Govt clarifies on unpaid, unclaimed dividend

NEW DELHI: The government on Sunday said unpaid and unclaimed dividend for seven years and not three years need to be put in Investor Education and Protection Fund (IEPF).
The clarification came in the face of confusion arising due to varying interpretations by the companies of the relevant notifications in this regard.
"Therefore, all amounts transferred to unpaid dividend account of a company on or after October 30, 1995 or which have remained unpaid or unclaimed for a period of seven years from the date of transfer should be transferred to IEPF together with interest accured thereon, unless already been transferred to general revenue account of Central Government prior to enactment of the Companies (Amendments) Act of 1999," an official notification said.
With amendments to certain sections of Companies Act, it is now provided with effect from October 31, 1998 that any monies transferred to unpaid dividend account of the company and remaining unpaid or unclaimed for a period of seven years from the date of such transfer shall be transferred to IEPF.
This move comes after it was found that the provisions of Section 205 C of the Act, stipulating the creation of such a fund, were being interpreted by various companies and other concerned persons in a number of ways leading to confusion, it said.
The notification said since the fund became operational only on October 1, 2001, all amounts due for transfer between November 1, 1998 and September 30, 2001, should have been transferred with the grace period of 30 days - by October 1, 2001.
Prior to the amendment of Section 205 A and enactment of Section 205 C by Companies (Amendment) Act with effect from October 31, 1998, firms were required to transfer to general revenue account of Central Government any amounts transferred to the ''unpaid dividend account'' which remained unpaid or unclaimed for a period of three years from the date of such transfer.
"Therefore, all amounts transferred to unpaid dividend account of a company on or before October 30, 1995 and which had remained unpaid or unclaimed on October 30, 1998, should have been transferred to the general revenue account," the official notification said.
The other amounts that needed to be transferred to the fund included matured deposits and debentures with companies and the interest accrued in the said instruments.