Remittance of unpaid dividend etc.,
Section 125 (2) of the Companies Act, 2013 (‘Act’ for short) provides the list of amounts that should be credited to the Investor Education and Protection Fund (‘Fund’ for short). The Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘Rule’ for short), which came into effect from 07.09.2016, was framed by the Central Government indicating the procedure for transfer of unpaid dividend and shares to the Fund. The following is the procedure in remittance of such amount-
- Any amount required to be credited by the companies under Section 125 (2) of the Act shall be remitted into the specified branches of Punjab National Bank and other authorized banks.
- The said remittance shall be done within thirty days of such amount becoming due to be credited to the Fund.
- The amount shall be tendered by the companies along with the challan, in triplicate to the bank.
- The bank will return two copies of the challan, duly stamped in token of having received the amount to the company.
- The third copy of the challan will be forwarded along with the daily credit scroll by receiving branch to its Focal Point Branch of the Bank for onward transmission to the Pay and Accounts Office, Ministry of Corporate Affairs.
- Every company shall file with the concerned Authority one copy of the challan indicating the deposit of the amount to the Fund and shall fill in the full particulars of the amount tendered including the head of account to which it has been credited.
- The amount may also be tendered by Electronic Fund Transfer in such manner as may be specified by the Central Government.
- Each designated bank shall furnish an abstract of such receipts during the month to the Authority within seven days after the close of every month.
Furnishing statement
- The company shall furnish a statement in Form No. IEPF – 1 containing details of such transfer to the Authority along with the Challan.
- Form No. IEPF – 1 shall be filed within thirty days of submission of challan.
- On receipt of the statement, the Authority shall enter the details of such receipt in a Register maintained physically or electronically by it in respect of each company every year and reconcile the amount so remitted and collected, with the concerned designated bank on monthly basis
Maintenance of records
The company shall maintain record consisting of name, last known address, amount, folio number or client ID, certificate number, beneficiary details etc., of the persons in respect of whom unpaid or unclaimed amount has been remained unpaid or unclaimed for a period of seven years and has been transferred to the Fund. The Authority shall have the powers to inspect such records.
Information through IEPF – 2
Every company shall within a period of 90 days after the holding of Annual General Meeting or the date on which it should have been held and every year thereafter till completion of the seven years period, identify the unclaimed amounts as on the date of holding of the Annual General Meeting or the date on which it should have been held, separately furnish and upload on its own website and also on website of the Authority or any other website as may be specified by the government, a statement or information through IEPF – 2, separately for each year. The statement shall contain the following information-
- the names and last known addresses of the persons entitled to receive the sum;
- the nature of amount;
- the amount to which each person is entitled;
- the due date for transfer into the Fund; and
- such other information as may be considered relevant for the purposes.
Transfer of shares
Section 124 (6) of the Act provides that all shares in respect of which dividend has not been paid or claimed for seven consecutive years or more shall be transferred by the company in the name of the Fund along with a statement such details as may be prescribed. In case any dividend is paid or claimed for any year during the said period of seven consecutive years, the share shall not be transferred to the Fund. In case, where there is a specific order of Court or Tribunal or Statutory Authority restraining any transfer of such shares and payment of dividend or where such shares are pledged or hypothecated under the provisions of Depositories Act or shares already been transferred the company shall not transfer such shares to the Fund. The company shall furnish details of such shares and unpaid dividend to the Authority in Form No. IEPF – 3 within 30 days from the end of the financial year.
The procedure involved in transferring the shares to the fund is as follows-
- The shares shall be credit to DEMAT account of the Authority within a period of 30 days of such shares becoming due to be transferred to the Fund.
- The transfer of shares by the company to the Fund shall be deemed to be transmission of shares and the procedure to be followed for transmission of shares shall be followed by the companies while transferring the shares to the fund.
- The Board shall authorize the Company Secretary or any other person to sign the necessary documents.
- The company shall inform, at the latest available address, the shareholder concerned regarding transfer of shares three months before the date of transfer of shares.
- The company shall simultaneously publish a notice in the leading newspaper in English and regional language having wide circulation informing the concerned that the names of such shareholders and their folio number or DPID – client ID are available on their website duly mentioning the website address.
- If the shares are dealt with in a depository-
- the company shall inform the depository by way of corporate action, where the shareholders have their accounts for transfer in favor of the Authority;
- on receipt of such information, the depository shall effect the transfer of shares in favor of DEMAT account of the Authority.
- If the shares to be transferred are held in physical form-
- the Company Secretary or the person authorized by the Board shall make an application, on behalf of the concerned shareholder, to the company, for issue of a new share certificate;
- on receipt of the said application, a new share certificate for each such shareholder shall be issued;
- it shall be stated on the face of the certificate that ‘Issued in lieu of share certificate No.______ for the purpose of transfer to IEPF’ and the same be recorded in register maintained for the purpose;
- particulars of every share certificate shall be in Form SH – 1;
- after issue a new share certificate, the company shall inform the depository by way of corporate action to convert the share certificates into DEMAT form and transfer in favor of the Authority.
- The company shall make such transfers through corporate action and shall preserve copies for its records.
- While effecting such transfer, the company shall send a statement to the Authority in Form No. IEPF – 4 containing such transfer.
- The shares transferred to the Authority shall not be excluded while calculating the total voting right.
- The company shall maintain the details of shareholding of each individual shareholders whose shares have been credited to the DEMAT account of the Authority.
- All benefits accruing on such shares i.e., bonus shares, split, consolidation, fraction shares etc., except right issue shall also be credited to such DEMAT account.
No transfer of shares
The shares held in such DEMAT account shall not be transferred or dealt with in any manner whatsoever except for the purposes of transferring the shares back to the claimant as and when he approaches the Authority.
Surrender of shares
If the company is getting delisted, the Authority shall surrender the shares on behalf of the shareholders in accordance with SEBI (Delisting of Equity Shares) Regulations, 2009. The proceedings realized shall be credited to the fund. A separate ledger account shall be maintained for such proceeds.
Winding up of the company
In case the company whose shares or securities are held by the Authority is being wound up the Authority may surrender the securities to receive the amount entitled on behalf of the security holder and credit the amount to the Fund. A separate ledger account shall be maintained for such purposes.
Dividend payment
Any further dividend received on such shares shall be credited to the Fund. A separate ledger account shall be maintained for such proceeds.
