# Unpaid Dividend Account (Section 124)

This section governs what happens when declared dividend is not paid or claimed by shareholders.

## The Timeline (Flow)

```

DECLARATION OF DIVIDEND

| 30 days for payment

Dividend Unpaid / Unclaimed?

| Within 7 days (total 37 days from declaration)

Transfer to special bank account called

'UNPAID DIVIDEND ACCOUNT'

(in a scheduled bank)

| Within 90 days of transfer

Prepare STATEMENT of unpaid amounts

(Name, last known address, amount due)

Upload to:

Company's website
Website approved by Government

| Continues for 7 years from transfer

If still unclaimed -> TRANSFER to IEPF

(Both unpaid dividend AND interest thereon)

```

## Key Time Limits at a Glance

Action	Time Limit
Pay declared dividend	Within 30 days of declaration
Transfer unpaid dividend to Unpaid Dividend Account	Within 7 days after the 30-day period
Prepare and upload statement of unpaid dividends	Within 90 days of transfer to Unpaid Dividend Account
Transfer to IEPF (if still unclaimed)	After 7 years in Unpaid Dividend Account

## Default in Transfer — Interest

If the company fails to transfer the unpaid/unclaimed dividend to the Unpaid Dividend Account within the prescribed time, it is liable to pay interest @ 12% p.a. from the date of default. The interest accrues for the benefit of the shareholders in proportion to the amounts remaining unpaid.

## Penalty for Non-compliance with Section 124

### Company

Fine: ₹1,00,000 + ₹500 per day during which the failure continues
Maximum: ₹10,00,000

### Every Officer in Default

Fine: ₹25,000 + ₹100 per day during which the failure continues
Maximum: ₹2,00,000

## Key Concepts

Unpaid Dividend Account = a separate special bank account for dividends declared but not paid/claimed within 30 days.
Shares on which dividend has remained unpaid/unclaimed for 7 consecutive years are also transferred to IEPF (along with the dividend).

Worked example

### Example 1

Example: ABC Ltd. declared a dividend on 1 June 2025.

By 30 June 2025 (30 days): All dividend must be paid.
Suppose ₹2,00,000 remains unpaid as on 30 June 2025.
By 7 July 2025 (within next 7 days): Company must transfer ₹2,00,000 to a special account called 'Unpaid Dividend Account' in a scheduled bank.
By 5 October 2025 (within 90 days of transfer): Company must prepare a statement giving name, last known address, and amount of each unpaid shareholder, and upload it on its website and the Government-approved website.
By July 2032 (after 7 years): If still unclaimed, the amount + interest is transferred to the Investor Education and Protection Fund (IEPF).

⚠️ Common exam mistakes

Confusing the two 7-day periods — the 7 DAYS is for transfer to the Unpaid Dividend Account; the 7 YEARS is for transfer to IEPF.
Forgetting that the 90-day window for uploading the statement runs from the date of transfer to the Unpaid Dividend Account, not from declaration.
Believing interest @ 12% p.a. is on the dividend amount as a punishment to the company alone — it actually accrues for the benefit of shareholders.
Assuming the company can withhold the statement of unpaid dividends — it must be uploaded on both the company's website and the Government-approved website.
Mixing up the penalty caps — Company: ₹10 lakhs max; Officer: ₹2 lakhs max.

Bare-Act text Section 124, Companies Act, 2013 · The Companies Act, 2013 · click to expand

Section 124(1): Where a dividend has been declared by a company but has not been paid or claimed within 30 days from the date of the declaration to any shareholder entitled to the payment of the dividend, the company shall, within 7 days from the date of expiry of the said period of 30 days, transfer the total amount of dividend which remains unpaid or unclaimed to a special account to be opened by the company in that behalf in any scheduled bank to be called the Unpaid Dividend Account. Section 124(2): The company shall, within a period of 90 days of making any transfer of an amount under sub-section (1) to the Unpaid Dividend Account, prepare a statement containing the names, their last known addresses and the unpaid dividend to be paid to each person and place it on the website of the company, if any, and also on any other website approved by the Central Government for this purpose. Section 124(3): If any 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 company, it 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 12% per annum and the interest accruing on such amount shall enure to the benefit of the members of the company in proportion to the amount remaining unpaid to them.

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