Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘Principle Rules’) were implemented by MCA on September 05, 2016 wherein it laid down the detailed procedure for transfer of unclaimed dividend and underlying shares to the IEPF. The detailed procedure contained in the Principle Rules had practical difficulties with their implementation. Accordingly, based on the representations made by the stakeholders, MCA vide its notification dated February 28, 2017, came out with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017.
The above-said rules have been further amended as Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2019 dated August 14, 2019 by the IEPF Authority (‘the Authority’) to facilitate the compliances required to be done by the Company and to remove any further difficulties with respect to claim of unclaimed dividend and underlying shares transferred to the IEPF.
A. IMMEDIATE AND OTHER ACTIONS (effective August 20, 2019)
1. Filing of E-form IEPF-2 indicating details of Nodal Officer viz. his/her designation, postal address, telephone, mobile number, and Company authorized E-mail ID within 15 days of publication of these rules i.e. till September 04, 2019.
In case of any further change in the Nodal Officer, his details shall be communicated to the Authority in the same form within 7 days of such change along with the Board Resolution.
2. The Companies which have already transferred the fund (dividend etc.) to IEPF, but have not filed the statement or have filed the statement in any format other than the provided format, it shall submit the details of such transfer in E-form IEPF-1A along with excel template within 60 days of publication of these rules i.e. till October 18, 2019.
3. E-form IEPF-2, identifying the unclaimed amounts as on closure of financial year for a period of previous seven years, shall be filed within 60 days of Annual General Meeting (AGM) or the last date on which AGM should have been held as per the provisions of Section 96 of the Companies Act, 2013 (whichever is earlier).
(Earlier Provision: E-form IEPF-2 was required to be filed within 90 days of the AGM or the last date when AGM should have been held, specifying the unclaimed amounts, due for the previous seven years, as on the date of AGM.)
4. The amount required to be credited to IEPF shall be remitted through online mode only, along with the statement in E-Form IEPF-1 containing details of the transfer to the Authority within 30 days of such amount becomes due for transfer.
(Earlier Provision: E-Form IEPF-1 along with the details of transfer was required to be filed within 30 days of the transfer of such amount.)
5. The copy of the ‘public notice’ published as per clause (a) of Sub-Rule (3) of Rule (6) of the Principle Rules, for informing that the names of such shareholders whose shares or dividend, is liable to be transferred to IEPF along with their folio number or DP ID – Client ID are available on the Company’s website, is mandatorily required to be attached with E-Form IEPF-4.
6. The appointment of Nodal Officer and publication of his details on the website of the Company is compulsorily required, who shall be a Director or CEO or CS of the Company, for the purpose of verification and coordination with the Authority.
In addition to the Nodal Officer, a company may appoint one or more Deputy Nodal Officer(s) to assist the Nodal Officer. However, Nodal Officer shall be liable for the actions of Deputy Nodal Officer.
In case the Company fails to appoint the Nodal Officer, every director of the Company shall be deemed to be the Nodal Officer and be liable for all failures.
B. OTHER IMPORTANT CHANGES
1. Form IEPF-6 has been withdrawn.
2. The requirement of filing one consolidated claim by the claimant in respect of a Company in a financial year is dispensed with.
3. The Authority has prescribed the documents required to be submitted for transmission and for issuance of duplicate share certificates in Schedule II and Schedule III respectively of the Amendment Rules.
4. Now, the Investors are not required to ensure the transmission process before filing any claim as the requirement to ensure the transmission has been replaced with just the responsibility of submission of the relevant documents for the same with E-form IEPF-5.
Therefore, the Authority shall now dispose off the request of transfer or transmission, based on the E-verification Report submitted by the Company subject to verification of such request.
(Earlier Provision: In case, claimant is a legal heir or successor or administrator or nominee of the registered share holder, he has to ensure that the transmission process is completed by the company before filing any claim with the Authority.)
C. CHANGE IN REFUND PROCESS (IEPF-5) (effective September 20, 2019)
The revised process for claiming shares and dividend already transferred to IEPF would be as mentioned below:
- CLAIMANT
1. Filing of E-form IEPF-5 by the Applicant.
Further, in addition to the online submission of the form, the claimant is also required to send the original documents as specified in E-Form IEPF-5, duly signed or certified by him, to the Nodal Officer of the Company at the Registered Office of the Company.
- COMPANY/NODAL OFFICER
2. Upon online submission of E-form IEPF-5 by the claimant, it shall be directly transmitted to the Nodal Officer of the Company for verification of the claim.
3. The company shall be liable to verify the details as provided by the claimant and submit an online verification report (‘the report’) within 30 days of the receipt of the claim with the Authority along with the scanned copy of original documents.
In case, the report is submitted after 30 days, the Company shall pay an additional fee of Rs. 50 per day subject to a maximum of Rs. 2500. (The form may be rejected in case the report is not filed within 60 days of receipt of claim).
The Company shall be liable to maintain the original documents as received from the claimant.
4. In case of failure to furnish the report as per the requirements, the company and its Nodal Officer shall be punishable as per the provision of The Companies Act, 2013.
- THE AUTHORITY
5. Where on examination, any further information/document(s) is required by the Authority or it is found that the E-form filed is defective or incomplete in any manner, the Authority may call for such further information/document or call to rectify such defect/incompleteness (duly signed) by the claimant, through an Email to the claimant as well as the Company and such re-submission shall be done within 15 days of the receipt of the communication by the claimant, failing which the Authority may reject the claim or the E-form IEPF-5.
The above-said information/document shall be submitted by the Claimant to the Nodal officer of the concerned company at its registered office for verification of the submitted documents and if required, the Company shall file a revised verification report.
6. Further, in case, such information/document or incompleteness or defect is required to be filed by the Company, the Company shall submit a revised verification report along with other details as may be required, within 30 days thereof.
7. On being satisfied, the dividend and the underlying shares credited to IEPF, shall be released and transferred to the claimant.
D. CONCLUSION
The revised set of Rules aims to minimize the ambiguities and the delay in the process of refund of the unclaimed dividend and underlying shares transferred to the IEPF and ease the compliances to be done the Companies. Thus, a positive step towards more governed and time bound process has been taken for the benefit of Investors.
-CS Ayushi Jain, Partner
-Srishti Gambhir, Intern
Recent Comments