Avail 20% discount on updated CA lectures for Dec 21 .Use Code RESULT20 !! Call : 088803-20003

ICICI

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More


UNPAID DIVIDEND ACCOUNT

  1. Pursuant to the provisions of section 124 of the Companies Act, 2013, where a dividend has been declared by a company but has not been paid or claimed within 30 days from the date of the declaration by any shareholder, then the company shall, within 7 days from the date of expiry of the said period of 30 days, transfer the total amount of dividend which remains unpaid or unclaimed to a special account called as “Unpaid Dividend Account” opened by the company in this behalf with a scheduled bank.
  2. The company shall, within 90 days of making any transfer of an amount to Unpaid Dividend Account, prepare a statement containing the names, their last known addresses and the unpaid dividend to be paid to each person and place it on the website of the company, if any, and also on any other website approved by the Central Government for this purpose, in such form, manner and other particulars as may be prescribed.
  3. If any default is made in transferring the total unpaid amount to the Unpaid Dividend Account of the company within 7 days from the date of expiry of the said period of 30 days, then the company shall pay interest at the rate 12% per annum from the date of such default.
  4. Any money transferred to the Unpaid Dividend Account of a company in pursuance of this section which remains unpaid or unclaimed for a period of 7 years from the date of such transfer shall be transferred by the company along with interest accrued, if any, thereon to the Investor Education Protection Fund (IEPF).
  5. All shares in respect of which dividend has not been paid or claimed for 7 consecutive years or more shall also be transferred by the company in the name of Investor Education and Protection Fund (IEPF) within 30 days of such shares becoming due to be transferred to IEPF along with a statement containing details in following manner:

PROCEDURE FOR TRANSFER OF SHARES TO IEPF

The board shall authorize the Company Secretary or any other person to sign the necessary documents for the purpose of effecting such transfer of shares to IEPF.

The company shall inform, the concerned shareholder, regarding transfer of shares 3 months before the due date of transfer of shares and also 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 DP ID - Client ID are available on their website duly mentioning the website address.

Unpaid Dividend Account And IEPF Provisions - Section 124 Of The Companies Act, 2013

Transfer of shares held with 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 intimation, the depository shall transfer the shares to demat account of the Authority.

Transfer of shares held in physical form

  1. The board shall authorize Company Secretary or any other person to make an application, on behalf of the concerned shareholder, to the company, for issue of a new share certificate.
  2. on receipt of the application the company will issue a new share certificate for each such shareholder and it shall state 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 the register maintained for the purpose.
  3. after issue of 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 IEPF Authority.
  4. The company shall make such transfers through corporate action and shall preserve copies for its records.
  5. Within 30 days of the corporate action taken for transfer of shares, the company shall file a statement containing share transfer details with IEPF Authority in Form No. IEPF-4 and shall also attach a copy of public notice published in these regards.
  6. All benefits accruing on such shares like bonus shares, split, consolidation, fraction shares and the like except right issue shall also be credited to such demat account of the Authority.

FURTHER ANY CLAIMANT WHOSE SHARES ARE TRANSFERRED TO IEPF CAN CLAIM THE TRANSFER OF SHARES FROM IEPF IN FOLLOWING MANNER

  • Any person whose shares, unclaimed dividend, matured deposits, matured debentures, application money due for refund, or interest thereon, sale proceeds of fractional shares, redemption proceeds of preference shares etc., has been transferred to the Fund, may claim the same by submitting an online application to Authority in Form IEPF-5 available on the website www.iepf.gov.in along with fee as specified.
  • Once IEPF-5 is successful uploaded acknowledgement will be generated indicating the SRN.
  • Upon submission, Form No. IEPF-5 shall be transmitted to the Nodal Officer of the company for verification of claim.
  • The claimant after making an application in Form No. IEPF-5, shall send original physical share certificate, original bond, deposit certificate, debenture certificate, as the case may be, along with Indemnity Bond, Advance Receipts, any other document as enumerated in Form No. IEPF-5, duly signed by him, to the Nodal Officer of the concerned company at its registered office for verification of the claim.
  • The company shall, within 30 days from the date of receipt of claim, send an online verification report to the Authority after verification of details in Form No. IEPF-5 in the format specified by the Authority along with all the documents submitted by the claimant and shall attach the scanned copy of all the original documents submitted by the claimant in physical form duly certified by its Nodal Officer along with the e-verification report and a scanned copy of both sides of original physical share certificate or original bond or deposit or debenture certificate/s duly cancelled and certified.

After verification of the entitlement of the claimant

(a) to the amount claimed: The Authority and then Drawing and Disbursement Officer of the Authority shall present a bill to the Pay and Accounts Office for e- payment as per the guidelines.
(b) to the shares claimed: The Authority shall issue a refund sanction order with the approval of the Competent Authority and shall credit the shares to the demat account of the claimant to the extent of the claimant’s entitlement.

  • An application received for refund of any claim under this rule duly verified by the concerned company shall be disposed off by the Authority within 60 days from the date of receipt of the verification report from the company, complete in all respects and any delay beyond 60 days shall be recorded in writing specifying the reasons for the delay and the same shall be communicated to the claimant in writing or by electronic means.
  • Where the Authority, on examining any application for claim, finds it necessary to call for further information or finds such application or e-form or document to be defective or incomplete in any respect, the Authority shall give intimation of such information called for or defects or incompleteness, by e-mail on the email address of the claimant and the company, which has filed such application or e-form or document, directing him or it to furnish such information or to rectify such defects or incompleteness or to re-submit such application or e-Form or document within 15 days from the date of receipt of such communication, failing which the Authority may reject the claim or Form No. IEPF-5

OTHER PROVISIONS

i. The Company shall not transfer the shares to IEPF in following cases

  • If the respective shareholder has encashed any dividend amount during the said period of 7 consecutive years, then such shares shall not be required to be transferred to the IEPF even though some dividend warrants may not have been encashed.
  • If 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 the Depositories Act, 1996 or shares already been transferred, the company shall not transfer such shares to the IEPF and shall furnish details of such shares and unpaid dividend to the Authority in Form No. IEPF 3 within 30 days from the end of financial year.

ii. Voting Rights

  • The voting rights on shares transferred to the Fund shall remain frozen until the rightful owner claims the shares.
  • for the purpose of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the shares which have been transferred to the Authority shall not be excluded while calculating the total voting rights.

iii. Appointment of Nodal Officer

  • Every company which is required to credit amounts or shares to the fund or has deposited the amount or transferred the shares to the Fund shall nominate a Nodal Officer, who shall either be a Director or Chief financial Officer (CFO) or Company Secretary (CS) of the company, for the purposes of verification of claims and coordination with IEPF Authority.
  • The company may appoint one or more Officer as Deputy Nodal Officer to assist the Nodal Officer for the purposes of verification of claim and for coordination with IEPF Authority.
  • Nodal Officer shall be solely liable for all actions of any officer appointed as Deputy Nodal Officer.
  • If the company fails to appoint Nodal Officer, every director of the company shall be deemed to be nodal officer and be liable for any failure to comply with requirement of these rules.
  • The details of the Nodal Officer and Deputy Nodal Officer duly indicating his or her designation, postal address, contact no. and company authorized e-mail ID shall be communicated to IEPF Authority in Form No. IEPF-2 and the company shall display the name of Nodal Officer and his e-mail ID on its website.
  • Any change in the Nodal Officer or his details shall be communicated to the Authority through Form No. IEPF-2 within 7 days of such change along with board resolution thereof.

iv. If any shares are due for transfer to IEPF, then such shares shall be transferred within a period of 30 days of such shares becoming due to be transferred to the Fund.

v. Any fraudulent claim by the claimant shall be deemed to be fraud within the meaning of section 447 of the Act and the claimant shall be liable accordingly.

 

PENALTY FOR CONTRAVENTION OF SECTION 124

Company

Rs. 1,00,000/- and in case of continuing failure with a further penalty of Rs. 500 for each day after the first during which such failure continues, subject to a maximum of Rs. 10,00,000/-

Every officer of the Company who is in default

Rs. 25,000/- and in case of continuing failure, with a further penalty of Rs. 100/- for each day after the first during which such failure continues, subject to a maximum of Rs. 2,00,000/-

CHECKLIST FOR IEPF COMPLIANCES

Form Name and Rules

Purpose of Filing

Compliances

Form IEPF-1

Rule 5 (1) of IEPF

Statement of amounts credited to IEPF

Any amount required to be credited by the companies to the Fund, shall be remitted online along with a Statement in Form No. IEPF-1 containing details of such transfer to the Authority within a period of 30 days of such amounts becoming due to be credited to the Fund.

Form IEPF-1A

Rule 5 (4A) of IEPF

Statement of amounts credited to IEPF

The companies which have transferred any amount as required to IEPF but have not filed the statement or have filed the statement in any format other than in excel template, shall submit details in Form No. IEPF-1A along with excel template within 60 days of notification.

Form IEPF-2

Rule 5 (8) of IEPF and

Rule 7 (2B)

Statement of unclaimed and unpaid amounts and details of Nodal Officer

Every company shall within a period of 60 days after the holding of AGM or the date on which it should have been held, whichever is earlier and every year thereafter till completion of the 7 years period shall identify the unclaimed amounts as on the date of closure of FY and upload on its own website and also on website of Authority or any other website as may be specified by the Government, a statement or information of unclaimed and unpaid amounts separately for each of the previous 7 financial years through Form No. IEPF-2

Rule 7(2B)- The details of the Nodal Officer and Deputy Nodal Officer shall be filed with Authority in Form No. IEPF-2 within 15 days of publication of rules and any change shall also be filed within 7 days of such change.

Form IEPF-3

Section 124(6) of the Companies Act, 2013 and Rule 6 (3) of IEPF

Statement of shares and unclaimed or unpaid dividend not transferred to the IEPF

If the Company is required to transfer any shares or dividend amount to IEPF, but due some specific order of Court or Tribunal or statutory Authority restraining such transfer of such shares and payment of dividend, company does not transfer the same to IEPF then such details shall be filed by the Company in Form No. IEPF-3 within 30 days of end of the FY

Form IEPF-4

Rule 6 (5) and 6(8) of IEPF

Statement of shares transferred to the IEPF

Rule 6(5) -While effecting transfer of shares the Company shall file a statement to Authority in Form No. IEPF-4 within 30 days of the corporate action taken.

Rule 6 (8)- Details of all corporate actions taken for crediting all benefits accruing on such shares like bonus shares, split etc shall also filed with Authority in Form No. IEPF-4 within 30 days of the corporate action taken.

Form IEPF-5

Section 125 (3) of the Companies Act, 2013 and Rule 7(1) of IEPF

Application to the Authority for claiming unpaid amounts and shares out of IEPF

Claimant can make application in Form No. IEPF-5 to the Authority for claiming unpaid amounts and shares from IEPF

Form IEPF-6

Rule 8 of IEPF

Statement stating the amount due to be transferred to Fund in next financial year

Requirement to file Form IEPF-6 has been dispensed with effect from 20.08.2019

Form IEPF-7

Rule 6(13) of IEPF

Statement of amounts credited to IEPF on account of shares transferred to the fund

The company shall furnish a Statement in Form No. IEPF-7 containing details of such transfer to the Authority within 30 days of transferring the amount or date of enforcement of these rules, whichever is later.

 

The author can also be reached at csneharedekar@gmail.com

Disclaimer: Please note that the above article is based on the interpretation of related laws, which may differ from person to person and is not legal advice.

"Loved reading this piece by Neha Rajan Redekar?
Join CAclubindia's network for Daily Articles, News Updates, Forum Threads, Judgments, Courses for CA/CS/CMA, Professional Courses and MUCH MORE!"




Tags :



Category Corporate Law, Other Articles by - Neha Rajan Redekar 



Comments


update