New Norms For Unclaimed Dividends Likely

Companies may no longer be required to transfer unclaimed dividends to the general revenue account (GRA) of the Union government. Instead, they will have to deposit the unpaid amount in a special bank account within 37 days.

These are among a slew of changes being proposed by the working group set up to recast the Companies Act, 1956, relating to the norms governing the declaration of dividend and its utilisation.

The working group has provided that the unpaid dividend be deposited in a special dividend account opened by the company in any scheduled bank. The accruals to this account would not be used by the company except to settle claims from investors.

The existing provisions provide for such an account, but stipulate that the unclaimed moneys should be transferred to the GRA after three years. At present, the government holds over Rs 100 crore in unclaimed dividends.

In order to effectively use the unclaimed amount, the government had considered the possibility of setting up an investor protection fund but the move was shelved following diferences with consumer protection organisations as to who would manage the fund.

The panel has proposed that the unclaimed sum should be transferred to the special account within 37 days of declaration of dividend. At present, a company gets 49 days