IEPF : Transfer of Unpaid / Unclaimed Dividend and Respective Shares to IEPF Authority
Provisions :Companies Act, 2013 (the Act)
Section 124(1)
Where a dividend has been declared by a company but has not been paid or claimed within thirty days from the date of the declaration to any shareholder entitled to the payment of the dividend, the company shall, within seven days from the date of expiry of the said period of thirty days, transfer the total amount of dividend which remains unpaid or unclaimed to a special account to be opened by the company in that behalf in any scheduled bank to be called the unpaid dividend account.
Section 124(6)
All shares in respect of which dividend has not been paid or claimed for seven consecutive years or more shall be transferred by the company in the name of Investor Education and protection Fund along with a statement containing such details as may be prescribed.
Section 125
The central government shall establish a Fund to be called the Investor Education and Protection Fund (the IEPF or the Fund),
There shall be credited to the Fund, the amount in the unpaid dividend account opened by the companies under sub-section (1) of section 124
Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (the Rules)
Rule 3
There shall be credited to the Fund;-

1. All shares in accordance with sub-section (6) of section 124 of the Act,
2. All the resultant benefits arising out of shares held by the Authority pursuant to this rule.

 
Rule 6
The Shares shall be credited to the Demat Account of the IEPF Authority (the Authority) to be opened by the Authority for the said purpose, within a period of thirty days of such shares becoming due to be transferred to the Fund:
Provided that, in case the beneficial owner has encashed any dividend warrant during the last seven years, such shares shall not be required to be transferred to the Fund even though some dividend warrants may not have been encashed.
Time Frame:
Timelines to be followed by the Company

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, the due date of transfer of such shares shall be deemed to be 31st May, 2017.
In any other case, the due date of transfer to the Fund shall be thirty days from the date of the shares becoming due to be transferred.
Procedure:
1 . The company shall inform, at the latest available address, the shareholder concerned regarding transfer of shares three months before the due date of transfer of shares and also simultaneously publish a notice in the leading newspaper in English and regional language having wide circulation informing the concerned that the names of such shareholders and their folio number or DP ID – Client ID are available on their website duly mentioning the website address.
2 . For the purposes of effecting the transfer,-
where the shares are dealt with in a depository-
the Company shall inform the depository by way of corporate action, where the shareholders have their accounts for transfer in favour of the Authority,
on receipt of such intimation, the depository shall effect the transfer of shares in favour of DEMAT account of the Authority.
where the shares are held in physical form-
the Company Secretary or the person authorised by the Board shall make an application, on behalf of the concerned shareholders, to the company, for issue of duplicate share certificates,
on receipt of the application, a duplicate certificate for each such shareholder shall be issued and it shall be stated on the face of it and be recorded in the register maintained for the purpose, that the 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, particulars of every share certificate issued as above shall be entered forthwith in a register of renewed and duplicate share certificates maintained in Form No. SH-2 as specified in the Companies (Share Capital and Debentures) Rules, 2014,
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.
3. The company shall make such transfers through corporate action and shall preserve copies for its records.
4. While effecting such transfer, the company shall send a statement to the Authority in Form No. IEPF 4 containing details of such transfer.
5. The company shall maintain the details of shareholding of each individual shareholders whose shares have been credited to the DEMAT account of the Authority.
6. All benefits accruing on such shares e.g., bonus shares, split, consolidation, fraction shares etc., except right issue shall also be credited to such DEMAT account.
7. Any further dividend received on such shares shall be credited to the Fund and a separate ledger account shall be maintained for such proceeds
Refunds to claimants from the Fund:
Rule 7 of the Rules
1 . Any person, whose shares, unclaimed dividend has been transferred to the Fund, may claim the shares from the Authority by making an application in Form IEPF 5 online available on website iepf.gov.in along with the fee, as decided by the Authority from time to time in consultation with the Central Government.
2. The claimant shall after making an application in Form IEPF-5, send the same duly signed by him along with, requisite documents as enumerated in Form IEPF-5 to the concerned company at its registered office for verification of his claim.
3. The company shall, within fifteen days from the date of receipt of claim, send a verification report to the Authority in the format specified by the Authority along with all the documents submitted by the claimant.
4. After verification of the entitlement of the claimant-
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 as per the guidelines,
to the shares claimed, the Authority shall issue a refund sanction order with the approval of the Competent Authority and shall credit the shares to the DEMAT account of the claimant to the extent of the claimants entitlement,
The Authority shall, in its records, cause a note to be made of all the payments made.
5. An application received for refund of any claim under this rule duly verified by the concerned company shall be disposed off by the Authority within sixty days from the date of receipt of the verification report from the company, complete in all respects and any delay beyond sixty days shall be recorded in writing specifying the reasons for the delay and the same shall be communicated to the claimant in writing or by electronic means.
6. In cases, where the application is incomplete or not approved, a communication shall be sent to the claimant and the concerned company by the Authority detailing deficiencies of the application.
7. 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.
8. In case, claimant is a legal heir or successor or administrator or nominee of any other registered security or in cases where request of transfer or transmission of shares is received after the transfer of shares by company to the Authority, the company shall verify all requisite documents required for registering transfer or transmission and shall issue letter to the claimant indicating his entitlement to the said security and furnish a copy of the same to the Authority while verifying the claim of such claimant.
9. The claimant shall file only one consolidated claim in respect of a company in a financial year.
10. The company shall be liable under all circumstances whatsoever to indemnify the Authority in case of any dispute or lawsuit that may be initiated due to any incongruity or inconsistency or disparity in the verification report or otherwise and the Authority shall not be liable to indemnify the security holder or Company for any liability arising out of any discrepancy in verification report submitted etc., leading to any litigation or complaint arising thereof.
AUTHOR OF THIS ARTICLE IS CS YOGESH GUPTA & CAN BE REACHED AT [email protected] OR 7742681270