Category Archives: Chapter VIII – CA2013

DECLARATION AND PAYMENT OF DIVIDEND

Transfer of Shares related to Unpaid Dividend


Ministry of Corporate Affairs recently amended Indian companies, the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. The Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2017 published in Official Gazette on 13th October 2017 and came into force on the same date. We discussed original rules here and earlier amended rules here.  In this post, we will discuss amended law related transfer of shares related to unpaid dividend to the Investor Education and Protection Fund Authority.

Due date for transfer

According to the combined reading of sub-section (6) and sub–section (5) of Section 124 of the Companies Act, 2013, transfer of shares to IEPF shall become due on completion of seven years from the date of transfer of dividend of first year (among these seven years) to Unpaid Dividend Account.

It is ==> Date of Declaration + 30 days + 7 days + 7 years (assuming all things done on last date of compliance.

However according to second proviso to sub – section (1) of amended rule 6 of these rules, in cases where the period of seven years provided under sub-section (5) of section 124 has been completed or being completed during the period from 7th September, 2016 to 31st May, 2017 31st October, 2017, the due date of transfer of such shares shall be deemed to be 31st May, 2017 31st October, 2017.

Deemed to be transmission

These Rules as well as the Companies Act, 2013 talks about the transfer of shares to Investor Education and Protection Fund. This transfer (as nomenclature) and its process faced many amendments and added confusion. Now, newly inserted third proviso declares this transfer as deemed to be transmission:

Provided further that transfer of shares by the companies to the Fund shall be deemed to be a transmission of shares and the procedure to be followed for transmission of shares shall be followed by the companies while transferring the shares to the fund.

Transfer of shares held in physical form

This was the second most contentious issue relating to the transfer of share to IEPF after the nomenclature itself. Again, clause (d) of sub – rule (3) of rules 6 substituted by these amended rules.

According to sub – clause (i) of clause (d) of sub – rule (3) of rules 6, the Company Secretary or the person authorised by the Board shall make an application, on behalf of the concerned shareholders, to the company, for the issue of duplicate share certificates. (No Change from earlier).

According to sub – clause (ii) of clause (d) of sub – rule (3) of rules 6, on receipt of the application under clause (a) [please, read this typographic error, which continue from original rules and survive from all these amendment, as sub – clause (i) of clause (d) of sub – rule (3) of rules 6], a duplicate certificate for each such shareholder shall be issued and it shall be stated on the face of it that this duplicate certificate is “Issued in lieu of share certificate No….. for purpose of transfer to IEPF” and the word “duplicate” shall be stamped or punched in bold letters on the first page of the share certificate. Such issue of the duplicate certificate shall be recorded in the register maintained for the purpose.

Now, stamping or punching requirement is not there. Now it may be typewritten also. This ease of doing business is a saving of cost of a stamp for companies and manual stamping.

The interesting thing here, original certificates shall be with the original shareholder. In case of sale which is otherwise legal, buyer has to “claim back” shares from IEPF as well through original shareholder.

According to sub – clause (iii) of clause (d) of sub – rule (3) of rules 6, particulars of every share certificate shall be in Form No. SH-1 as specified in the Companies (Share Capital and Debentures) Rules, 2014.

This is an interesting amendment as earlier rules inadvertently mentioned Form SH – 2 which is format for the Register of Renewed and Duplicate Share Certificates under Rule 6(3)(a) of the Companies (Share Capital and Debentures) Rules, 2014.

According to sub – clause (iv) of clause (d) of sub – rule (3) of rules 6 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, after issue of duplicate share certificates, the company shall inform the depository by way of corporate action to convert the duplicate share certificates into DEMAT form and transfer in favour of the Authority. (No Change).

Account of IEPF

According to newly inserted sub – rule (13) of Rule 6, any amount required to be credited by the companies to the Fund as provided under sub-rules (10), (11) and sub-rule (12) shall be remitted to the specified account of the IEPF Authority maintained in the Punjab National Bank.

Report of IEPF Authority

According to newly inserted sub – rule (14) of Rule 6, the IEPF Authority shall furnish its report to the Central Government as and when noncompliance of the rules by companies came to its knowledge.

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Refund to claimant from IEPF


Ministry of Corporate Affairs amended the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. The Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017 rules published in Official Gazette on 28th February 2017 and came into force on even date.  In earlier post here and here(original)/here(amended), we discussed transfer of amounts of unpaid and unclaimed dividends etc to the Investor Education and Protection Fund Authority Fund and transfer of shares in respect of which dividend is remain unpaid and unclaimed for continuous seven years. In this post, we will discuss amended provisions related to refund of such amount and shares related to unpaid dividend transferred to the Investor Education and Protection Fund Authority.

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Transfer of Shares related to Unpaid Dividend


Ministry of Corporate Affairs recently amended Indian companies, the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017 published in Official Gazette on 28th February 2017 and came into force on same date. We discussed original rules earlier here.  In this post, we will discuss amended law related transfer of shares related to unpaid dividend to the Investor Education and Protection Fund Authority.

Continue reading

Refund to claimant from IEPF


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 5th September 2016 and came into force on 7th September 2016.  In earlier post here and here, we discussed transfer of amounts of unpaid and unclaimed dividends etc to the Investor Education and Protection Fund Authority Fund and transfer of shares in respect of which dividend is remain unpaid and unclaimed for continuous seven years. In this post, we will refund of such amount and shares related to unpaid dividend transferred to the Investor Education and Protection Fund Authority.

UPDATE – provisions in this post are redundant from 28th February 2017 due to amendment in relevant Rules. Please click here to know new provisions.

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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 5th September 2016 and came into force on 7th September 2016.  In this post, we will discuss transfer of amount of unpaid dividend to the Investor Education and Protection Fund Authority.

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Reporting of Unpaid Dividend


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

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INVESTOR EDUCATION AND PROTECTION FUND AUTHORITY


Investor Education and Protection Fund Authority established under Section 125(5) of the Companies Act, 2013 is an authority to administer for administration of Investor Education and Protection Fund established under Section 125(1) of the Act. Operating provisions of Section 125 are not force, but recently a Notification S.O. 125(E) dated 13th January 2016 notified part of this Section to be effective with effect from 13th January 2016. Consequently, Ministry of Corporate Affairs also put a draft notification for the Investor Education and Protection Fund Authority (Appointment of Chairperson and Members, holding of meetings and provision for offices and officers) Rules, 2016. In this post, we discuss the Notification and these Rules.

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