Companies Act Section 352 — Company Liquidation Dividend and Undistributed Assets Account
CHAPTER XX WINDING UP
Commercial / Corporate
Summary
Sub-section (1) requires that when a company is being wound up, if the liquidator holds money that represents dividends owed to creditors but unpaid for six months after they were declared, or assets that should be refunded to contributors but have remained undistributed for six months after becoming refundable, the liquidator must immediately deposit that money into a special account called the Company Liquidation Dividend and Undistributed Assets Account, maintained in a scheduled bank.
Sub-section (2) states that when the company is formally dissolved, the liquidator must pay into the same special account any money representing unpaid dividends or undistributed assets that remain in the liquidator's hands at the time of dissolution.
Sub-section (3) requires the liquidator, when making any payment under sub-sections (1) and (2), to provide the Registrar with a statement in the prescribed form. This statement must include details about all sums in the payment, such as the nature of the sums, the names and last known addresses of the people entitled to them, the amount each person is entitled to, the nature of each person's claim, and any other particulars that may be prescribed.
Sub-section (4) gives the liquidator the right to receive a receipt from the scheduled bank for any money paid into the account under sub-sections (1) and (2), and this receipt serves as a valid discharge of the liquidator's responsibility for that money.
Sub-section (5) applies when a company is being wound up voluntarily. In such cases, the liquidator must, when filing a statement under sub-section (1) of section 348, indicate the sum of money payable under sub-sections (1) and (2) of this section during the six months before the date the statement is prepared. The liquidator must then pay that sum into the Company Liquidation Dividend and Undistributed Assets Account within fourteen days of filing the statement.
Sub-section (6) allows any person who claims to be entitled to money paid into the account, whether under this section or under any previous company law, to apply to the Registrar for payment. If the Registrar is satisfied that the claimant is entitled, the Registrar may pay the sum due. However, the Registrar must settle the claim within sixty days of receiving it, and if the Registrar fails to do so, the Registrar must report to the Regional Director explaining the reasons for the failure.
Sub-section (7) states that any money paid into the account under this section that remains unclaimed for fifteen years must be transferred to the general revenue account of the Central Government. However, a claim to such transferred money can still be made under sub-section (6), and it will be handled as if the transfer had not occurred. Any order for payment on such a claim will be treated as an order for refund of revenue.
Sub-section (8) addresses a liquidator who retains money that should have been paid into the account under this section. Under clause (a), the liquidator must pay interest on the retained amount at twelve percent per annum, plus any penalty determined by the Registrar, though the Central Government may remit part or all of the interest in appropriate cases. Under clause (b), the liquidator is also liable for any expenses caused by the default. Under clause (c), if the winding up is by the Tribunal, the liquidator may also have all or part of their remuneration disallowed, as the Tribunal considers just and proper, and may be removed from office by the Tribunal.
Official Text
(1) Where any company is being wound up and the liquidator has in his hands or under his control any money representing—
(a) dividends payable to any creditor but which had remained unpaid for six months after the date on which they were declared; or
(b) assets refundable to any contributory which have remained undistributed for six months after the date on which they become refundable, the liquidator shall forthwith deposit the said money into a separate special account to be known as the Company Liquidation Dividend and Undistributed Assets Account maintained in a scheduled bank.
(2) The liquidator shall, on the dissolution of the company, pay into the Company Liquidation Dividend and Undistributed Assets Account any money representing unpaid dividends or undistributed assets in his hands at the date of dissolution.
(3) The liquidator shall, when making any payment referred to in sub-sections
(1) and (2), furnish to the Registrar, a statement in the prescribed form, setting forth, in respect of all sums included in such payment, the nature of the sums, the names and last known addresses of the persons entitled to participate therein, the amount to which each is entitled and the nature of his claim thereto, and such other particulars as may be prescribed.
(4) The liquidator shall be entitled to a receipt from the scheduled bank for any money paid to it under sub-sections
(1) and (2), and such receipt shall be an effectual discharge of the Company Liquidator in respect thereof.
(5) Where a company is being wound up voluntarily, the Company Liquidator shall, when filing a statement in pursuance of sub-section (1) of section 348, indicate the sum of money which is payable under sub-sections
(1) and
(2) of this section during the six months preceding the date on which the said statement is prepared, and shall, within fourteen days of the date of filing the said statement, pay that sum into the Company Liquidation Dividend and Undistributed Assets Account.
(6) Any person claiming to be entitled to any money paid into the Company Liquidation Dividend and Undistributed Assets Account, whether paid in pursuance of this section or under the provisions of any previous company law may apply to the Registrar for payment thereof, and the Registrar, if satisfied that the person claiming is entitled, may make the payment to that person of the sum due:
Provided that the Registrar shall settle the claim of such person within a period of sixty days from the date of receipt of such claim, failing which the Registrar shall make a report to the Regional Director giving reasons of such failure.
(7) Any money paid into the Company Liquidation Dividend and Undistributed Assets Account in pursuance of this section, which remains unclaimed thereafter for a period of fifteen years, shall be transferred to the general revenue account of the Central Government, but a claim to any money so transferred may be preferred under sub-section (6) and shall be dealt with as if such transfer had not been made and the order, if any, for payment on the claim will be treated as an order for refund of revenue.
(8) Any liquidator retaining any money which should have been paid by him into the Company Liquidation Dividend and Undistributed Assets Account under this section shall—
(a) pay interest on the amount so retained at the rate of twelve per cent. per annum and also pay such penalty as may be determined by the Registrar:
Provided that the Central Government may in any proper case remit either in part or in whole the amount of interest which the liquidator is required to pay under this clause;
(b) be liable to pay any expenses occasioned by reason of his default; and
(c) where the winding up is by the Tribunal, also be liable to have all or such part of his remuneration, as the Tribunal may consider just and proper, to be disallowed, and to be removed from his office by the Tribunal.