Application for removal of the name of the companies from the register of companies maintained by Company registrars has legal roots in Subsection (2) of Section 248 of the Companies Act, 2013 as discussed earlier here and now outdated. Rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 deals with its procedural aspects which we discussed earlier here. Recently, the Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2019 amended Rule 4 significantly. We will discuss updated Rule 4 in this post.
[Law discussed in this post is as on 10th May 2019]
Dividend usually is a payment made by a company to its shareholders out of distributable profit. In layman term, it is a share of profit for a shareholder. The Companies Amendment Act, 2017 read with notification dated 9th February 2018 amended law related to declaration of dividend. This post discusses law related to dividend after recent amendment in the Companies Act, 2013.
The Investor Education and Protection Fund (IEPF) educates investors and protect their interests. The Companies Act, 2013 brought provisions for transfer of shares of untraceable shareholders to the IEPF. The IEPF shall hold shares transferred to it as custodian and such transfer is not a statutory vesting of any property.
The Recent order of Delhi court discussed these rules in details. The High Court order that It is imperative that the Central Government gives publicity to the transfer of shares, by virtue of the provisions (not of individual companies) to inform the public, and ensures a simple, as well as compact form with the attendant procedure, is notified, for reclaiming them.
Now, this post discusses some practical issues may be faced by innocent investors residing far interior places while reclaiming their shares.
- The name of the company has been changed three years ago. The investor has old share certificates and no idea of the change of name. Now, he is writing letters to the address of the company but returned by courier guy, postman or by the reception of the company. (Address of the company may have been changed, since.)
- The Registered office of the company is shifted from one state to another state. Now, CIN and address all things have been changed. The investors have no idea about the where about of the company. It is not easy to identify the shareholders.
- In one case company changed name three years ago and now shifted its registered office from the state. The Master Data of MCA give no clue about the company.
- After completion of 7 years of transfer of shares in the year 2024, the company find no record of the shareholder with it. How to reclaim?
- The Shareholders, with share certificate, have different name and address in the record of the company.
- Recently, a person tried to impersonate as a shareholder. But company identified that claimant was the young person while original shareholder was its retired employee. The company does not want to involve in an additional court case.
- Share transferred to IEPF should not be treated as par war against benami property. Many investors invested their hard earned money on the advice of some friends in share market and failed to have a trace of their investment after value vanished, somehow.
These are few cases where either investor or company needs awareness, education or clarity. The Government need an early step to retain the faith of investors and companies in the IEPF. The government should focus on the user-friendly website of MCA and IEPF.
My friend Gaurav Pingle pointed out in his article, the High Court in above-mentioned order has clarified that the shareholder continues to retain ‘title’ of the shares but loses ‘agency’. However, the Court has also stated that the company is relieved from the responsibility of holding shares or reflecting it in its list of shareholders. This needs some fine tuning in law.
The Ministry of Corporate Affairs placed here on its website a draft of the Companies (Declaration and Payment of dividend) Second Amendment Rules, 2015. These amendment Rules will come into force from the date of its publication in Official Gazette.
These amendment rules proposed to omit Rule 3(5) of the Companies (Declaration and Payment of dividend) Rules, 2014.
The Deleted Rule 3(5) read as under,
“No company shall declare dividend unless carried over previous losses and depreciation not provided in previous year are set off against profit of the company of the current year the loss or depreciation, whichever is less, in previous years is set off against the profit of the company for the year for which dividend is declared or paid.”
Posted in Chapter VIII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged Companies Act 2013, Corporate Law, Dividend, India, Ministry of corporate affairs, the Companies (Declaration and Payment of Dividend) Rules 2014, the Companies (Declaration and Payment of dividend) Second Amendment Rules 2015, The Companies (Registration of Charges) Rules 2014