CS Shikha Mehra Chawla

CS Shikha Mehra

Procedure for Investor Education & Protection Fund (IEPF):

1. Pass a resolution authorizing the Company Secretary or any other person:

– To sign the delivery instruction slips for transferring the shares held in demat.

– To submit application to the Company on behalf of shareholders, for issue of duplicate share certificate.

– To sign form SH-2 for transferring the shares held in physical form to the Fund

2. Identify the shares/ list of shareholders in respect of whom shares have been unpaid from last (07) seven years.

How to identify shares/ shareholders whose shares are eligible to be transferred to IEPF?

The proviso to Rule 6(3)(a) of IEPF Rules, 2016 provides for transition period to companies with respect to the following cases:

Case 1: Shares in respect of which, dividend has already been transferred to the Fund.

Case 2: Shares in respect of which dividend has been transferred to unpaid dividend account and period of seven years has elapsed from the date of transfer, on or before September 07, 2016.

Case 3: Shares in respect of which dividend has been transferred to unpaid dividend account and period of seven years will elapse within 3 months of September 07, 2016.

The shares covered under case (1) to (3) shall be transferred to the fund within three months provided no dividend warrant on such shares has been en cashed during the last seven years. The IEPF Rules 2016 are silent as to the date from which the aforesaid three months shall be calculated.

3. Inform the shareholders whose shares are becoming due for transfer to the Fund. Since the mode of intimation has not mentioned in the Rules, the intimation shall be given in accordance with the provisions of Section 20. Simultaneously, publish a notice in the leading newspaper in the English and regional language having wide circulation. However, no format for giving the advertisement has mentioned in the Rules and time frame to give the newspaper advertisement is also not provided in the Rules.

4. Post the details of such shareholders & the shares due for transfer on the website of the Company.

5. Pass necessary Board/committee resolution to approve the transfer of physical shares to the Fund.

6. File IEPF -4 in respect of those shares which have been transferred to Fund.

MANNER OF DEPOSITING/CREDITING THE FUNDS LYING IN THE UNPAID DIVIDEND ACCOUNT TO THE FUND

The Manner of depositing/crediting an unclaimed amount is set forth below: –

i. Login on the MCA -21 portal, click on the “Miscellaneous fees” link and then select the head IEPF.

ii. Fill the requisite details and select the mode of payment i.e. offline or online.

iii. In case of offline payment, generate three copies of challan and submit the same along with necessary amount (either in cash or demand draft) to the specified Bank Branches of Punjab National Bank, which is accredited bank of the Pay and Accounts Office, Ministry of Corporate Affairs.

iv. Bank will return the two copies of duly stamped challan and will forward the third copy to its focal point branch

v. In case of online payment, the requirement in clause (iii) is not applicable

vi. Thereafter, the Company shall be required to file with the Authority a statements in Form IEPF-1 containing details of such transfer within thirty days of submission of challan*.

*In case of online payment submission of challan means deposit of the amount to the Fund.

YEARLY COMPLIANCES WITH RESPECT TO IEPF:

FORM PURPOSE
Form No. IEPF-6 The company shall furnish a statement to the Authority in Form No. IEPF 6 within thirty days of end of financial year stating therein the amounts due to be transferred to the Fund in next financial year.

Further, the Company shall also furnish a statement of deviation, if any of the amount in respect of which statement has been last financial year & actual amounts transferred to the Fund.

Form No. IEPF-2 Every company shall within a period of (90) ninety days after the holding of Annual General Meeting and every year thereafter till completion of the (7) seven years period, identify the unclaimed amounts, as on the date of holding of Annual General Meeting, separately furnish and upload on its own website and also on website of IEPFA (Authority) or any other website as may be specified by the Government, a statement or information through Form No. IEPF 2, separately for each year.

TIME FRAME WITHIN WHICH SHARES SHOULD BE TRANSFERRED TO THE IEPF

As per rule 6 of the IEPF Rules, the shares shall be credited to an IEPF suspense account (on the name of the company) with one of the depository participants as may be identified by the IEPF Authority within thirty days of such shares becoming due to be transferred to the IEPF.

PENALTY FOR DEFAULTS IN TRANSFERRING THE UNPAID/UNCLAIMED DIVIDEND AMOUNT TO THE UNPAID DIVIDEND ACCOUNT

Pursuant to section 124(3) of the Act earlier section 205A (4) of CA, 1956, company shall pay an interest at the rate of 12% per annum on the unpaid/unclaimed dividend amount from the date of such default. The interest accruing shall ensure to the benefit of the members in proportion to the amount remaining unpaid to them. Additionally the company may also be liable for penal provisions as mentioned under section 124 (7).

PENALTY FOR DEFAULTS IN TRANSFERRING THE SHARES TO THE IEPF FUND

As per section 124 (7) of the Act, 2013, in case a company makes a default in transferring shares to the IEPF Fund, such company shall be punishable with fine which shall not be less than five lakh rupees but may extend to twenty-five lakhs rupees. In addition to the same every officer in default shall be punishable with a fine which shall not be less than one lakh but may extend to five lakh rupees.

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