## Section 124 – Unpaid Dividend Account

When dividend remains unpaid or unclaimed beyond the 30-day window, the law mandates a parking mechanism so that shareholder money does not get co-mingled with the company's working funds.

### Step 1 – Transfer to Unpaid Dividend Account

Where declared dividend is not paid or not claimed within 30 days of declaration,
The company must transfer the unpaid/unclaimed amount to a special account called the 'Unpaid Dividend Account' opened in a scheduled bank,
Within 7 days from the expiry of the 30-day period (i.e., within 37 days from declaration).

### Step 2 – Statement on Website

Company shall prepare a statement containing:
Names of shareholders,
Their last known addresses,
Unpaid dividend amount.
This statement must be placed on the company's website (and any other website notified by Central Government) within 90 days of making the transfer.

### Step 3 – Interest on Default

If the company defaults in transferring the amount to the Unpaid Dividend Account:

Interest @ 12% p.a. from the date of default,
Such interest accrues to the benefit of shareholders to whom the dividend is unpaid (not to the company).

### Step 4 – Claim by Shareholder

Any person claiming unpaid dividend can apply to the company for payment.

### Step 5 – Transfer to IEPF after 7 years

If the amount remains unpaid/unclaimed for 7 years from the date of transfer to the Unpaid Dividend Account,
The company must transfer such amount along with interest accrued to the Investor Education and Protection Fund (IEPF).
Company must also furnish a statement to IEPF Authority containing details of transfer and receive a receipt as evidence.

### Step 6 – Transfer of Shares to IEPF

All shares in respect of which dividend has remained unpaid/unclaimed for 7 consecutive years shall also be transferred to IEPF in the name of IEPF.

Note: The claimant can later claim such shares back from IEPF.

### Penalty for Contravention

Penalty is imposed on company and officers in default (as per OTP – Officer/Threshold/Penalty schedule under the Act).

Worked example

### Example 1

Timeline Example: Sun Ltd. declared dividend on 1 January 2026.

Last date for payment: 31 January 2026 (30 days).
Last date for transfer to Unpaid Dividend A/c: 7 February 2026 (37 days from declaration).
Last date for putting statement on website: 8 May 2026 (90 days from transfer).
Last date for transfer to IEPF (if still unclaimed): 7 February 2033 (7 years from transfer to Unpaid Dividend A/c).

### Example 2

Default Example: Moon Ltd. failed to transfer ₹10 lakh of unpaid dividend to the Unpaid Dividend A/c by the due date and delayed by 60 days.

Solution: Moon Ltd. must pay interest @ 12% p.a. on ₹10 lakh for 60 days = ₹10,00,000 × 12% × 60/365 ≈ ₹19,726. This interest accrues to the benefit of the shareholders, not the company.

⚠️ Common exam mistakes

Confusing 18% interest under Sec. 127 (default in paying declared dividend) with 12% interest under Sec. 124 (default in transferring to Unpaid Dividend A/c).
Forgetting that interest on delayed transfer accrues to shareholders, not the company.
Treating the 7-year period from declaration date instead of from date of transfer to Unpaid Dividend A/c.
Missing that when shares are transferred to IEPF, the claimant can still claim them back from IEPF — they are not extinguished.

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

Where a dividend has been declared by a company but has not been paid or claimed within 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 thirty 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.

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Unpaid Dividend Account (Section 124)

Worked example

⚠️ Common exam mistakes