B.

COM

SEMESTER III

COMPANY LAW

COURSE CODE B.COM CC305

DIVIDEND

UNIT 4

Study Notes

Prepared by,

NIKKY TIWARY

ASSISTANT PROFESSOR

DEPARTMENT OF COMMERCE
Company Law Syllabus

1. Definition of company, characteristics of company, lifting the corporate

veil, company distinguished from partnership, kinds of companies,
incorporation of company, promoter and their legal position.
2. Memorandum of Association: contents, alteration, Doctrine of ultra vires.
3. Articles of Association: contents, alteration,
Doctrine of Indoor Management, Constructive notice of memorandum
and articles,
Articles and memorandum- their relation and distinction, legal effect of
Memorandum and Articles.
4. Prospectus: Definition, contents
5. Shares and share capital: kinds of share capital, alteration and reduction of
capital, reorganization of capital, voting rights.
6. Company meetings and proceedings: general meetings of shareholders,
requisites of a valid meeting, proxies, voting and poll, resolutions.
7. Dividend: Meaning of Dividend, Legal Provisions regarding Dividend,
Revocation of Declared Dividend, Interim Dividend, Unpaid Dividend
8. Winding up: Meaning, Modes, and Consequences of winding up.
 Lesson 1

Introduction

Learning Objectives

1. Introduction
2. Objective
3. Meaning of Company
4. Characteristics of Company
5. Lifting of a corporate veil.
6. Summary.

Introduction:

A company means a body of individuals associated for a common objective,

which may be to carry on business for gain or to engage in some humanactivity
for the benefit of the society.

Accordingly, the word ‘company’ is employed to representassociations formed

to carry on some business for profit or to promote art, science, education or to
fulfil some charitable purpose. This body of individuals may be incorporated
orunincorporated.

In simple words, a company means the association of peoples or group of

persons associated together for carrying on a business with a view to earn
profit.Purpose. The companies act passed time to time in India and followed by
English companies act with certain modification which suit Indian Condition.
Company law is a body of law which govern and determine rights, relations and
conduct of persons, companies and organisation. It deals with the legal aspects
of corporations.

Meaning Of Company:

According to sec. 2 (20) of companies Act 2013 provides that, a company

means a company incorporated under this Act or under any previous company
Law.

Lindley’s L.J. defines a company as, “an association of many people who
contribute money or money’s worth to a common stock, and employ it in some
common trade or business (i.e., for a common purpose), and who share the
profit or loss (as the case may be) arising there from.
Chief Justice Marshall Of USA defined company “as a person ,
artificial ,invisible ,intangible and existing only in the eyes of the law .Being a
mere creation of law it possesses only those properties which the charter of it
creation confers upon it either expressly or as accidental to its very existence.”

Indian companies act 2013 Contain-470 section, 7 schedules and 29 chapters. It

became applicable from financial year 2014-15.

The companies act ,2013 was enacted broadly to achieve following

Objective:

1. To maintain high standard of corporate governance, management,

accountability responsibility and transparency.
2. To take strict step or action towards those companies who are involve in
fraudulent activities and non-compliance of latest company provision.
3. To identify new policies concepts to protect the interest of stakeholders.

Some Previous companies acts- 1913,1956.

Characteristics of a company: -

On the basis of the above observations, we may spell out the following
characteristic features of
a company.

1.Seperate legal entity

2.Incorporated association
3.Artificial person
4.limited liability
5.Common seal
6. Perpetual succession
7. Transferability of shares

The distinguishing characteristics of a company are: -

1.Seperate legal entity: - It means a company have a separate legal entity from
its members. It has all legal rights which is separate and members of a company
are not liable for it. In case of any contract of company, company name is used
and contract binds the company not its member. The company’s property,
assets, Liability belong only to the company. Even members are not liable to the
debts of the company and the liability of members are limited.
2.Incorporated Association: - Company is an incorporated associations of
person and it formed by registration under various companies act either 2013 or
previous companies act. For forming public company at least 7 persons required
and for private company at least 2 people required. The name of persons
subscribed in memorandum of association and they are complying with other
legal requirements in respect of registration and incorporation of a company.

3. Artificial legal person: - A company is created with the sanction of law and is
not itself a human being, it is therefore,called artificial; and since it is clothed
with certain rights and obligations, it is called a person.

A company is accordingly, an artificial person.

 Company does not exist in physical form- No body, no soul, no

conscience
 it doesn’t have attributes like people and we can call it fictitious person.
 it has existence in the eyes of law.
 It has its own property, liabilities and legal rights can sue and be sued in
its own name.
 It has domicile, nationality and residence but the company cannot enjoy
the fundamental rights which is given to natural person mentioned in
Constitution of India or citizenship Act.
 Company cannot be treated as citizen of the country on behalf of its
member.

4.Limited liability: -

The company being a separate person, its members are not as such liable for its
debts.
 In the case of a company limited by shares, the liability of members is
limited to the nominal value of shares held by them. Thus, if the shares
are fully paid up, their liability will be nil.
 In case of unlimited liability companies, members shall continue to be
liable till each paise has been paid off.
 In case of companies limited by guarantee, the liability of each member
shall be determined by the guarantee amount, i.e., he shall be liableto
contribute up to the amount guaranteed by him.
So, A company’s liability is different from liability of shareholder. Shareholder
have limited liability to the unpaid value of shares. once they have paid full
amount on the shares held by them and they have no obligation toward
company. In the case of losses shareholder are not called to manage the losses
of the company. creditor cannot claim personal wealth of shareholder. And in
case of guarantee company the members are liable to pay specified amount to
the assets of the company in the case of company being wound up

5.Perpetual succession: - A company has perpetual succession. It never dies nor

the life of it depend upon the life of members. It is incorporated by law and end
only by process of law. The death of member doesn’t lead to death of company,
existence of the company is independent. It is not affected by death, mental
disorder, retirement of any of its member. The company aim is to maintain
continuity forever until it dissolved, members may come and go company will
be there.
 A company being an artificial person cannot be incapacitated by illness
and
 it does not have an allotted span of life. The death, insolvency or
retirement of its members leaves the company unaffected.
 Members may come and go but the company can go forever.

6.Common seal: - A company is artificial person and it doesn’t have hand like a
human being so it cannot sign any document personally. Every company have
its common seal which works as its signature. The document within a company
is authorized by the common seal.

7.Transferability of shares: - The company’s capital is divided into small unit

called shares, the share of the company is transferable in case of public
companies it transfers freely but in case of private companies there are some
restrictions. Section 44 of the companies act 2013, it provides that the shares,
debentures or other interest of the member of a company are moveable property.
Hence, they are transferable in the manner as provided in the company’s articles
of association.

8.Company may sue and be sued in its own name- Company, if aggrieved by
some wrong done
to it may sue or be sued in its own name.

LIFTING OR PIERCING OF CORPORATE VEIL

Meaning of corporate veil: - A company is a separate legal entity and corporate

veil is a curtain between company and its member.

Company itself is liable for its acts and its members/directors/employees/

shareholders are not liable for the acts of company.

 A company is distinct from its members.

 It is a separate legal entity.
  There is thus, a veil between a company and its members keeping them
both separate from each other.
However, sometimes it becomes necessary to lift this veil to find out the
realities of the company. The court may investigate the real affairs, ownership,
etc., of the company. This is called lifting or piercing the corporate veil.

In other words, the Court investigates into the true state of affairs of the
company. It has been observed that though a corporation is a distinct entity, yet
in reality, it is an association of persons who are in fact the beneficial owners of
all the corporate property.

The corporate veil is therefore lifted by the court, when it ignores the company
and concerns
itself directly with the members or managers.

The corporate veil may be lifted in the following instances:

 To investigate the relationships between the holding company and

subsidiary company;
 To investigate the number and names of members of the company;
 To investigate the true ownership of shares and controlling power over
the company;
 To investigate lawful objects of the company;
 To investigate mismanagement and oppression by the majority;
 To investigate the character of the company where it is trading with an
alien enemy or
 persons managing the affairs of the company are under the control of
enemies or been
residing in enemy country;
 To investigate into the affairs where there exists a tendency to create
monopoly;

 To investigate the company affairs where it is used for tax evasion or to

circumvent tax obligation;
 To investigate if the company is acting as an agent for its shareholders;
 To investigate the affairs where it is formed for fraudulent purposes, to
defeat and circumvent the law or to defraud its creditors or to avoid valid
obligations.

Company Distinguished from Partnership

Section 4 of the Indian Partnership Act, 1932 defines a partnership as ‘the
relation between persons who have agreed to share the profits of a business
carried on by all or any of them acting for all’. Persons who enter into a
partnership are individually called ‘Partners’ and collectively a ‘Firm’, and the
name under which the business is carried on is called the ‘Firm’s Name’.

The essential characteristics of a partnership organisation are:

1. A partnership is an association of two or more than two persons.

2. A partnership must be the result of an agreement between two or more
persons.
3. The agreement must be to carry on some business.
4. The agreement must be to share profits of the firm.
5. The business must be carried on by all or any of them acting for all. The
partnership isbased upon the idea of mutual agency.
Every partner assumes a dual role – that of aprincipal and an agent.
6. The liability of each partner of the firm is unlimited in respect of the firm’s
debts.
7. A partnership firm has no independent legal existence apart from the persons
who
constitute it.
8. A partnership agreement is based on mutual confidence and trust of the
partners.
9. No partner can transfer his share in a partnership to an outsider without the
consent of all
the other partners.
10. No change can be made in the nature of the partnership business without the
consent of all
the partners.

A partnership firm may be distinguished from a company in the following

ways:

1. Legal Status: A partnership firm has no existence apart from its members. A
company isa separate legal entity distinct from its members.
2. Mutual Agency: A partnership is founded on the idea of mutual agency –
every partner isan agent of the rest of the partners. A member of a company is
not an agent of the othermembers.
3. Liability of Members: The liability of a partner is unlimited, i.e., even his
own personalassets are liable for the debts of the firm. The liability of a member
of a limited companyis limited to the extent of the amount remaining unpaid on
shares held by him or theamount of guarantee, as mentioned in the
memorandum of association of the company.
4. Transfer of Interest: A partner cannot transfer his interest in the partnership
without theconsent of all other partners. A member, subject to the restrictions
contained in the articles,can freely transfer his shares in the company.
5. Duration of Existence: Unless there is a contract to the contrary, the death,
retirement, orinsolvency of a partner results in the dissolution of the firm. In
contrast, a company enjoysa perpetual succession. Death or retirement or
insolvency of a member of a company does
6.Minimum Membership: The minimum number of persons required to form a
partnership is two. The minimum number required to form a private company is
two and in the case of a public company the minimum number is seven.
7. Maximum Membership: A partnership cannot be formed by more than twenty
persons. The number is limited to ten in the case of a banking business. In the
case of a public company, there is no limit to the maximum number of
members. However, a private company cannot have more than fifty members.
8. Audit: The audit of the accounts of a firm is not compulsory, whereas the
audit of accounts
of a company is mandatory.
9. Use of the Words ‘Limited’ and ‘Private Limited’ not Allowed: Section 631
provides that if
any person or persons trade or carry-on business under any name or title of
which thewords, “Limited” or “Private Limited” are the last words, that person
or each of these
persons shall, unless duly incorporated as a public or a private company, as the
case may
be, be punishable with fine which may extend to 500 for every day upon which
that name
has been used.not affect the existence of the company.
 COMPANIES ACT, 2013

Unit 4

Dividend

Introduction:

A trading company is formed to earn profit. The power to declare Dividend is

implied (understood)/ inherent and need not be expressly shown in the
memorandum of association or Articles of Association. The Articles of
Association may regulate the manner in which the dividends are to be paid. In
order to determine the profit of the organisation of a particular period. The
accounts must be properly audited so that true and correct financial position is
presented before the board and members in their respective meetings for final
declaration of dividends.Dividend is that portion of the distributable amount of
profit to which each member is entitled when it is formally declared in annual
general meeting. It means that if no profits are made or if none are made
available for distribution, no dividend will be declared. Rate of dividend
decided in annual general meeting.

There are three essential conditions

1. There are profits

2. Recommendation of board of directors
3. Approval of Shareholders.

Meaning of Dividend

The term ‘dividend’ has been defined under Section 2(35) of the Companies
Act, 2013.
The term “Dividend” includes any interim dividend.

A dividend is a distribution of profit by a corporation to its shareholders.

When a corporation earns a profit or surplus, it is able to pay a proportion of the
profit as a dividend to shareholders.

Meaning of Retained Earning- Any amount not distributed is taken to be re-

invested in the business called Retained Earning.
According to the generally accepted definition, “dividend” means the profit of a
company, which is not retained in the business and is distributed among the
shareholders in proportion to the amount paid-up on the shares held by them.

Dividends are usually payable for a financial year after the final accounts are
ready and the amount of distributable profits is available.

Types Of Dividends

1. Final Dividend
2. Interim Dividend

Final Dividend
Dividend for a financial year of the company which is called ‘final dividend’are
payable only if it is declared by the company at its annual general meeting on
the recommendation of the Board of directors.

Interim Dividend
Sometimes dividends are also paid by the Board of directors between two
annual general meetings without declaring them at an annual general meeting
(which is called ‘interim dividend’).

(Section 8 of Companies Act stating the provisions related to the Non-profit

making Organisation. The companies having licence under Section 8 of the Act
are prohibited by their constitution from paying any dividend to its members.
They apply the profits in promoting the objects of the company.)

Dividend under the Companies Act, 2013

The Companies Act, 2013,section 123 (1) lays down certain legal provisions
for declaration of dividend, which are:

Dividend shall be declared or paid by a company for any financial year out
of:
(a) The current year’s profit of the company arrived at after
providing for depreciation in accordance with the provisions of
schedule II of the companies Act 2013, or
(b)The previous year’s profit of the company arrived at after
providing for depreciation in accordance with the provisions of
schedule II.
(c) No dividend can be paid out of capital as this will result in
reduction of capital. Reduction of capital may be done by passing
special resolution.
 (d)The money provided by central or state government for the
payment of dividend by the company in pursuance of guarantee
given by the government.
(e) No company shall declare dividend unless carried over previous
losses and depreciation not provided in previous years and set off
against profit.

Important provisions

(i) Section 51 permits companies to pay dividendsproportionately,

i.e., in proportion to the amount paid-up on each share.
(ii) when all shares are not uniformly paid up, i.e.,pro rata. Pro rata
means in proportion or proportionately, according to a certain rate.
The Board of Directors of a company may decide to pay dividends
on pro rata basis if all the equity shares of the company are not
equally paidup.
(iii) However, in the case of preference shares, dividend is always paid
at a fixed rate.
The permission given by this section is, however, conditional upon
the company’s articles of association expressly authorising the
company in this regard.
(iv) Final Dividend is generally declared at an annual general
meeting [Section 102(2))] at a rate not more than what is
recommended by the directors in accordance with the articles of
association of a company.
(v) An interim dividend is declared by the Board of directors at any time
before the closure of financial year, whereas a final dividend is
declared by the members of a company at its annual general meeting
if and only if the same has been recommended by the Board of
directors of the Company.
(vi) No dividend shall be declared or paid by or paid by a company from
its reserves other than free reserves.
(vii) The amount of dividend shall be deposited in a separate bank account
within 5 days from the date of declaration and same shall be used for
payment of dividend.
(viii) Dividends shall be paid only to the registered shareholders of such
shares or to his banker.
(ix) Dividend shall be paid in proportion to the amount paid up on each
share.
(x) Board of directors must state in the Directors’ Report the amount of
dividend, if any, which it recommends to be paid. The dividend
recommended by the Board of directors in the Board’s Report must
be ‘declared’ at the annual general meeting of the company.
 (xi) A company may before the declaration of any dividend in any
financial year, transfer such percentage of its profits for that financial
year as it may consider Appropriate to the reserves of the
company.
(xii) If owing to inadequacy or absence of profits in any year, a company
proposes to declare dividend out of the accumulated profits earned
by it in any previous financial years and transferred to reserves, such
declaration of dividend shall not be made except in accordance with
the Companies (Declaration and Payment of Dividend) Rules,
2014.
(xiii) Dividend has to be paid within 30 days from the date of declaration.

Transfer to Reserves:

A company may Before Declaration of any dividend in nay financial year

transfer such percentage of profit for that financial year to Appropriation of
Reserves of the company such transfer is not mandatory.

Payment to Dividend:

Dividends payable in cash may be paid in cash cheque, warrant (A Share

Warrant is a document issued by the company under its common seal,
stating that its bearer is entitled to the shares or stock specified therein.
Share warrants are negotiable instruments) or in any electronic mode.
Dividend has to be paid within 30 days from the date of declaration.

The amount of dividend shall be deposited in a separate bank account

within 5 days from the date of declaration and same shall be used for
payment of dividend.

Unpaid Dividend Account: (Section 124)

The provisions related to Unpaid Dividend Account are given under

section 124 of company act of company’s act, 2013 which are as follows:

1. Unpaid Dividend to be transferred to special unpaid Dividend

account: as per sec 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 declaration, with in 7 days from the date of expiry of the said
period of 30 days, transfer the total amount of dividend which
remains unpaid or claimed to a special account to be opened by the
company in any schedule bank to be called ‘unpaid dividend account.
 2. If dividend has not been paid or claimed within the 30 days from the date
of its declaration, the company is required to transfer the total amount of
dividend which remains unpaid or unclaimed, to a special account to be
opened by the company in a scheduled bank to be called “Unpaid
Dividend Account”. Such transfer shall be made within 7 days from the
date of expiry of the said period of 30 days.

Transfer of unclaimed amount to Investors Education and Protection

fund (IEPF)

(i) Any money transferred to the unpaid dividend account of a company

in pursuance of section 124 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 Investor Education and
Protection Fund and the company shall file a statement in “Form
DIV-5” to the Authority constituted under the Act to administer the
fund and such authority shall issue a receipt to the company as
evidence of such transfer. [Section 124(5)
(ii) Where a dividend has not been paid by the company within 30 days
from the date of declaration, every director shall, if he is knowingly a
party to the default, be punishable with imprisonment for a term
which may extend to 2 years and shall also be liable to a fine of
rupees 1000 for every day during which default continues and the
company shall be liable to pay simple interest @ 18% per annum
during the period for which such default continues. [Section 127]

A dividend once declared by the company in general meeting is a debt and

creates an enforceable obligation. However, a dividend when proposed
does not become a debt.

Revocation of Declare Dividend

A dividend once declared can’t be revoked, because declaration of dividend

once approved by the shareholders create a debt to the shareholders. But where
a dividend has been illegally declared, or where some extraordinary situation
occurred like fire, outbreak of war or any other cause significant ally
diminishing the assets of the company then in such cases board of directors
can justify for revocation the declaration of dividend.

The Companies Declaration and paymentdividend rules 2014

 Rule 3 of these company law rule for payment and declaration of dividend
provides that in the event of in adequacy or absence of profits in any year,
a company may declare dividend out of free reserves subject to the
fulfilment of the following conditions-----
1. The rate of dividend shall not exceed the average of the rates at which
dividend was declared by it in the three years immediately proceeding
that year. However, this rule shall not apply to a company which has
not declared any dividend in each of the three preceding financial year.
2. The total amount to be drawn from such accumulated profit shall not
exceed one tenth of the total of its paid-up share capital appeared in
audited balance sheet.
3. The amount of dividend shall be available after set off losses and
providing depreciation.

PROCEDURE FOR DECLARATION AND PAYMENT OF FINAL

DIVIDEND

The following steps are required to be taken by a company in respect of

declaration and payment of final dividend:

1. Issue notice for holding a meeting of the Board of directors of the

company to consider the matter.

2. Notify stock Exchange

3.Approving the annual accounts (balance sheet and profit and loss account
of the company for the year ended);
4. Fixing time, date and venue for holding the next annual general meeting
of the companyfor declaration of dividend recommended by the Board.

5. Approving notice for the annual general meeting and authorising the
company secretary or any other competent person.

7. Ensure that the required percentage of profits as decided by the Board is

transferred to company’s reserves.

(Pro-rata means in proportion or proportionately, according to a certain rate.

It denotes a method of dividing something between a number of participants
in proportion to some factor. The profits of a company are shared, pro rata,
 among the shareholders, i.e. in proportion to the number of shares each
shareholder holds)

8. Prepare a statement of dividend in respect of each shareholder.

9. Ensure that the dividend tax is paid to the tax authorities within the
prescribed time.
10. Open a separate bank account for making dividend payment and credit
the said bank account with the total amount of dividend payable within five
days of declaration of dividend.
11. Dispatch dividend warrantswithin thirty days of the declaration of
dividend. In case of joint shareholders, dispatch the dividend warrant to the
first named shareholder.
12. Transfer unpaid dividend amount to Investor Education and Protection
Fund (IEPF) after the expiry of seven years from the date of transfer to
unpaid dividend A/c.

DECLARATION OF DIVIDEND OUT OF COMPANY ’S RESERVES

In the event of inadequacy or absence of profits in any year, a company

may declare dividend out of surplus reserves subject to the fulfilment of
the following conditions, namely: -

a. The rate of dividend declared shall not exceed the average of the rates at
which dividend was declared by the company in the three years immediately
preceding that year. However, this condition shall not apply to a company,
which has not declared any dividend in each of the three preceding financial
year.
b. The total amount to be drawn from such accumulated profits shall not
exceed one-tenth of the paid-up share capital and free reserves as appearing
in the latest audited financial statement.
c. The amount so drawn shall first be utilised to set off the losses incurred in
the financial year in which dividend is declared before any dividend in
respect of equity shares is declared.

d. The balance of reserves after such withdrawal shall not fall below 15% of
its paid up share capital as appearing in the latest audited financial statement

The procedure is as follows:

(1) Give notice as per Section 173 to all the directors of the company for
holding a Board meeting. In the meeting, take decision to declare
dividend out of company’s reserves because of inadequacy or absence
 of profits and also fix the date, time and place of the Annual General
Meeting.
(2) Authorise the Company Secretary or any competent person if company
does not have a company secretary to issue the notice of the AGM on
behalf of the Board of directors of the company to all the members,
directors and auditors of the company and other persons entitled to
receive the same.
(3) Ensure that the conditions prescribed under Companies (Declaration
and Payment of Dividend) Rules, 2014 are complied with. Rest of the
procedural steps are same as in case of payment of final dividend

INTERIM DIVIDEND

PROCEDURE FOR DECLARATION AND PAYMENT OF INTERIM

DIVIDEND

1. Verify from company’s Articles of Association that they authorise the

directors to declare interim dividend; if not then alter the Articles of Association
accordingly.
2. Issue notice for holding a meeting of the Board of directors of the company to
consider the matter.
3. In case of listed companies, notify stock exchange(s) where the securities of
the company are listed, at least 2 working days in advance of the date of the
meeting of its Board of Directors at which the declaration of interim dividend is
to be considered
4. At the Board meeting, the Board of Directors considers in detail all the
matters with regard to the declaration and payment of an interim dividend
including…..

(a) Before declaring an interim dividend, the directors must satisfy

themselves that the financial position of the company allows the payment
of such a dividend out of profits available for distribution.
(b) The board should pass a suitable resolution for declaration and payment
of interim dividend on equity shares of the company.
(c) Authority for signing the dividend warrants and pass appropriate
resolutions covering all these aspects of the matter.
(d) Interim dividend on preference shares: Generally, dividend on preference
shares is paid annually.

5. Open the “Interim Dividend Account of ............. Ltd.” with the bank as
resolved by the Board and deposit the amount of dividend payable in the
account within five days of declaration and give a copy of the Board resolution
containing instructions regarding opening of the account and give the authority
to Bank to honour the dividend warrants when presented.

Unclaimed or unpaid Dividend

Unpaid dividend means any dividend the warrant in respect of which has not
been enchased or any dividend has not been paid or claimed.

Statutory provisions regarding unpaid or unclaimed dividend:

1. Unpaid dividend to be transferred to a special unpaid dividend

account: as per sec124 (1) where a dividend has been declared by a
company but has not been paid or claimed with in 30 days from the
date of declaration to any shareholders 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 schedule bank to be called the
unpaid Dividend Account.
2. Preparation of statement with respect to Unclaimed Dividend: Sec
124 (2) states that the company shall within a period of 90 days of
making transfer to unpaid dividend account, prepare a statement
containing name, address etc
3. Default in transferring Dividend in Special Dividend Account: Sec
124 (3) states that in any default in transfer of the amount to unpaid
dividend account the company shall pay 12% interest shall be paid
4. Transfer of Unpaid Dividend to Investors Education and Protection
fund---Sec 124(5) if any amount transferred to unpaid dividend
account remains unpaid in 7 yearsthen such amount will transfer to
Investors education and protection fund.

PAYMENT OF UNCLAIMED/UNPAID DIVIDEND

The claimant shall make an application in prescribed form under his own
signature or through a person holding a valid power of attorney granted by him.
The application shall be accompanied by the following documents

1. Indemnity Bond in prescribed format (not required in case applicant is

Central/State Government, a Government Company or a public financial
institution within the meaning of Companies Act, 2013

2. Documents in support of the claim i.e. dividend warrant/ letter issued by

the company etc.
3. A stamped advance receipt bearing the signature of claimant and two
witnesses.
4. Proof of Identity & Proof of Address
5. In case of deceased person, legal representative shall furnish a succession
certificate/probate/letter of administration.
6. If the securities have to be transmitted in the name of claimant, a
certificate from the company may be furnished.
7. On receipt of application the authority shall verify and certify whether
the claimant is entitled to the money claimed by him.
8. After certification of the title of the claimant to the amount claimed, the
authority shall issue a payment order in prescribed form sanctioning the
payment and
9. Issue and deliver the cheque in favour of the claimant