Dividends - Transfer of unpaid dividend ‑ Scope of the section explained in the context of expressions “has not been paid” and “warrant in respect thereof has not been posted” used therein. - Companies Law - Circular: No. 35/76

Circular: No. 35/76 [8/30/(205A)/75 ‑ CL-V], dated 28 ‑ 10 ‑ 1976. Subject:- Dividends - Transfer of unpaid dividend ‑ Scope of the section explained in the context of expressions has not been paid and warrant in respect thereof has not been posted used therein. This Department has received some enquiries regarding the application of the provisions of section 205A to the amount of dividend as might be payable to non‑resident shareholders since permission of the Reserve Bank of India is required under the Foreign Exchange Regulation Act before the remittance of dividend amount out of India to the concerned shareholders. The matter has since been carefully examined by this Department and this Department is of the view that there is nothing in that section to say that the dividend remittable to non‑resident shareholders which requires approval of the Reserve Bank of India is exempt from the provisions of sub‑section (1) of section 205A. The provisions of sub‑sections (5) and (6) of section 205A are indicative of the fact that any money transferred to the unpaid dividend amount could be subsequently paid to the shareholders within the period of three years from the date of such transfer and that only after the expiry of the period of three years such money is to be transferred to the general revenue account of the Central Government.1 The concerned companies, after obtaining the necessary approval of the Reserve Bank, can draw the amount from the unpaid dividend account for the payment to the non‑resident shareholders.