The Ministry of Corporate Affairs has amended the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. The amendments aim to clarify the process for transferring securities to legal heirs and increase the minimum claim amount for filing a claim with the IEPF Authority. The rules now accept legal heir certificates issued by revenue authorities and require additional documentation, such as indemnity bonds and no objection certificates from other legal heirs. The amendments also introduce a new requirement for companies to obtain insurance coverage for risks associated with verification reports. These changes are intended to streamline the process for investors to claim lost or unclaimed securities and protect the interests of both investors and companies.
MINISTRY OF CORPORATE AFFAIRS
NOTIFICATION
New Delhi, the 9th September, 2024.
G.S.R. 552(E).— In exercise of the powers conferred by sub-sections (1), (2), (3), (4), (8), (9), (10) and (11) of section 125 and sub-section (6) of section 124 read with section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, namely:-
1. (1) These rules may be called the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2024.
(2) These rules shall come into force on the date of their publication in Official Gazette.
2. In the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (hereinafter referred to as the said rules), in Schedule II,–
(1) for the word “shares”, wherever it occurs, the word “securities”, shall be substituted;
(2) In Part A,–
(i) in item 2,–
(a) in sub-item 2.2, in clause (a), after the word “Tribunal”, the words “or legal heir certificate issued by the revenue authority not below the rank of Tahsildar having jurisdiction” shall be inserted;
(b) in sub-item 2.3, after the word “Tribunal”, the words “or legal heir certificate issued by the revenue authority not below the rank of Tahsildar having jurisdiction” shall be inserted;
(c) in the “Explanation”, for clause (2), the following clauses shall be substituted, namely:–
“(2) In cases where a copy of Will is submitted as may be applicable in terms of the Indian
Succession Act, 1925 (39 of 1925), the same shall be accompanied with a notarised indemnity bond from the claimant to whom the securities are transmitted.
(3) In cases where a copy of legal heir certificate issued by the revenue authority not below the rank of Tahsildar having jurisdiction is submitted, the same shall be accompanied with–
(a) a notarised indemnity bond from the legal heir or claimant to whom the securities are transmitted; and
(b) a no objection certificate from all legal heirs other than claimants, stating that they have relinquished their rights to the claim for transmission of securities, duly attested by a notary public or by a gazetted officer.
(4) The value of the securities as on the date of application shall be quantified by the applicant on the basis of the closing price of such securities at any one of the recognised stock exchange a day prior to the date of such submission in the application, for listed securities and for unlisted securities, the value shall be quantified basis on the face value or the maturity value of the security, whichever is more.”;
(ii) in item 4,–
(a) in sub-item 4.2, after the word “Tribunal”, the words “or legal heir certificate issued by the revenue authority not below the rank of Tahsildar having jurisdiction” shall be inserted;
(b) in sub-item 4.3, after the word “Tribunal”, the words “or legal heir certificate issued by the revenue authority not below the rank of Tahsildar having jurisdiction” shall be inserted;
(c) in the “Explanation”, for clause (2), the following clauses shall be substituted, namely:–
“(2) In cases where a copy of Will is submitted as may be applicable in terms of the Indian Succession Act,1925 (39 of 1925), the same shall be accompanied with a notarised indemnity bond from the claimant to whom the securities are transmitted.
(3) In cases where a copy of legal heir certificate issued by the revenue authority not below the rank of Tahsildar having jurisdiction is submitted, the same shall be accompanied with:
(a) a notarised indemnity bond from the legal heir or claimant to whom the securities are transmitted;
(b) a no objection certificate from all non-claimants, stating that they have relinquished their rights to the claim for transmission of securities, duly attested by a notary public or by a gazetted officer.
(4) The value of the securities as on the date of application shall be quantified by the applicant on the basis of the closing price of such securities at any one of the recognised stock exchange a day prior to the date of such submission in the application, for listed securities and for unlisted securities, the value shall be quantified basis on the face value or the maturity value of the security, whichever is more.”;
(3) In Part B,–
(i) for the letters, figures, brackets and words, “Rs.5,00,000 (rupees five lakhs only),” wherever they occur, the letters, figures, brackets and words, “Rs.15,00,000 (rupees fifteen lakhs only), shall be substituted;
(ii) in item 2,–
(a) in sub-item 2.2, in clause (a), after the word “ Tribunal”, the words “or legal heir certificate issued by the revenue authority not below the rank of Tahsildar having jurisdiction” shall be inserted;
(b) in sub-item 2.3, after the word “ Tribunal”, the words “ or legal heir certificate issued by the revenue authority not below the rank of Tahsildar having jurisdiction” shall be inserted;
(c) in the “Explanation”, for clause (2), the following clauses shall be substituted, namely:– “(2) In cases where a copy of Will is submitted as may be applicable in terms of the Indian Succession Act, 1925 (39 of 1925), the same shall be accompanied with a notarised indemnity bond from the claimant to whom the securities are transmitted.
(3) In cases where a copy of legal heir certificate issued by the revenue authority not below the rank of Tahsildar having jurisdiction is submitted, the same shall be accompanied with:
(a) a notarised indemnity bond from the legal heir or claimant to whom the securities are transmitted;
(b) a no objection certificate from all non-claimants, stating that they have relinquished their rights to the claim for transmission of securities, duly attested by a notary public or by a gazetted officer.
(4) The value of the securities as on the date of application shall be quantified by the applicant on the basis of the closing price of such securities at any one of the recognised stock exchange a day prior to the date of such submission in the application, for listed securities and for unlisted securities, the value shall be quantified basis on the face value or the maturity value of the security, whichever is more.”;
(iii) in item 4,–
(a) in sub-item 4.2, in clause (a), after the word “Tribunal”, the words “or legal heir certificate issued by the revenue authority not below the rank of Tahsildar having jurisdiction” shall be inserted;
(b) in sub-item 4.3, after the word “Tribunal”, the words “ or legal heir certificate issued by the revenue authority not below the rank of Tahsildar having jurisdiction” shall be inserted;
(c) in the “Explanation”, for clause (2), the following clauses shall be substituted, namely:–
“(2) In cases where a copy of Will is submitted as may be applicable in terms of the Indian Succession Act, 1925 (39 of 1925), the same shall be accompanied with a notarised indemnity bond from the claimant to whom the securities are transmitted.
(3) In cases where a copy of legal heir certificate issued by the revenue authority not below the rank of Tahsildar having jurisdiction is submitted, the same shall be accompanied with:
(a) a notarised indemnity bond from the legal heir or claimant to whom the securities are transmitted;
(b) a no objection certificate from all non-claimants, stating that they have relinquished their rights to the claim for transmission of securities, duly attested by a notary public or by a gazetted officer.
(4) The value of the securities as on the date of application shall be quantified by the applicant on the basis of the closing price of such securities at any one of the recognised stock exchange a day prior to the date of such submission in the application, for listed securities and for unlisted securities, the value shall be quantified basis on the face value or the maturity value of the security, whichever is more.”.
3. In Schedule III of the said rules,–
(i) for the word, “shares” wherever it occurs, the word “securities”, shall be substituted;
(ii) in item 1, after the word “certificate”, the words “if the market value of the shares is greater than five lakh rupees” shall be inserted;
(iii) item 2 shall be omitted;
(iv) in item 4, for the words, “issued in at least one English language national daily newspaper having nationwide circulation and in one regional language daily newspaper published in the place of registered office of company”, the words “regarding loss of securities in a widely circulated newspaper” shall be substituted;
(v) after item 4, the following explanations shall be inserted, namely: –
“Explanation I: A foreign national or non-resident Indian, in lieu of documents mentioned in item 1, shall be permitted to provide self-declaration of securities lost or misplaced or stolen which shall be duly notarised or apostilled or consularised in their country of residence, along with self-attested copies of valid passport and overseas address proof.
Explanation II: The value of the securities as on the date of application shall be quantified by the applicant based on the closing price of such securities at any one of the recognised stock exchange a day prior to the date of such submission in the application, for listed securities and for unlisted securities, the value shall be quantified basis on the face value of the maturity value of the securities, whichever is more.” .
4. In Schedule IV to the said rules, in paragraph 1, after the words “report to the Authority.”, the following shall be inserted, namely:–
“The company shall take special contingency insurance policy from the insurance company towards the risk arising out of such claim in respect of verification report under sub-rule (3) of rule 7 or the revised verification report under the second proviso of sub-rule (7) of the said rule, as the case may be”.
[F. No. 05/01/2021-IEPF]
ANITA SHAH AKELLA, Jt. Secy.
Note.– The principal rules were published in the Gazette of India vide number G.S.R. 854 (E), dated the 5th September, 2016 and amended vide notification number G.S.R. 178(E) dated the 28th February, 2017, G.S.R. 1267 (E) dated the 13th October, 2017, G.S.R. 472 (E) dated 22.05.2018, 343(E) dated 1st May, 2019, G.S.R. 571(E) dated the 14th August, 2019 , G.S.R. 396(E) dated the 09th June, 2021, G.S.R. 785(E) dated the 09th November, 2021, G.S.R 791(E) dated the 12th November, 2021 and G.S.R. 888(E) dated the 28th December, 2021 and G.S.R. 414(E), dated the 16th July, 2024.
