Detailed compliance checklist for a Company w.r.t. Investor Education and Protection Fund (IEPF)
BACKGROUND
Investor Education and Protection Fund (IEPF) is a Fund established by the Central Government to pool all the unpaid / unclaimed amounts belonging to the Investors and remaining unpaid / unclaimed for 7 (seven) years. The Fund has been created for promotion of investors’ education, awareness and protection of the interests of investors.
PROVISIONS OF THE COMPANIES ACT, 2013 (THE ACT) AND THE INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY (ACCOUNTING, AUDIT, TRANSFER AND REFUND) RULES, 2016 (“IEPF RULES”) W.R.T. TRANSFER OF AMOUNTS TO IEPF
As per Section 124(5) of the Act, 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 (seven) years from the date of such transfer shall be transferred by the company along with interest accrued, if any, thereon to IEPF.
As per Section 124(6) of the Act read of Rule 3(2)(b) of IEPF Rules, all shares in respect of which dividend has not been paid or claimed for 7 (seven) consecutive years or more shall be transferred by the company in the name of IEPF along with a statement containing such details as may be prescribed.
Section 125(2) of the Act and Rule 3(2) of the Rules specifies the amounts that shall be credited to the IEPF some of which includes the amount in the Unpaid Dividend Account of companies transferred to the Fund under sub-section (5) of section 124; the application money received by companies for allotment of any securities and due for refund; matured deposits with companies other than banking companies and interest accrued thereon; matured debentures with companies and interest accrued thereon; sale proceeds of fractional shares arising out of issuance of bonus shares, merger and amalgamation for 7 (seven) or more years; redemption amount of preference shares remaining unpaid or unclaimed for seven or more years; amongst others.
COMPLIANCES TO BE UNDERTAKEN BY A COMPANY UNDER IEPF
| Form No. | Description | Timeline | Reference of IEPF Rules |
| IEPF-1 | Statement of amounts credited to Investor Education and Protection Fund (IEPF).
This e-form is required to be filed for transfer of any unpaid / unclaimed amounts lying with the Company for 7 (seven) consecutive years to IEPF. The following is the step by step process: 1) File e-form IEPF-1 with MCA 2) Generate NEFT challan (using pay miscellaneous fee at MCA website) by using the SRN of the challan generated by filing e-form IEPF-1 3) Request letter to be sent to the Bank (having dividend account) along with the NEFT challan for transfer of the unpaid / unclaimed amounts to the Designated Bank 4) Bank to transfer the amounts to the Designated Bank 5) Obtain UTR from the Bank 6) Link the NEFT payment at MCA website to generate MCA payment receipt 7) Upload Investor-wise excel (containing name, address, father’s name, folio no., unpaid / unclaimed amounts etc.) of the Investor) on IEPF website within 7 days from the date of filing e-form IEPF-1. |
Within 30 days from the due date of transfer (i.e. after expiry of 7 years from the date the amount became due for payment). | Rule 5(1) of IEPF Rules.
[Last amended vide MCA notification dated 14.08.2019 effective from 20.08.2019]. |
| IEPF-2 | Statement of unclaimed and unpaid amounts as on the date of closure of financial year the account of which are to be adopted in the AGM
The following is the process: 1. Obtain details of all unpaid / unclaimed amounts (as specified under Section 125(2) of the Companies Act, 2013 lying with the Company as on 31st March) 2. File e-form IEPF-2 with MCA 3. Upload Investor-wise excel (containing name, address, father’s name, folio no., unpaid / unclaimed amounts etc.) on IEPF website within 7 days from the date of filing e-form IEPF-2 4. Upload Investor-wise excel on Company’s website |
Within 60 days of AGM or the date on which it should have been held as per the provisions of section 96 of the Act, whichever is earlier. | Rule 5(8) of IEPF Rules.
[Last amended vide MCA notification dated 14.08.2019 effective from 20.08.2019]. |
| Company to nominate a Nodal Officer (Director / CFO/ CS of the Company to be designated as such) for verification of claims and coordination with IEPF.
Company may appoint one or more Deputy Nodal Officer to assist the Nodal Officer. Details of Nodal Officer and Deputy Nodal Officer to be communicated to IEPF and details of Nodal Officer and his email id to be displayed on Company’s website. Any change in the nodal officer or his details shall be communicated to the Authority through Form IEPF 2 along with board resolution thereof. Post approval of e-form IEPF-2, Nodal Officer / Deputy Nodal Officer are required to register themselves as Nodal Officer / Deputy Nodal Officer – IEPF on MCA Website using their PAN. |
Within 15 days from 20.08.2019.
Within 7 days of any change along with Board Resolution thereof Post approval of e-form IEPF-2 |
Rule 7(2A) and 7(2B) of IEPF Rules.
[Vide MCA notification dated 14.08.2019 effective from 20.08.2019]. |
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| IEPF-3 | Statement of shares and unclaimed or unpaid dividend not transferred to IEPF due to the following reasons:
• Where there is a specific order of court or tribunal or statutory authority restraining any transfer of shares and payment of dividend; or • Where such shares are pledged or hypothecated; or • Shares have already been transferred. |
Within 30 days from the end of Financial Year. | Rule 6(3)(b) of IEPF Rules.
[Last amended vide MCA notification dated 28.02.2017 effective from 28.02.2017].
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| Newspaper Publication
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The Company to inform at the latest available address of the shareholders regarding due date of transfer of shares and also simultaneously publish a notice in the leading newspaper in English and regional language having wide circulation.
Details of such shareholders to be made available on the Company’s website. |
3 (three) months before the due date of share transfer. | Rule 6(3) of the IEPF Rules.
[Last amended vide MCA notification dated 28.02.2017 effective from 28.02.2017].
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| IEPF-4 | Statement of shares transferred to the IEPF.
The following is the step by step process for transfer of shares to IEPF: 1) Identify the Investors whose dividend are lying unpaid / unclaimed for 7 (seven) consecutive years 2) Identity corresponding shares and obtain data from RTA 3) Execute corporate action with the depositories 4) Obtain corporate action confirmation from depositories 5) File e-form IEPF-4 [attach a public notice published under clause (a) of rule 6(3) in Form IEPF-4] 6) Upload Investor-wise details within 7 days of filing e-form IEPF-4 Process for physical share transfer: 1) The Company Secretary / Authorised person to make application on behalf of the concerned shareholder to the Company for issue of new share certificate 2) On receipt of application, a new share certificate in form no SH-1 for each shareholder shall be issued and it shall be stated on face of it “issued in lieu of share certificate no…for the purpose of transfer to IEPF” and the same shall be recorded in the register 3) After issue, the Company to inform the depository by way of corporate action to convert such certificates into DEMAT form in favour of Authority. |
Within 30 days of corporate action. | Rule 6(5) of IEPF Rules.
[Last amended vide MCA notification dated 13.10.2017 effective from 13.10.2017].
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| IEPF-5 | Application by Investor to the Authority for claiming unpaid amounts and shares out of Investor Education and Protection Fund (IEPF)
Nodal Officer to verify the Claim of the Investor and send online verification report to the Authority along other documents as specified in IEPF Rules. |
Within 30 days from the date of receipt of claim. | Rule 7 of IEPF Rules. |
| IEPF-7 | Statement of following amounts credited to IEPF on account of shares transferred to the fund:
• If the Company is getting delisted, the authority shall surrender shares on behalf of shareholders in accordance with the SEBI (Delisting of Equity shares) Regulations, 2009 and the proceeds realised shall be credited to the Fund and a separate ledger account shall be maintained for such proceeds. • 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 and a separate ledger account shall be maintained for such proceeds. • Any further dividend received on such shares transferred to IEPF shall be credited to the Fund and a separate ledger account shall be maintained for such proceeds. |
Within 30 days from the date of remittance. | Rule 6(13) of IEPF Rules.
[Last amended vide MCA notification dated 22.05.2018 effective from 22.05.2018]. |
| IEPF-1A | For all unpaid amounts referred to under Section 205C of the Companies Act, 1956 which were transferred to IEPF but investor wise excel not uploaded as required under Rule 5(1) of the Rules. | 20.08.2019
(within 60 days from 20.08.2019). |
This was a one-time filing requirement.
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Note: The requirement of filing e-form IEPF-6 (Statement of unclaimed or unpaid amounts to be transferred to the Investor Education and Protection Fund next financial year) has been done away with.
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Disclaimer: I, Ekta Agarwal hereby declare that the article, “Detailed compliance checklist for a Company w.r.t. Investor Education and Protection Fund (IEPF)” has been written by me on the basis of legal facts and contents have not been copied from anywhere except legal provisions under various enactments. I further declare that this is my ‘original work’. Any resemblance to any other work/article/book/blog is purely coincidental. Although, I have made every effort to ensure that the information in this article was correct at the time of publication, I do not assume and hereby disclaim any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, or any other cause.
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