General Circular No. 22/2002
F.No.17/63/99-C.L.V
Government of India
Ministry of Finance and Company Affairs
Department of Company Affairs
**********
5th floor, A’ Wing, Shastri Bhavan,
Dr. R.P. Road, New Delhi.
Dated 23rd of September, 2002
To
All Chambers of Commerce,
FICCI, ICAI, ICSI, ICWAI, ASSOCHAM
RBI
It has been brought to the notice of the Central Government that provisions of Section 205C, inserted into the Companies Act on 31.10.1998, is being interpreted by various companies, and other concerned persons, in a number of ways, and this is leading to some confusion.
1. Therefore, in supercession of all earlier letters or clarifications, given either generally or specifically to any company, the correct legal position is clarified as under:-
Unpaid Dividend
3.1 Prior to the amendment of Section 205A and the enactment of Section 205C by the Companies (Amendment) Act, 1999 with effect from 31st October, 1998, companies were required to transfer to the general revenue account of the Central Government any moneys transferred to the ‘unpaid dividend account’ which remained unpaid or unclaimed for a period of three years from the date of such transfer.
3.2 Therefore, all amounts transferred to the ‘unpaid dividend account’ of a company on or before 30th October, 1995 and which had remained unpaid or unclaimed on 30th October, 1998 should have been transferred to the general revenue account of the Central Government.
3.3 With the amendment of Section 205A and the enactment of Section 205C by the Companies (Amendment) Act, 1999, it is now provided with effect from 31st October, 1998 that any moneys transferred to the ‘unpaid dividend account’ of the company and remaining unpaid or unclaimed for a period of seven years from the date of such transfer shall be transferred to the Investor Education and Protection Fund.
3.4 Therefore, all amounts transferred to the ‘unpaid dividend account’ of a company on or after 30th October, 1995 or which have remained unpaid or unclaimed for a period of seven years from the date of such transfer should be transferred to the Investor Education and Protection Fund together with interest accrued thereon, unless they have already been transferred to the general revenue account of the Central Government prior to the enactment of the Companies (Amendment) Act, 1999.
Other Unclaimed Amounts
4.1 Section 205C enacted by the Companies (Amendment) Act, 1999 with effect from 31st October, 1998 also requires the following amounts to be credited to the Investor Education and Protection Fund (the Fund) :
(a) The application moneys received by companies for allotment of any securities and due for refund;
(b) Matured deposits with companies;
(c) Matured debentures with companies;
(d) The interest accrued on the amounts referred to in clauses (a) to (c).
4.2 The above amounts have to be transferred to the Fund when they have remained unclaimed or unpaid for a period of seven years from the date they became due for payment.
4.3 Accordingly, all amounts which had remained unclaimed or unpaid as on 30th October, 1991 (irrespective of the number of years they had remained unclaimed or unpaid as on that date) and which remained unclaimed or unpaid as on 31st October, 1998 should be transferred to the Fund unless such amounts have been paid to the parties before the enactment of the Companies (Amendment) Act, 1999.
4.4 In respect of such amounts, which have become due for payment after 30th October, 1991, the amounts should be transferred to the Fund if they remain unclaimed and unpaid for a period of seven years from the dates they first became due for payment.
Operationalisation of the Fund
5.1 Since the Fund became operational only on 1st October, 2001 all amounts due for transfer between 1st November, 1998 and 30th September, 2001 should have been transferred within the grace period of 30 days, i.e., by 31st October, 2001.
5.2 All concerned are advised, that all transfers required to be made in terms of the above clarification, if not already made, should be made immediately.
(E. Selvaraj)
Joint Director (T)
