The Companies Act, 2013 mandates transfer of unclaimed dividends to the Investor Education and Protection Fund (IEPF) after seven consecutive years under Sections 124 and 125 read with the IEPF Rules, 2016. Companies must first identify unpaid dividends in the Unpaid Dividend Account and prepare a detailed shareholder-wise statement. Shareholders must be notified at least three months prior to transfer. Following Board approval, companies must prepare Form IEPF-1 data and transfer the unclaimed amount, along with corresponding shares, to the IEPF Authority within prescribed timelines. The e-Form IEPF-1 must be filed within 30 days of transfer, supported by relevant documents such as challans and resolutions. Companies are required to update statutory registers, disclose details on their website for seven years, and maintain proper records. Importantly, shareholders retain the right to reclaim transferred amounts and shares by filing Form IEPF-5, ensuring that no claim is permanently extinguished.
Governing provisions of Companies Act, 2013 for Transfer of Unclaimed Dividend to IEPF under Companies Act, 2013
| Section 124 & 125 of the Companies Act, 2013
Rule 5, 6, and 7 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 |
Procedure:
| Sr. No | Steps |
| 1. | Identify Unclaimed Dividend:
Check the Unpaid Dividend Account to identify dividend amounts that have remained unpaid or unclaimed for 7 consecutive years from the date they became due. Example: Dividend declared on 15.09.2016 becomes due on or before 15.10.2016. If unclaimed till 15.10.2023, it must be transferred to IEPF. |
| 2. | Verify Records & Prepare List:
Prepare a year-wise statement of shareholders with unclaimed dividend, including name, last known address, folio/DP ID-Client ID, and amount. |
| 3. | Inform Shareholders:
Send individual reminders by post/e-mail at least 3 months before due date of transfer, informing about impending transfer to IEPF. |
| 4. | Board Approval:
Place the statement of unclaimed dividend before the Board/Committee for noting and authorizing the transfer to IEPF. Pass a Board Resolution. |
| 5. | Preparing the Data:
Prepare details in Form IEPF-1 (Excel template from MCA website) containing dividend and shareholder particulars. |
| 6. | Transfer Dividend Amount:
Transfer the total unclaimed dividend amount along with the respective shares to IEPF Authority’s specified bank account via online banking/NEFT before due date. Example: For dividend due on 15.10.2023, transfer must be made on or before 14.11.2023. |
| 7. | Filing of e-Form IEPF-1:
Within 30 days of transferring the amount, file e-Form IEPF-1 on MCA Portal, attaching:- Copy of challan/UTR of amount transferred – Certified statement of unclaimed dividend- Board Resolution. |
| 8. | Update Company Records:
Mark the concerned entries in the Register of Members and Dividend Register, noting “Transferred to IEPF”. |
| 9. | Disclosure on Website:
Upload details of shareholders and amounts transferred to IEPF on the company’s website, ensuring it is searchable for at least 7 years. |
| 10. | Maintain Records:
Keep safe custody of all supporting documents for future reference, as they may be needed in case shareholders claim refunds from IEPF. |
Steps not applicable to Private Companies:
| Public notice requirements and website disclosures may not apply to certain private companies unless they are deemed public or have public shareholders. |
Important points:
| No claim is lost permanently—shareholders can reclaim from IEPF anytime by filing Form IEPF-5
Both dividend and shares are transferred and following forms are filed:
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**This document is for educational purposes only and does not constitute legal advice.
Author : M/s Ronak Jhuthawat & Co, Practicing Company secretary Call: +91 98874 22212 | Email: compliancerjac@gmail.com
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