 2024; transfer to IEPF within 30 days, i.e. by 30 October 2024.
The seven-year clock runs from transfer to the unpaid dividend account, not from the original declaration. This distinction matters for every old dividend year.
2. How should the company deal with Mrs. Kapoor's dividend, the undelivered ₹4,500 warrant, and the demand for cash payment?
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Mrs. Kapoor: the record date was 20 August, so she was the holder on record date. The dividend is payable to her estate. Her son can claim on transmission with the death certificate, proof of legal heirship (succession certificate, probate, or indemnity as the company's policy requires for the value), and KYC. Transmission does not forfeit the dividend.
Undelivered ₹4,500: after 30 days it should be kept in the Unpaid Dividend Account; it must not be sent to IEPF until seven years. The company should write to the member and reissue or revalidate the warrant after indemnity if within validity, or hold it until claimed.
Cash demand: dividend should normally be paid by cheque, warrant, or electronic mode, not cash at the registered office. The company can issue a cheque to the registered address after KYC; it should not pay cash merely for convenience.
3. What are the consequences of failing to transfer the ₹6.2 lakh to IEPF, and what should the board do now?
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Failure to transfer by 30 October 2024 violates Section 124. The company and officers in default are exposed to monetary penalties, and the amount remains recoverable by the IEPF Authority. Delay also damages the company's compliance record and may affect future filings and audits.
The board should pass a resolution, transfer the amount immediately with a delay statement, update IEPF records, and reconcile the unpaid dividend account for other years. It should fix a compliance calendar so that each year's unpaid dividend is tracked from the date of transfer to the unpaid account, not from the declaration date.