Section 205c
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
08 January 2013
Dear Sir/ Mam
I have a query on the applicability of section 205C.
Company's date of AGM where dividend is declared: September 30,2007
so, according to the section, last date for payment: October 29, 2007
Transfer of amount to separate account: November 5,2007
Query 1: Company did not transfer the amount to a separate account. As on date, the same dividend account remains open.
Query 2: Should company entertain any claim of dividend after October 29, 2007.
Query 3: Company pays dividend to a claimant in November 2008. is this a violation under law.
Query 4: exact date of completion of 7 years for transfer of amount to Investor & Protection fund
Request an urgent opinion . Thank you
I have a query on the applicability of section 205C.
Company's date of AGM where dividend is declared: September 30,2007
so, according to the section, last date for payment: October 29, 2007
Transfer of amount to separate account: November 5,2007
Query 1: Company did not transfer the amount to a separate account. As on date, the same dividend account remains open.
Query 2: Should company entertain any claim of dividend after October 29, 2007.
Query 3: Company pays dividend to a claimant in November 2008. is this a violation under law.
Query 4: exact date of completion of 7 years for transfer of amount to Investor & Protection fund
Request an urgent opinion . Thank you
08 January 2013
for your query first - it is mandate to transfer after 30 days to unpaid dividend account.
second - until mand unless claim is not transefer to investr protection fund, company can entertain the claim
Third- not it cant entertain the claim of nov 2008
fourth - after 7 years of the trasfer to unclaim dividend account
second - until mand unless claim is not transefer to investr protection fund, company can entertain the claim
Third- not it cant entertain the claim of nov 2008
fourth - after 7 years of the trasfer to unclaim dividend account
Querist : Anonymous
Querist :
Anonymous
(Querist)
08 January 2013
Thanks sir. But my concern is the status as on date stands as explained by me for a company.
what is the procedure for rectification or further steps ahead?
what is the procedure for rectification or further steps ahead?
23 July 2025
Under Section 205C of the Companies Act, 1956, which deals with the unpaid dividends and their transfer to the Investor Education and Protection Fund (IEPF), the company has certain obligations in terms of dealing with unpaid dividends. Let me break down the issues you raised and provide guidance on how to move forward:
1. Query 1: Company did not transfer the amount to a separate account. As on date, the same dividend account remains open.
Legal Obligation: The company is required by law to transfer unpaid dividend to a separate unpaid dividend account within 30 days from the declaration of dividend. This must be done to ensure that unclaimed dividends are segregated from regular cash balances.
Rectification:
If the company failed to transfer the amount to a separate account within 30 days, the company should immediately rectify this oversight.
You may need to ensure that the amount of unpaid dividend is transferred to the unpaid dividend account right away to comply with the statutory requirement.
If it has already crossed the 30-day period, you may need to take additional steps to rectify this by consulting with a company secretary or legal expert for proper compliance.
2. Query 2: Should the company entertain any claim of dividend after October 29, 2007?
Legal Position: Once the dividend has been declared and the last date for payment (October 29, 2007) has passed, any unclaimed dividend should be transferred to the unpaid dividend account after 30 days.
Company's Obligation: The company can still entertain claims for dividends even after the last payment date (October 29, 2007), as long as the unclaimed dividend has not been transferred to the Investor Education and Protection Fund (IEPF). Once the funds are transferred to the IEPF, the company cannot entertain claims.
Action: The company should continue to entertain claims for dividend until the amount is transferred to the IEPF.
3. Query 3: Company pays dividend to a claimant in November 2008. Is this a violation under law?
Legal Position: If the company paid the dividend after October 29, 2007, but before transferring it to the IEPF, then there would be no violation, as long as the payment was made from the unpaid dividend account.
Violation: However, if the dividend was not transferred to the unpaid dividend account within 30 days and the payment was made in November 2008, it could result in a violation of Section 205C of the Companies Act, 1956, which mandates that any unpaid dividend that remains unclaimed for a period of 7 years must be transferred to the IEPF.
4. Query 4: Exact date of completion of 7 years for transfer of amount to Investor Protection Fund
Legal Obligation: As per Section 205C, the company must transfer the unpaid dividend amount to the Investor Education and Protection Fund (IEPF) after 7 years from the date the dividend was declared.
Calculation of 7 years:
In your case, the dividend was declared on September 30, 2007. The 7-year period for transfer to the IEPF will be completed on September 30, 2014.
The last date for transfer to the IEPF would be October 29, 2014 (i.e., 30 days after the 7 years are completed).
Steps Ahead and Rectification Procedure:
Transfer to Unpaid Dividend Account: If the amount has not yet been transferred to the unpaid dividend account, the company should immediately transfer the balance to this account and ensure that it complies with the 30-day rule under Section 205C.
Claims for Unpaid Dividend: The company can continue to entertain claims for dividend payments from shareholders until the unpaid dividends are transferred to the IEPF. However, any claims after the transfer to the IEPF will no longer be entertained.
Transfer to IEPF: Since the 7-year period has already passed for the dividend declared on September 30, 2007, the company is legally required to transfer the unpaid dividend amount to the IEPF by October 29, 2014. The company should now proceed to make the transfer of any unpaid dividends to the IEPF.
Filing with the Registrar of Companies (RoC): Once the dividend is transferred to the IEPF, the company should file the necessary forms with the Registrar of Companies (RoC), such as Form IEPF-1 to report the transfer.
In Summary:
The company must immediately rectify its mistake by transferring the dividend amount to a separate unpaid dividend account if it has not been done already.
The company should continue to entertain claims for dividend payments until the unclaimed dividends are transferred to the IEPF.
The last date for transfer to IEPF for the dividend declared on September 30, 2007, was October 29, 2014, and it should have been transferred by then. The company needs to comply with this deadline and transfer the unclaimed dividend to the IEPF.
1. Query 1: Company did not transfer the amount to a separate account. As on date, the same dividend account remains open.
Legal Obligation: The company is required by law to transfer unpaid dividend to a separate unpaid dividend account within 30 days from the declaration of dividend. This must be done to ensure that unclaimed dividends are segregated from regular cash balances.
Rectification:
If the company failed to transfer the amount to a separate account within 30 days, the company should immediately rectify this oversight.
You may need to ensure that the amount of unpaid dividend is transferred to the unpaid dividend account right away to comply with the statutory requirement.
If it has already crossed the 30-day period, you may need to take additional steps to rectify this by consulting with a company secretary or legal expert for proper compliance.
2. Query 2: Should the company entertain any claim of dividend after October 29, 2007?
Legal Position: Once the dividend has been declared and the last date for payment (October 29, 2007) has passed, any unclaimed dividend should be transferred to the unpaid dividend account after 30 days.
Company's Obligation: The company can still entertain claims for dividends even after the last payment date (October 29, 2007), as long as the unclaimed dividend has not been transferred to the Investor Education and Protection Fund (IEPF). Once the funds are transferred to the IEPF, the company cannot entertain claims.
Action: The company should continue to entertain claims for dividend until the amount is transferred to the IEPF.
3. Query 3: Company pays dividend to a claimant in November 2008. Is this a violation under law?
Legal Position: If the company paid the dividend after October 29, 2007, but before transferring it to the IEPF, then there would be no violation, as long as the payment was made from the unpaid dividend account.
Violation: However, if the dividend was not transferred to the unpaid dividend account within 30 days and the payment was made in November 2008, it could result in a violation of Section 205C of the Companies Act, 1956, which mandates that any unpaid dividend that remains unclaimed for a period of 7 years must be transferred to the IEPF.
4. Query 4: Exact date of completion of 7 years for transfer of amount to Investor Protection Fund
Legal Obligation: As per Section 205C, the company must transfer the unpaid dividend amount to the Investor Education and Protection Fund (IEPF) after 7 years from the date the dividend was declared.
Calculation of 7 years:
In your case, the dividend was declared on September 30, 2007. The 7-year period for transfer to the IEPF will be completed on September 30, 2014.
The last date for transfer to the IEPF would be October 29, 2014 (i.e., 30 days after the 7 years are completed).
Steps Ahead and Rectification Procedure:
Transfer to Unpaid Dividend Account: If the amount has not yet been transferred to the unpaid dividend account, the company should immediately transfer the balance to this account and ensure that it complies with the 30-day rule under Section 205C.
Claims for Unpaid Dividend: The company can continue to entertain claims for dividend payments from shareholders until the unpaid dividends are transferred to the IEPF. However, any claims after the transfer to the IEPF will no longer be entertained.
Transfer to IEPF: Since the 7-year period has already passed for the dividend declared on September 30, 2007, the company is legally required to transfer the unpaid dividend amount to the IEPF by October 29, 2014. The company should now proceed to make the transfer of any unpaid dividends to the IEPF.
Filing with the Registrar of Companies (RoC): Once the dividend is transferred to the IEPF, the company should file the necessary forms with the Registrar of Companies (RoC), such as Form IEPF-1 to report the transfer.
In Summary:
The company must immediately rectify its mistake by transferring the dividend amount to a separate unpaid dividend account if it has not been done already.
The company should continue to entertain claims for dividend payments until the unclaimed dividends are transferred to the IEPF.
The last date for transfer to IEPF for the dividend declared on September 30, 2007, was October 29, 2014, and it should have been transferred by then. The company needs to comply with this deadline and transfer the unclaimed dividend to the IEPF.
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