Unpaid dividend explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Dividend that is declared but not claimed does not stay with the company. Paragraphs 6 to 10 of SS-3 describe where it goes, when it moves on to the Investor Education and Protection Fund, how long cheques and registers are kept, what the accounts and the Board's report must say, and what a listed company does in addition. A compliance advisory review of the unpaid dividend position is a useful year-end step.
SS-3, effective from 1 January 2018 (recommendatory), is not approved under section 118(10). ICSI may revise the Standards, so check the current version on icsi.edu. SS-3 pre-dates later changes to the investor protection fund rules, so the Act and the rules as now in force prevail; read the live articles linked below before acting. For tax on dividend, see our income-tax guides.
Dividend unpaid or unclaimed thirty days after declaration goes to the Unpaid Dividend Account within seven days of those thirty days. After seven years in that account it goes to the IEPF within thirty days; shares on which no dividend was paid or claimed for seven consecutive years also move to the Fund. A declared dividend is a debt and cannot be revoked. Dividend cheques and registers are kept for eight years.
Paragraph 6: unpaid dividend and the Fund
6.1 Unpaid Dividend Account. Dividend unpaid or unclaimed after thirty days from declaration is moved to a special bank account titled "Unpaid Dividend Account" with a scheduled bank, within seven days of the thirty days expiring. Within ninety days of the transfer the company prepares a statement of names, last known addresses and amounts, and places it on its website (if any) and on the website specified by the Central Government. It stays there until transfer to the Fund and is updated regularly. Anyone entitled may apply to the company for payment. A Nidhi may credit the member's account if dividend is not claimed within thirty days. The Act's rule is in the unpaid dividend account article.
6.2 Transfer to the Fund. Amounts that remain unpaid or unclaimed for seven years from the date of transfer to the Unpaid Dividend Account, with accrued interest, go to the Investor Education and Protection Fund within thirty days of the seven years ending. The Standard lists steps the company must take:
| Step | Requirement as printed |
|---|---|
| (a) | Send the IEPF Authority a statement in the prescribed form on the transfer within thirty days of transfer and obtain a receipt |
| (b) | Keep a record of name, last known address, amount, folio, DP ID and client ID, certificate number and beneficiary details of each person whose dividend is transferred |
| (c) | Do not transfer where a court, tribunal or authority has restrained it; furnish those details within thirty days of year-end |
| (d) | File a statement within thirty days of year-end of the dividend due to be transferred in the next year |
| (e) | Within thirty days of closing the financial statements, report reasons for any deviation between (d) and the actual transfer |
A claimant may apply for refund from the Fund by the prescribed procedure.
6.3 Intimation. The company gives each member an individual intimation at least three months before the due date of transfer, stating the amount and advising the member to claim it. 6.4 Interest earned on the Unpaid Dividend Account is also transferred.
6.5 Shares. Shares on which dividend has not been paid or claimed for seven consecutive years or more are transferred in the name of the Fund. If dividend was paid or claimed in any of those years, they are not transferred. At least three months in advance, the company sends an individual notice to the concerned members, uploads the details on its website and publishes a notice in leading English and regional newspapers, naming the website address. Claimants may claim the shares by the prescribed procedure. No shares or dividend are transferred where a specific order restrains it, or where the shares are pledged or hypothecated under the Depositories Act, 1996.
What the live rules say. The Standard states the 2017 position. Section 124 and the Investor Education and Protection Fund Authority rules have been amended since, and the forms, filing times and the refund process in force are in the current rules. Read sections 124 and 125 on unpaid dividend and the Fund and the IEPF compliance calendar as now in force; they prevail over the Standard's list of steps.
Paragraph 7: revocation
Dividend, once declared, becomes a debt and is not revoked. A declaration therefore has to be right the first time, which is why the checks in paragraph 1 come before the Board's recommendation.
Paragraph 8: records
Dividend cheques or warrants returned by the bank after payment, and the dividend registers, are preserved for eight years. If the company gave the bank an undertaking to keep paid instruments for a specified time, they are kept for that time or eight years from the date of the instrument, whichever is longer. Destruction needs Board approval or follows a Board-approved policy.
Paragraph 9: disclosure
| Para | Where | What |
|---|---|---|
| 9.1 | Notes to accounts | Aggregate dividend proposed to equity and preference shareholders, dividend per share, and arrears of fixed cumulative preference dividend shown separately |
| 9.2 | Balance sheet | The amount in the Unpaid Dividend Account, with accrued interest, under current liabilities and provisions |
| 9.3 | Board's report | Interim dividend paid and final dividend recommended |
| 9.4 | Annual report | The total in the Unpaid Dividend Account for the last seven years, when it is due for transfer to the Fund, and any amount transferred during the year |
The Board's report is covered in section 134 on the Board's report and the report rules; the 2025 additions to rule 8 are in the rule 8 article.
Paragraph 10 and Annexure 'A': listed companies
A listed company complies with Annexure 'A' in addition. In summary, the Annexure expects a listed company to:
- let newly allotted equity shares rank equally for dividend if they exist on the record date or book closure, and not issue shares conferring superior voting or dividend rights over listed equity;
- tell the stock exchanges in advance about the Board meeting to consider dividend, the record date, and the outcome of that meeting promptly after it, including the payment or despatch date;
- recommend or declare dividend a set number of working days before the record date;
- use speed post for larger warrants, declare and disclose dividend per share only, and not forfeit unclaimed dividend before the claim is barred by law;
- for the largest listed companies by market capitalisation, formulate and publish a dividend distribution policy; and
- disclose the dividend payment date in the corporate governance report.
The working-day periods and thresholds in the Annexure follow the listing regulations as they stood in 2017. The SEBI listing regulations now in force prevail; see regulation 42 on the record date and regulation 43A on the dividend distribution policy for the current positions.
Checklist for the Company Secretary
| Event | Action |
|---|---|
| 30 days after declaration | Move unpaid amount to the Unpaid Dividend Account within seven days |
| 90 days after transfer | Statement of unpaid dividend on the websites |
| Before due transfer | Individual intimation to members at least three months ahead |
| Seven years | Transfer dividend and, for shares, notice and transfer as the rules require |
| Annual | Disclose unpaid dividend position in the balance sheet and annual report |
| Records | Keep cheques and registers for eight years |
A worked example
Granth Industries Limited declares a dividend that is not claimed by 200 shareholders. After thirty days it moves the unpaid sum within a week to the Unpaid Dividend Account and, in the next ninety days, uploads the statement. Seven years later, three months before the transfer date, it writes individually to the remaining holders and then transfers the dividend. For shares, it checks whether dividend was paid or claimed in any of the seven years; where it was, the shares stay. The Board's report records the interim dividend paid and the final dividend recommended.
Need help with unpaid dividend and IEPF compliance?
Unpaid dividend lists, member notices and Fund transfers are repeat tasks with hard dates. TaxClue's compliance advisory team can prepare the IEPF calendar and member intimations for your company.
Key takeaways
- Unpaid dividend moves to a separate account after thirty days plus seven days.
- It goes to the Fund after seven years; shares go after seven consecutive years without payment or claim.
- A declared dividend is a debt and cannot be revoked.
- Cheques and dividend registers are kept for eight years.
- Listed companies follow Annexure 'A'; the current listing regulations prevail.
Read next
- Paragraphs 2 to 5 of SS-3: declaration and payment
- Paragraph 1 of SS-3: amount available for dividend
- Sections 124 and 125: unpaid dividend and IEPF
- SS-3 on dividend: key requirements
Disclaimer: Based on the Secretarial Standards issued by the Institute of Company Secretaries of India (SS-1 and SS-2 as revised effective 1 April 2024; SS-3 effective 1 January 2018; SS-4 effective 1 October 2018), as consulted on 3 October 2026. ICSI revises the Standards from time to time; check the current versions on icsi.edu and the Companies Act provisions referred to. This article is general information, not legal advice; check the official text before acting.