Regarding transfer of unpaid dividend to iepf

This query is : Resolved

Sathyan Avinash (Querist)
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27 October 2012 Dear Experts,

We all know that by virtue of section 205A, any amount of unpaid dividend remaining unclaimed for a period of 7 years or more need to be transferred to the IEPF.

What are the penal consequences of not doing so ?

Whether penalty as stated in section 205A would be attracted or some other provisions will get attracted ?

Dear Experts kindly throw light upon this matter.

Thank you,

With regards,

Sathyan
e-mail id: sathyanavinash@gmail.com

CS Ankur Srivastava

CS Ankur Srivastava (Expert)
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27 October 2012 Under Section 205C, the specified amount if remain unpaid for 7 years will be transferred to the Investor Education and Protection Fund, within 30 days from the date it became due to transfer.

Sathyan Avinash

Sathyan Avinash (Querist)
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29 October 2012 Dear Ankur,

My query is what are the penal consequences of not transferring the said amount to IEPF.

In my web search, many quote the residual penalty levied under section 629A as the consequence of such non transfer.

But according to me the penalty for such non - transfer of unpaid dividends to IEPF is contained in section 205A(8) itself. Which states that the company and every officer in default is liable to penalty upto Rs. 5000/- per day for such continuous offence.

I would like to know whethe my view is correct.

I back my view as section 205A only contains provisions as to transfer of unpaid dividend to IEPF and as such sub section 8 of the said section contains penalty for non- compliance of the section.

Experts views solicited.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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20 July 2025 Great question on the penalty for non-transfer of unpaid dividends to the IEPF under Companies Act provisions!

Here’s a clear breakdown based on the laws as applicable around 2012-2013:

Legal Provisions:
Section 205A (now replaced by Section 124 of the Companies Act, 2013)
This section mandates that companies transfer unpaid/unclaimed dividends to the Investor Education and Protection Fund (IEPF) after 7 years from the date they become due.
Penalty Provisions under Section 205A(8)
It explicitly states that the company and every officer in default shall be liable to a penalty up to Rs. 5,000 per day for continuing failure to transfer the unpaid dividend.
This penalty is specific to the non-transfer of unpaid dividend amounts to the IEPF.
Section 205C
Deals with the actual transfer of the unpaid dividend amounts to IEPF.
The timeline is within 30 days after the due date for transfer.
Section 629A (Old Companies Act)
Often quoted as a residual penalty section but not specifically meant for unpaid dividend transfer failure.
It covers penalties for other contraventions.
Answer to your query:
Your interpretation is correct that Section 205A(8) contains the specific penalty for non-transfer of unpaid dividends.
This penalty can be imposed daily until compliance.
Section 629A is not specifically applicable here; it is a general penalty provision.
Therefore, companies and officers cannot avoid penalty by relying on Section 629A since 205A(8) is a special provision.

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