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Section 100 and section 391 - reduction of share capital

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(Querist)
01 April 2011 Dear All,

a company reduces its share capital by paying off Rs. 1/- per share to shareholders and there by Reducing the face value to Rs. 9/- per share from Rs. 10/- per share. (with high court approval)

The DD for the above are dispatched to all the shareholders.

However some of the shareholders do not claim the above amount and the same is remaining unpaid with the company under 'unclaimed scheme of arrangment'.

Now the question is if the amount remained in the unclaimed account should be transferred to IEPF account or which traetment sould be given after 7 years?
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Rasesh

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Rasesh (Expert)
01 April 2011 Sec 205C(2) does not refer to the above referred amount. The clause is very specify in mentioning the amounts that have to be transferred to the IEPF.
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Pankaj

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Pankaj (Querist)
05 April 2011 Sir, then the amount will have to be kept in the unclaimed account as it is?

The banker is enjoying the funds in that account' neither the company nor the government can use this amount. As company have sent many reminders to the shareholders yet the amount have remained unclaimed for so many years....

if the amount will be kept in the account forever till no one claims it??
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Rasesh

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Rasesh (Expert)
05 April 2011 You may write it back in your books after management approval.
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Pankaj

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Pankaj (Querist)
05 April 2011 Thanks sir,

Thanks lot for this. But under which section it is allowed for the company to do that?

or what procedure is expected? only resolution will be sufficient?

Please guide on above sir,

Thanking You,
Pankaj
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Rasesh

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Rasesh (Expert)
05 April 2011 No Specific Section. No Board Resolution required unless you feel that the Bank will demand the same for release of funds. Only management approval should suffice. Write off and write back of balances is a normal part of accounting.
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Pankaj

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Pankaj (Querist)
05 April 2011 Sir,

The amount is already there under Current Liabilities as 'unclaimed scheme of arrangement account'.

Can company use the funds in the above mentioned account for its business purpose instead of keeping the same in bank accounts?
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Rasesh

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Rasesh (Expert)
05 April 2011 In my view, Yes.
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