Section 205A - Unpaid dividend to be transferred to special dividend account. - Companies Act, 1956

Unpaid dividend to be transferred to special dividend account. [1] [205A. (1) Where, after the commencement of the Companies (Amendment) Act, 1974 (41 of 1974), a dividend has been declared by a company but has not been paid, [2] [or claimed], within [3] [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 [4] [thirty days], transfer the total amount of dividend which remains unpaid [5] [or unclaimed] within the said period of [6] [thirty days], to a special account to be opened by the company in that behalf in any scheduled bank, to be called "Unpaid Dividend Account of .......... Company Limited/ Company (Private) Limited". [7] [ Explanation . In this sub-section, the expression "dividend which remains unpaid" means any dividend the warrant in respect thereof has not been encashed or which has otherwise not been paid or claimed.] (2) Where the whole or any part of any dividend, declared by a company before the commencement of the Companies (Amendment) Act, 1974 (41 of 1974), remains unpaid at such commencement, the company shall within a period of six months from such commencement, transfer such unpaid amount to the account referred to in sub-section (1). (3) Where, owing to inadequacy or absence of profits in any year, any company proposes to declare dividend out of the accumulated profits earned by the company in previous years and transferred by it to the reserves, such declaration of dividend shall not be made except in accordance with such rules as may be made by the Central Government in this behalf, and, where any such declaration is not in accordance with such rules, such declaration shall not be made except with the previous approval of the Central Government. (4) If the 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 concerned company, the company 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 ensure to the benefit of the members of the company, in proportion to the amount remaining unpaid to them. [8] [(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 to the Fund established under sub-section (1) of section 205C.] (6) The company shall, when making any transfer under sub-section (5) to the [9] [Fund established under section 205C] any unpaid or unclaimed dividend, furnish [10] [to such authority or committee as the Central Government may appoint] in this behalf a statement in the prescribed form setting forth in respect of all sums included in such transfer, the nature of the sums, the names and last known addresses of the persons entitled to receive the sum, the amount to which each person is entitled and the nature of his claim thereto, and such other particulars as may be prescribed. [11] [(7) The company shall be entitled to a receipt from the authority or committee under sub-section (4) of section 205C for any money transferred by it to the Fund and such a receipt shall be an effectual discharge of the company in respect thereof.] (8) If a company fails to comply with any of the requirements of this section, the company and every officer of the company who is in default, shall be punishable with fine which may extend to [12] [five thousand rupees] for every day during which the failure continues.] ---------------------------------------- Notes:- [1] Inserted by Act of 41 of 1974, section 19, w.e.f. 1-2-1975. [2] Substituted for the words "or the warrant in respect thereof has not been posted". By the Companies (Amendment) Act, 1988, section 27, w.e.f. 15-6-1988 [3] Substituted for "forty-two days" by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000. [4] Substituted for "forty-two days" by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000. [5] Substituted by the Companies (Amendment) Act, 1988, section 27, w.e.f. 15-6-1988 for the words "or in relation to which no dividend warrant has been posted". [6] Substituted for "forty-two days" by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000. [7] Inserted by the Companies (Amendment) Act, 1988, section 27, w.e.f. 15-6-1988. [8] Substituted by the Companies (Amendment) Act, 1999, w.r.e.f. 31-10-1998. Prior to its substitution, sub-section (5) was inserted by the Companies (Amendment) Act, 1974, w.e.f. 1-2-1975. for the following: "(5) Any money transferred to the unpaid dividend account of a company in pursuance of this section which remains unpaid or unclaimed for period of three years from the date of such transfer, shall be transferred by the company to the general revenue account of the Central Government but a claim to any money so transferred to the general revenue account may be preferred to the Central Government by the person to whom the money is due and shall be dealt with as if such transfer to the general revenue account had not been made, the order, if any for payment of the claim being treated as an order for refund of revenue." [9] Substituted for the words "general revenue account of the Central Government", by the Companies (Amendment) Act, 1999, w.r.e.f. 31-10-1998. [10] Substituted for the words "to such officer as the Central Government may appoint", by the Companies (Amendment) Act, 1999, w.r.e.f. 31-10-1998. [11] Substituted by the Companies (Amendment) Act, 1999, w.r.e.f. 31-10-1998. Prior to its substitution, sub-section (7) was inserted by the Companies (Amendment), Act, 1974, w.e.f. 1-2-1975. for the following: "(7) The company shall be entitled to a receipt from the Reserve Bank of India for any money transferred by it to the general revenue account of the Central Government and such receipt shall be an effectual discharge of the company in respect thereof." [12] Substituted for "five hundred rupees" by the Companies (Amendment) Act, 2000, w.e.f. 13-12-2000.