Transfer of Amount of Unpaid Dividend

Ministry of Corporate Affairs recently issued Indian companies, the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. These rules published in Official Gazette on 5^th September 2016 and came into force on 7^th September 2016.  In this post, we will discuss transfer of amount of unpaid dividend to the Investor Education and Protection Fund Authority.

Transfer of Amounts

According to sub – section (5) of section 124 of the Companies Act, 2013, if any money transferred to the Unpaid Dividend Account of a company remains unpaid or unclaimed for a period of seven years from the date of such transfer shall be transferred by the company along with interest accrued, if any, thereon to the Investor Education and Protection Fund. The company shall send a statement in the prescribed form of the details of such transfer to the Investor Education and Protection Fund Authority. The Investor Education and Protection Fund Authority shall issue a receipt to the company as evidence of such transfer.

According to sub – section (2) of Section 125 amount to be transfer not only includes the amount in unpaid or unclaimed dividend but also includes –

• the application money received by companies for allotment of any securities and due for refund;
• matured deposits with companies other than banking companies;
• matured debentures with companies;
• interest accrued on the amounts referred above;
• sale proceeds of fractional shares arising out of issuance of bonus shares, merger and amalgamation for seven or more years;
• redemption amount of preference shares remaining unpaid or unclaimed for seven or more years; and
• such other amount as may be prescribed.

According to sub – rule (1) of rule 5 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, any amount required to be credited by the companies to the Fund shall be remitted into the specified branches of Punjab National Bank, which is the accredited Bank of the Pay and Accounts Office, Ministry of Corporate Affairs and other authorised banks engaged by the MCA-21 system. The companies shall remit such amount within a period of thirty days of such amounts becoming due to be credited to the Fund.

According to sub – rule (5) of rule 5 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the amount may also be remitted by Electronic Fund Transfer in such manner, as may be specified by the Central Government.

According to sub – rule (2) of rule 5 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the amount shall be tendered by the companies along with challan (in triplicate) to the specified Bank Branches of Punjab National Bank and other authorised banks under MCA-21 system who will return two copies of the challan, duly stamped in token of having received the amount, to the  Company. The third copy of the challan will be forwarded along with the daily credit scroll by the receiving branch to its Focal Point Branch of the Bank for onward transmission to the Pay and Accounts Office, Ministry of Corporate Affairs.

According to sub – rule (3) of rule 5 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, every company shall file with the concerned Authority one copy of the challan referred to in sub – rule (2) indicating the deposit of the amount to the Fund and shall fill in the full particulars of the amount tendered, including the head of account to which it has been credited.

According to sub – rule (4) of rule 5 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the company shall, along with the copy of the challan as required under sub-rule (3), furnish a Statement in Form IEPF – 1 containing details of such transfer to the Authority within thirty days of submission of challan.

According to clause (a) of sub – rule (6) of rule 5 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, on receipt of the statement, the Authority shall enter the details of such receipt in a Register maintained physically or electronically by it in respect of each company every year. The authority shall reconcile the amount so remitted and collected, with the concerned designated bank on monthly basis.

According to clause (b) of sub – rule (6) of rule 5 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, each designated bank shall furnish an abstract of such receipts during the month to the Authority within seven days after the close of every month.

According to clause (c) of sub – rule (6) of rule 5 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the company shall maintain record consisting of name, last known address, amount, folio number or client ID, certificate number, beneficiary details etc. of the persons in respect of whom unpaid or unclaimed amount has remained unpaid or unclaimed for a period of seven years and has been transferred to the Fund and the Authority shall have the powers to inspect such records.

Form – IEPF – 1

According to sub – rule (4) of rule 5 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the company furnish a Statement in Form IEPF – 1 containing details of such transfer to the Authority within thirty days of submission of challan.

The Form shall contain following information, namely:-

• Enter the SRN generated at the time of making payment to the fund (using Pay Miscellaneous Service).
• Break up of amount
• Financial year to which amount relates

 The excel sheet to be furnished with this form require following information –

• Name
• Father name
• Complete Address
• Folio number
• DP id client id
• Investment type
• Amount transferred
• Proposed Date of transfer to IEPF

Re – conciliation Statement

According to sub – rule (1) of rule 8, the company shall furnish a statement to the Authority in Form 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. According to rule 8(2), the company shall also furnish a statement to the authority within thirty days of the closure of its accounts for the financial year stating therein the reasons of deviation, if any, of amounts detailed in sub-rule (1) above and actual amounts transferred to the Fund.

A reading of form IEPF – 6 suggest that this form is sufficient to comply with sub – rule (1) and (2) both.