Companies Act & MCA

Debentures, Dividend and Unpaid Dividend: Board Finance Checklist

Finin2min Compliance Desk·June 2026·7 min read71/123

Debenture funding and dividend distribution both sit at the intersection of finance and company law. The board should review security, conversion, trustee/covenant issues, dividend source and unpaid dividend tracking before approvals.

Debenture control

Section 71 says a company may issue debentures with an option to convert such debentures into shares, either wholly or partly at redemption, subject to approval requirements where applicable. It also prohibits debentures carrying voting rights.

For the connected rule or filing step, see Dividend Yield, Payout and Income Calculator.

Dividend control

Section 123 says no dividend shall be declared or paid except out of permitted profits/reserves routes after providing for depreciation, subject to the section. Section 124 deals with unpaid dividend account, and Section 125 deals with Investor Education and Protection Fund.

Finance checklist

Area	Control
Convertible debentures	Check special resolution and conversion terms.
Secured debentures	Check charge creation and trustee/security records.
Dividend declaration	Check profits, depreciation, deposit default and board/shareholder route.
Unpaid dividend	Transfer unpaid/unclaimed amount to unpaid dividend account where triggered.
IEPF	Track long-unclaimed amounts and shares for eventual IEPF workflow.

Finin2min warning

Dividend and debenture decisions create statutory trails. Maintain board papers, registers, bank evidence and shareholder communication together.

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Build your Companies Act evidence fileKeep approvals, registers, certificates, SRNs, challans and cap table support in one transaction-wise folder.

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Official sources used

This article is intentionally source-limited to official India Code / MCA material. Verify final filing positions with the latest Act, Rules, MCA forms and portal advisories before publishing.

FAQs

Which section covers debentures? ▾

Section 71 covers debentures.

Which section covers declaration of dividend? ▾

Section 123 covers declaration of dividend.

What happens to unpaid dividend? ▾

Section 124 deals with unpaid dividend account and Section 125 deals with the Investor Education and Protection Fund.

Source and review trail

Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.

Primary category: Companies Act & MCA
Official starting point: www.mca.gov.in