Transfer of Shares to IEPF Authority by Companies: Rules and MCA Clarifications

Transfer of Shares to IEPF Authority by Companies: Rules and MCA Clarifications

MCA has notified the Rules/ procedure relating to transfer of shares by companies to the IEPF Authority and has issued clarifications on various related issues from time to time, including information on demat account details, due dates, etc., as under:

Demat Account Details for Transfer of Shares to IEPF Authority Notified by MCA

The MCA has notified the Demat Account Details for Transfer of Shares to IEPF Authority, latest by 31 Oct. 2017, where the seven years period provided under Section 124(5) is completed for unpaid/ unclaimed dividends, during September 7, 2016 to October 31, 2017, as under:

Demat Account Details for Transfer of Shares to IEPFA: MCA General Circular 12/2017 16 Oct. 2017

1. Pursuant to second proviso to Rule 6 of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended time to time, wherein the seven years period provided under sub-section (5) of section 124 is completed for unpaid/ unclaimed dividends during September 7, 2016 to October 31, 2017, the due date for transfer of such shares by companies is October 31st 2017.

2. The IEPF Authority has opened demat accounts with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) through Punjab National Bank and SBICAP Securities Limited respectively, as Depository Participants. The details of said accounts are as under:

Particulars PNB SBICAP
DP ID IN300708 12047200
Client ID 10656671 13676780

3. These demat accounts will have features and functionality to support IEPF operations using paperless, digital processes and facilitate record keeping of shares transferred to the IEPF Authority to meet the requirements of the Rules.

4. All companies which are required to transfer shares to ‘EPF Authority under the aforesaid Rules, shall transfer such shares, whether held in dematerialised form or physical form, to the demat accounts of IEPF Authority by way of corporate action. The Information related to the shareholders, whose shares are being transferred to IEPF’s demat accounts with PNB or SBICAP shall be provided by the companies to NSDL or CDSL respectively as per the prescribed format by the concerned depository.

5. The Ministry of Corporate Affairs has held separate discussions with NSDL and CDSL during which they have agreed to levy reduced charges for account maintenance and record keeping pertaining to shares transferred to the demat accounts of IEPF Authority. A Memorandum of Understanding (MOU) to the effect is being finalized with the two depositories and the same will also be uploaded on website www.iepf.gov.in on finalization. NSDL and CDSL shall, based on these discussions, separately notify the charges, which shall not be more than those finalized in the MOU NSDL and CDSL are required to allow the services with immediate effect.

6. Any cash benefit accruing on account of shares transferred to IEPF such as dividend, proceeds realised on account of delisting of equity shares of the company, amount entitled on behalf of security holder if the company is being wound up as per Rule 6, sub-rule (10), (11) and (12) of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, shall be transferred by companies to bank account opened by the Authority with Punjab National Bank, Sansad Marg, New Delhi, which has been linked to demat accounts mentioned at para 2 above.

7. It is clarified that Only amounts mentioned in para 6 above are to be transferred to Bank account indicated above. Transfer of amount due to be transferred under section 125(2) of the Companies Act, 2013 or any other amount to aforesaid account is strictly prohibited.

It may be noted that MCA has already notified the IEPFA Amendment Rules applicable w.e.f. 13 Oct. 2017, relating to transfer of shares by companies to IEPFA, as under:

IEPF Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2017: MCA Notification dt. 13 Oct. 2017

Companies to Follow Procedure for Transmission of Shares while Transferring Shares to IEPFA: MCA Clarification

The MCA has issued clarification vide General Circular No. 7/2017 dt. 5 June 2017 that companies should follow the procedure applicable for Transmission of Shares while transferring shares to the IEPFA, since the same is happening due to operation of law and hence duplicate shares need not be issued in such cases.

Clarification reg. Transmission of Shares to IEPFA: MCA General Circular No. 7/2017 dt. 5 June 2017

Clarity has been sought by stakeholders w.r.t. issue of duplicate shares under Rule 6(3)(d) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.

It has been stated that since transfer of shares to IEPF under section 124(6) of the Companies Act, 2013 read with rules referred to above takes place on account of operation of law hence the procedure followed during transmission of shares may be followed in such cases and duplicate shares need not be issued in such cases.

The suggestion made by the stakeholders has been examined in the Ministry and it is clarified that the procedure similar to what is followed in case of transmission of shares may be followed by companies while transferring shares to IEPF Authority pursuant to section 124 (6) read with applicable rules.

MCA Clarification on Due Date for Transfer of Shares to IEPF Authority (Due Date extended for Cases falling due on 31 May 2017 under IEPFA Rules)

A. MCA Clarification on Due Date for Transfer of Shares to IEPFA

MCA General Circular No. 6/2017 dt. 29 May 2017

MCA has clarified that due date for transfer of shares by companies to demat account of IEPFA will be notified later (i.e. extended till further information), where the same was falling due on 31 May 2017 under the IEPFA Rules. It may be noted that earlier MCA had issued procedural guidelines in this regard and had later withdrawn the same, may be due to pending formalities in opening of demat accounts.

However, the companies have been advised to complete the requisite formalities as per IEPFA Rules without waiting for announcement of fresh dates. Further, the companies which have already published notice in newspaper and have sent notices to the shareholders as well, need not serve the notice again.

B. MCA Withdraws General Circular 3/2017

MCA General Circular No. 5/2017 dt. 16 May 2017

The MCA has issued General Circular No. 5/2017 dt. 16 May 2017 to withdraw it’s General Circular No. 3/2017 earlier issued on 27 Apr. 2017 relating to procedure for Transfer of Shares to IEPF Authority, before 31 May 2017, under the IEPFA Rules. The subject matter is under review with the Ministry and fresh instructions are likely to be issued after the review.

C. Procedure for Transfer of Shares by Companies to IEPFA

Transfer of Shares to IEPF Authority: MCA General Circular 03/2017 dt. 27 Apr. 2017 

1. Pursuant to second proviso to Rule 6 of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017 notified on February 28, 2017, where the seven year period provided under sub-section (5) of section 124 is completed during September 7, 2016 to May 31, 2017, the due date for transfer of such shares by companies is May 31, 2017.

2. The IEPF Authority has decided to Open a special demat account with National Securities Depository Limited (NSDL) through a Depository Participant of NSDL.

3. The special demat account will have features and functionality to support IEPF operations using paperless, digital processes and facilitate record keeping of shares transferred to the IEPF Authority to meet the requirements of the Rules. The details of the DEMAT account will be issued in due course.

4. All companies required to transfer shares to IEPF Authority under the aforesaid Rules shall transfer such shares, whether held in dematerialised form or physical form to the demat account of IEPF Authority by way of corporate action. Information related to the shareholders whose shares are being transferred to IEPF’s demat account shall be provided to NSDL in prescribed format.

5. NSDL will prescribe the file formats and operational procedures for transfer of shares to special demat account of the IEPF Authority by April 30th 2017 and May 15th 2017 respectively. (NSDL File Formats)

6. The charges to be levied by NSDL to the companies towards upload and maintenance of records pertaining to shares transferred to the special demat account of the IEPF Authority are as under:

i) Transaction Fees at the time of effecting transfer of shares to Demat Account of IEPF Authority: Rs. 10/- per record subject to minimum of Rs. 500/-.

ii) Annual Maintenance Fees: Rs. 11/- per record subject to minimum based on paid-up capital of the company as mentioned below:

Nominal Value of Admitted Securities (Rs.) Annual Custody Fee payable by Co. (Rs.)
Upto Rs. 5 crore  2,700
Above Rs.5 crore and upto Rs. 10 crore 6,750
Above Rs.10 crore and upto Rs.20 crore 13,500
Above Rs.20 crore 22,500

These charges are in addition to the fees that Depositories levy on the companies for corporate actions.

MCA Notifies IEPF Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017

The MCA has amended various forms (IEPF-3/ 5/ 6) and Rules 2/ 3/ 6/ 7 of the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules. Accordingly, it has notified the Amendment Rules, 2017 applicable w.e.f. 28 Feb. 2017, as under:

IEPF Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017

G.S.R. 178(E).—In exercise of the powers conferred by sub-sections (1), (2), (3), (4), (8), (9), (10) and (11) of section 125 and sub-section (6) of section 124 read with section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules, to amend the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, namely:-

1. (1) These rules may be called the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017. (2) They shall come into force from the 28th February, 2017. …contd…

MCA Clarification reg. likely simplification of process and extension of due date for transfer of shares to IEPF Authority

MCA General Circular No. 15/2016 dt. 7 Dec. 2016 F. No.05/23/2016-IEPF

MCA has received various representations from Companies for Simplification of transfer process of shares under IEPF (Accounting, Audit, Transfer and Refund) Rules, 2016, notified on 5 Sept. 2016 including for extension of the due date prescribed for transferring the shares to IEPF Authority.

The MCA has clarified that simplification of transfer process of shares to IEPF Authority and extension of due date for such transfer, are under review. The rules are likely to be revised and shall be notified in due course.

MCA Clarification reg. Filing of Offline/ Online Challans with IEPF Authority under the Companies Act 2013

With reference to ‘Filing of Offline Challans with IEPF Authority under the Companies Act 2013’, the MCA has clarified that as per IEPF Rules it is mandatory for companies transferring amount to IEPF to generate online Challans at MCA21 portal and file Form IEPF-I mentioning SRN of the online Challan.

MCA General Circular No. 13/2016 dt. 5 Dec. 2016 File No. 05/05/2016-IEPF 

In accordance With Investor Education & Protection Fund (Accounting, Audit. Transfer. and Refund) Rules, 2016 notified on 05.09.2016, it is mandatory for the companies depositing amounts to IEPF under section 125 of Companies Act 2013 to:-

(i) generate challan online only;

(ii) file form IEPF-I mentioning the SRN No. of challan (online mode only).

2.  All companies transferring the amount to IEPF are, therefore, requested to ensure that the above procedure is followed. The challans not generated on MCA21 portal will not be accepted after 15.12.2016.

MCA Notifies Relaxation of Additional Fees reg. filing of Form IEPF-1 due between 25 March 2016 to 6 Sept. 2016 if the same is filed on or before 6 Oct. 2016

The Ministry of Corporate Affairs (MCA), vide General Circular 10/2016 has notified for relaxation of additional fees regarding filing of Form IEPF-1 due between 25 March 2016 to 6 Sept. 2016 if the same is filed on or before 6 Oct. 2016, as under:

MCA General Circular No. 10/2016 dt. 7 Sept. 2016 (Ref. No. 05/05/2016-IEPF)

The Ministry had deployed the V2R2 version of MCA21 on 28th March, 2016. Consequently, the Form 1- INV as prescribed under the Companies Act, 1956 was not available for filing on the MCA21 portal since 25th March, 2016. In view of this and deployment of the new Form IEPF-1 (which replaces earlier Form 1-INV) after the notification of Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 [IEPF (AATR) Rules] with effect from 7th September, 2016, it is clarified that companies that have not filed the requisite information in Form 1 INV can now file the information in Form IEPF-1. Further, as a onetime measure, for companies with due date for filing of the form 1- INV falling between the period 25th March 2016 to 6th September, 2016, the companies may file the form IEPF- 1 without additional fees on or before 06.10.2016.

Investor Education and Protection Fund Authority (Accounting, Audit, Transfer & Refund) Rules 2016 notified by MCA

The Ministry of Corporate Affairs (MCA) vide Notification dt. 5 Sept. 2016 has notified the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer & Refund) Rules 2016, which are effective from 7 Sept., 2016. To view/ download pdf copy of the said Rules, please refer the link below:

IEPF Authority Rules 2016: MCA Notification dt. 5 Sept. 2016

MCA Notifies 7th Sept. 2016 as the Effective Date reg. IEPF Administration, etc.

The Ministry of Corporate Affairs (MCA) vide Notification dt. 5 Sept. 2016 has appointed 7th Sept. 2016 as the date on which provisions of certain sub-sections of Sec. 124 (reg. IEPF Administration) and Sec. 125 of the Companies Act, 2013 shall come into force, as under:

MCA Notification dt. 5 Sept. 2016

S.O. 2866(E) – In exercise of the powers conferred by sub-section (3) of section 1 of the Companies Act, 2013 (18 of 2013), the Central Government hereby appoints 7th September, 2016 as the date on which the provisions of section 124, sub-sections (1) to (4), (6) [with respect to the manner of administration of the Investor Education and Protection Fund] and (8) to (11) of section 125 of the said Act shall come into force.

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