Section 38A of The State Bank of India Act, 1955
1[38A. Transfer of unpaid or unclaimed dividend.-- (1) Where, after the commencement of the State Bank of India (Amendment) Act, 2010 (27 of 2010), a dividend has been declared by the State Bank but which has not been paid to a shareholder or claimed by any shareholder entitled to it, within thirty days from the date of declaration, the State Bank 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 named, the "unpaid dividend account" maintained by it. Explanation.--In this sub-section, the expression "dividend which remains unpaid" means any dividend the warrant in respect thereof has not been encashed or which has otherwise not been paid or claimed.
- (2)Where the whole or any part of any dividend, declared by the State Bank before the commencement of the State Bank of India (Amendment) Act, 2010 (27 of 2010), remains unpaid at such commencement, the State Bank shall, within a period of six months from such commencement, transfer such unpaid amount to the account referred to in sub-section (1).
- (3)Any money transferred to the unpaid dividend account of the State Bank, in pursuance of this section which remains unpaid or unclaimed for a period of seven years from the date of such transfer shall be transferred by the State Bank to the Investor Education and Protection Fund established under subsection (1) of section 205C of the Companies Act, 1956 (1 of 1956) for being utilised for the purpose and in the manner specified in that section.]
Summary
- Unpaid or unclaimed dividends must be transferred to a special "unpaid dividend account" within seven days after a thirty-day period from the date of declaration.
- Unpaid dividends declared before the 2010 amendment had to be transferred to this special account within six months of the amendment's start.
- Shares with unpaid or unclaimed dividends for seven consecutive years, and unpaid bond interest or redemption amounts after seven years, must also be transferred to this Fund.
Practical examples
FAQ
1. What is an unpaid dividend under this section?
It is any declared dividend where the dividend warrant has not been cashed, or that has otherwise not been paid or claimed by the entitled shareholder.
Test yourself
Q1.Under Section 38A of The State Bank of India Act, 1955, if a declared dividend is not paid or claimed within thirty days, within how many days must the bank transfer it to the special unpaid dividend account?
Q2.Under Section 38A of The State Bank of India Act, 1955, after how many years of remaining unpaid in the special account must money be transferred to the Investor Education and Protection Fund?
Q3.Under Section 38A of The State Bank of India Act, 1955, what happens to the actual shares of a shareholder if dividends on those shares have not been paid or claimed for seven consecutive years?
Q4.Under Section 38A of The State Bank of India Act, 1955, if a bondholder fails to claim the redemption amount on a bond issued by the State Bank, after what period must this redemption money be transferred to the Investor Education and Protection Fund?