TRANSFER OF UNCLAIMED DIVIDEND AND UNCLAIMED SHARES- PROCEDURE

Unclaimed or Unpaid Dividend

The purpose of investing in shares is to get returns thereon. When a company earns profits, the same will be distributed to the shareholders by way of dividend. Section 123 of the Companies Act, 2013, deals with Declaration of Dividends. The Board of Directors of the company recommend dividend and the shareholders at the General Meeting approve the dividend. When the dividend is not claimed by the shareholders, it shall be transferred to Unpaid Dividend Account in accordance with Section 124 of the Companies Act, 2013.

Meaning of Unclaimed Dividend;

The dividend that has been declared by the company and has not been paid or claimed by the members is named as unclaimed or unpaid dividend.

Applicable Section of the Companies Act 2013 and the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016

As per Section 124(5) of the Companies Act, 2013; the unclaimed or unpaid dividend for a period more than 7years has to be transferred to Investor Education and Protection Fund established under the Section 125 of the Companies Act, 2013, by the Central Government. The procedure for transferring the amount unpaid or unclaimed to the IEPF is stated in the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.

Forms to be Filed

The following forms are prescribed by the Government relating to Unclaimed Dividend;

·         Form No. IEPF-1- Statement of amounts to be credited to IEPF

·         Form No. IEPF-2- Statement of unclaimed or unpaid amounts

·         Form No. IEPF-3- Statement of shares and unclaimed or unpaid dividend not transferred to the IEPF

·         Form No. IEPF-4- Statement of shares to be transferred to IEPF

·         Form No. IEPF-5- Application to the Authority(constituted under Section 125(5) of the Companies Act, 2013) for claiming unpaid amounts and shares from the IEPF

·         Form No. IEPF-6- Statement of unclaimed and unpaid amounts to be transferred to IEPF

Amounts to be credited to the IEPF

As per Section 125 of the Companies Act, 2013, the following shall be credited to Investor Education and Protection Fund;

a.        the amount given by the Central Government by way of grants after due appropriation made by Parliament by law in this behalf for being utilised for the purposes of the Fund;

b.       donations given to the Fund by the Central Government, State Governments, companies or any other institution for the purposes of the Fund;

c.        the amount in the Unpaid Dividend Account of companies transferred to the Fund under sub-section (5) of section 124;

d.       the amount in the general revenue account of the Central Government which had been transferred to that account under sub-section (5) of section 205A of the Companies Act, 1956, as it stood immediately before the commencement of the Companies (Amendment) Act, 1999, and remaining unpaid or unclaimed on the commencement of this Act;

e.       the amount lying in the Investor Education and Protection Fund under section 205C of the Companies Act, 1956;

f.         the interest or other income received out of investments made from the Fund;

g.        the amount received under sub-section (4) of section 38;

h.       the application money received by companies for allotment of any securities and due for refund;

i.         matured deposits with companies other than banking companies which has remained unclaimed and unpaid for a period of seven years from the date of it becoming due for payment;

j.         matured debentures with companies which has remained unclaimed and unpaid for a period of seven years from the date of it becoming due;

k.        interest accrued on the amounts referred to in clauses (h) to (j);

l.         sale proceeds of fractional shares arising out of issuance of bonus shares, merger and amalgamation for seven or more years;

m.      redemption amount of preference shares remaining unpaid or unclaimed for seven or more years; and

n.       such other amount as may be prescribed

Further, through notification to the IEPF Rules, 2016, the following additional amounts shall be credited in the Fund:

a.        All shares in respect of which dividend has not been paid or claimed for 7 consecutive years or more.

b.       All resultant benefits arising out of shares held by IEPF under section 124(6) like dividend, bonus shares, etc.

c.        All grants, fees and charges received by the Authority under these rules;

d.       All sums received by the IEPF Authority from such other sources as may be decided upon by the Central Government

e.       All income earned by the IEPF Authority in any year;

f.         All amounts payable as mentioned in Section 108(3) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and Section 10B of Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980; and

g.        All other sums of money collected by the IEPF Authority as envisaged in the Act

h.       Due, unpaid or unclaimed interest on matured deposits transferred to the Fund;

i.         Due, unpaid or unclaimed interest on matured debentures transferred to the Fund;

Procedure for transfer of Dividend

·         According to Section 123(4) of the Companies Act, 2013, the amount of dividend declared, out of profits or out of money provided by the Government, shall be deposited in a Schedule Bank Account within 5days of declaration.

·         If the declared dividend remains unpaid or unclaimed in the dividend account for more than 30days from the date of declaration, the said amount shall be transferred to Unpaid Dividend Account within 7days from the expiry of 30days as per Section 124 of the Companies Act, 2013.

·         As per Section 124(5), any money remaining unclaimed in the Unpaid Dividend Account for a period more than 7years from the date of transfer of dividend to the said account along with the interest accrued (if any), be transferred to the Investor Education and Protection Fund (IEPF) established by the Central Government within a period of 30days of such shares becoming due.

·         According to provision to rule 6(3)(a) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the company shall issue notice to the shareholders concerned regarding transfer of shares three months before the due date of the shares to be transferred to the fund and also publish the notice in one leading English newspaper and a regional language newspaper.

·         The company shall also publish on their website the details of such shareholders and shares due to be transferred.

Depositing/ Crediting to IEPF and Forms to be filed

·         The deposit can be made online or offline for transfer of such amount from the Unpaid Dividend Account to the IEPF.

·         In case of Offline payment, three copies of challan are to be generated and the same shall be submitted to the concerned authority (constituted under Section 125(5) of the Companies Act, 2013).

·         Thereafter, the company shall file Form No. IEPF-1 with the statements of amounts credited to IEPF as per provision of rule 5(4) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.

·         The company shall within a period of 90days after the AGM and every year thereafter till the completion of 7 years identify the unclaimed dividend amount and the statement of the unclaimed or unpaid dividend shall be filed in Form No. IEPF-2 as per provision of rule 5(8) of the IEPF Rules, 2016.

·         In case, specific order of the Court or Tribunal or Statutory Authority restrains the transfer of shares or dividend, the company shall not transfer the same to the Fund. The company shall furnish to the authority Form No. IEPF-3 within 30days from the end of financial year containing statement of shares and unclaimed or unpaid dividend not transferred to the IEPF.

·         Within 30days from the end of financial year, the company shall furnish a statement to the authority in Form No. IEPF-6 statement of unclaimed or unpaid dividend due to be transferred to the Fund in the next financial year.

Manner for Transfer of Shares to IEPF as per Rule 6 of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016

·         Where the shares are dealt with depository, the company shall inform the depository who shall effect the transfer of shares. Under the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the shares shall be credited to IEPF Suspense Account with one Depository Participant as may be identified by the Authority.

·         In case of shares held in physical form, after passing necessary Board/ Committee resolution for transfer, application shall be made by the Company Secretary or the person authorised by the Board on behalf of the concerned shareholders for issue of duplicate certificates.

·         The duplicate certificate issued on receipt of the application shall on the face of it contain that the duplicate certificate is “Issued in lieu of share certificate No. ___ for the purpose of transfer to IEPF”.

·         Particulars of such share certificate issued shall be entered in the register maintained in Form SH-2.

·         After the issue of duplicate certificates, the Company Secretary or the persona authorised by the Board, shall sign the Form No. SH-4 for transferring the shares in favour of the Fund.

·         The company or depository shall preserve copies of the depository instruction slips, transfer deeds and duplicate certificates for its record.

·         The company shall inform the depository to convert the duplicate share certificates issued into DEMAT form and transfer them to the authority concerned.

·         While effecting the transfer, the company shall file the Form No. IEPF-4 containing the statement of shares to be transferred to IEPF. The voting rights on shares transferred to the Fund shall remain frozen until the rightful owner claims the shares.

(The above provisions excepting the provision for transfer of shares to IEPF are applicable. The provision relating to transfer of shares is yet to be notified).

Claiming the Unpaid amounts and shares from IEPF as per Rule 7 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016

·         The claimant, whose shares unclaimed dividend or interests thereon has been transferred to IEPF, shall make an online application in Form No. IEPF-5. The claimant shall file only one consolidated claim in respect of a company in a financial year.

·         The claimant shall send the form duly signed by him, with the other documents necessary, to the concerned company at the registered office for verification of the claim.

·         Documents required are;

                                 i.            Copy of Acknowledgement

                                ii.            Indemnity Bond with claimant signature

                              iii.            Advance Stamped Receipt

                              iv.            Copy of Aadhar Card

                                v.            Proof of entitlement (certificate of shares, etc.)

                              vi.            In case of refund of matured deposit or debentures, original certificate thereto

                             vii.            Cancelled cheque leaf

                           viii.            Copy of Passport, OCI and PIO card in case of foreigners and NRI

                              ix.            Other optional document, (if any)

·         The company shall send a verification report to the Authority within 15days from the date of receipt of claim from the claimant.

·         Application received for refund of any claim duly verified by the company shall be disposed off by the Authority within 60days from the date of receipt of verification report from the company. Any further delay beyond 60days shall be recorded in writing specifying the reasons for delay and the same shall be communicated to the claimant.

·         After verification of the report, the authority shall take following actions;

                                 i.            To the amount claimed, the authority and then Drawing and Disbursement officer of the Authority shall present a bill to the Pay and Accounts Office for e-payment.

                                ii.            In case of shares claimed, the authority shall issue a refund sanction order with the approval of competent Authority and shall credit the shares lying with the Depository Participant in IEPF suspense account to the DEMAT account of the claimant and in case of physical shares, cancel the duplicate certificate and transfer the shares to the claimant.

In case of Delisting or Winding up of the Company

·         If the company is getting delisted, Authority shall surrender such shares with SEBI and the proceeds realized shall be credited to the Fund.

·         In case of company whose shares are held by the authority is being wound up, the Authority may surrender the shares and credit the realised amount to the Fund. Any further dividend declared shall be credited to the Fund and a separate ledger account shall be maintained for such proceeds.

Format of Notice to be issued to the Shareholders and in the newspaper

COMPANY NAME AND REGISTERED OFFICE ADDRESS

CIN: ____

NOTICE TO THE SHAREHOLDERS

TRANSFER OF UNPAID/ UNCLAIMED DIVIDEND FOR THE FINANCIAL YEAR 2009-10 TO THE INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Notice is hereby given to the shareholders of the company pursuant to Rule 6 of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, as under;

In pursuance of the provisions of Section 125(1) of the Companies Act, 2013, the Central Government has established “Investor Education and Protection Fund”. In terms of Section 124(5), every company has to credit the amount of dividend which remains unpaid or unclaimed for a period of seven years from the date of its transfers to Unclaimed Dividend Account, to the IEPF. Accordingly, Dividend for the year 2009-10, which remains unclaimed for a period of 7 years, will be credited to IEPF in the month of September, 2017.

Recently the Government of India vide. Notification dated September 05, 2016 came out with Rules constituting the Investor Education and Protection Fund Authority to administer the said IEPF. In terms of the said Rules made thereunder, all shares in respect of which the dividends are not claimed/ paid for the last 7 years in respect of any shareholder have to be transferred to IEPF Suspense Account with one Depository Participant to be identified by the Investor Education and Protection Fund Authority.

To claim the dividend amount before its credit to IEPF, shareholders may forward to us a written application to claim the unclaimed dividend at the registered office of the company____, Chennai, on or before 30^th September, 2017. In case of no valid claim has been made, the shares in respect of which the dividends are lying unclaimed/ unpaid will be transferred to IEPF Suspense Account on completion of three months from the date of this notice, individually served on the members along with the details of unclaimed dividend.

The company has sent individual notices through registered post to the latest available addresses of the shareholders whose dividends are lying unclaimed since September, 2010 for the last 7 consecutive years, advising them to claim the dividends expeditiously.

Further, in terms of Rule 6(3) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the statement containing the details of name, address, folio number, demat account number and number of shares due to transfer is made available in our website www.websiteofthecompany.com for information and necessary action by the shareholders.

In case the concerned shareholders wish to claim the shares after transfer to IEPF, a separate application has to be made to the IEPF Authority in Form IEPF-5, as may be prescribed under the Rules and the same is made available at IEPF website i.e., www.iepf.gov.in.

For ___Company

Company Secretary/ Director

Place: Chennai

Date: 01-09-2017