Declaration of Commencement of Business - Series 487

UNPAID/ UNCLAIMED DIVIDEND

The word “Dividend” has origin from the Latin word “Dividendum”. It means a thing to be divided. Dividend means the portion of the profit received by the shareholders from the company's net profit, which is legally available for distribution among the members. Therefore, dividend is a return on the share capital subscribed for and paid to its shareholders by a company. Dividend defined under section 2(35) of the Companies Act, 2013, includes any interim dividend.          

UNPAID DIVIDEND ACCOUNT:

Provisions of Unpaid Dividend Account:

§  Once dividend transferred in Dividend Account but not has not been claimed by the shareholder within 30 days of declaration of dividend.

§  The Company shall transfer such unpaid amount within 37 days from the date of declaration in a special account ‘Unpaid Dividend Account’.

§  The company shall, within a period of ninety days of making any transfer of an amount under sub-section (1) to the Unpaid Dividend Account,

-         prepare a statement containing the names, their last known addresses and the unpaid dividend to be paid to each person

-         and place it on the website of the company, if any, and

-         also on any other website approved by the Central Government for this purpose, in such form, manner and other particulars as may be prescribed.

Whether entitled shareholder can claim amount from the unpaid dividend account.

Any person claiming to be entitled to any money transferred under sub-section (1) to the Unpaid Dividend Account of the company may apply to the company for payment of the money claimed.

 Penalty:

If any default is made in transferring the total amount referred to in sub-section (1) or any part thereof to the Unpaid Dividend Account of the company, it shall pay, from the date of such default, interest on so much of the amount as has not been transferred to the said account, at the rate of twelve per cent. per annum and the interest accruing on such amount shall enure to the benefit of the members of the company in proportion to the amount remaining unpaid to them.

Investor Education and Protection Fund

Provisions of Investor Education and Protection fund:

Transfer of Dividend: Any money transferred to the Unpaid Dividend Account of a company in pursuance of this section which remains unpaid or unclaimed for a period of seven years (7 year and 37 days from the date of declaration of dividend) from the date of such transfer shall be transferred by the company along with interest accrued, if any, thereon to Investor education and protection fund.

§  The company shall send a statement in the prescribed form of the details of such transfer to the authority which administers the said Fund and that authority shall issue a receipt to the company as evidence of such transfer.

Transfer of Shares:

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:

Whether Shareholder can claim transfer of shares/Dividend from Investor Education and Protection Fund.

Yes, any claimant of shares transferred above shall be entitled to claim the transfer of shares from Investor Education and Protection Fund in accordance with such procedure and on submission of such documents as discussed below.

Process of transfer of dividend to Investor Education and Protection fund:

As per MCA Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 dated 05^th September, 2016:

1.      The Company shall credit the fund due for transfer in investor Education and protection Fund within 30 days of becomes due.

2.      The amount shall be tendered by the companies along with challan (in triplicate) to the specified Bank Branches who will return two copies of the challan, duly stamped in token of having received the amount, to the Company.

3.      Every company shall file with the concerned Authority one copy of the challan indicating 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.

4.      The company shall, along with the copy of the challan furnish a Statement in Form No. IEPF 1 containing details of such transfer to the Authority within thirty days of submission of challan.

5.      The Company shall maintain record consisting of name, last known address, amount, folio number or client ID, certificate number, beneficiary details etc. of the person in respect f whom unpaid or unclaimed amount has remained unpaid or unclaimed for a period of 7 years and has been transferred to the fund and the authority shall have the power to inspect such records.

Yearly Compliance for the Company:

IEPF-2

Every company shall within a period of ninety days after the holding of Annual General Meeting and every year thereafter till completion of the seven years period, identify the unclaimed amounts, as referred in sub-section 2 of section 125 of the Act, as on the date of holding of Annual General Meeting, separately furnish and upload on its own website and also on website of Authority or any other website as may be specified by the Government, a statement or information through Form No. IEPF 2, separately for each year, containing following information, namely:-

(a) The names and last known addresses of the persons entitled to receive the sum;

(b) The nature of amount;

(c) The amount to which each person is entitled;

(d) The due date for transfer into the Investor Education and Protection Fund; and

(e) Such other information as may be considered relevant for the purposes.

IEPF-6

(1) The company shall furnish a statement to the Authority in Form No. 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.

(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.

Process of refund to claimant from Investor Education and Protection fund:

Section125(3) of Companies Act,2013 enabling investors to claim their unpaid dividends, matured deposits or debentures etc. transferred to Investor Education and  Protection Fund(IEPF) by companies has been commenced with effect from 7^TH September,2016. Claimants may file their applications to the IEPF Authority, as per the procedure hereunder: The claimant shall file only one consolidated claim in respect of a Company in a financial year.

1 .    Download the FormIEPF-5 from the website of IEPF (http://www.iepf.gov.in) for filing the claim for refund. Read the instructions provided on the website/instruction kit along with the e-form carefully before filing the form.

2.   After filing the form save it on your computer and submit the duly filled form by following the instructions given in the upload link on the website. On successful uploading an acknowledgement will be generated indicating the SRN. Please note the SRN for future tracking of the form.

3.    Take a printout of the duly filled IEPF-5 and the acknowledgement issued after uploading the form.

4.   Submit indemnity bond in original, copy of acknowledgement and self attested copy of e-form along with the other documents as mentioned in the Form IEPF-5 to Nodal Officer (IEPF) of the company at its registered office in an envelope marked “Claim for refund from IEPF Authority”.

5 .   Claim forms completed in all aspects will be verified by the concerned company and on the basis of company’s verification report, refund will be released by the IEPF Authority in favor of claimants’ Aadhaar linked bank account through electronic transfer

Report from Company to Authority:

The Company shall, within 15 days of receipt of claim form, send a verification report to the authority in the format specified by the authority along with all the documents submitted by the claimant.

  

An application received for refund of any claim under this rule duly verified by the concerned company shall be disposed of by the Authority within 60 days from the date of receipt of the verification report from the Company, complete in all respects and any delay beyond 60 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.

(Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at csdiveshgoyal@gmail.com)

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION WITH THE USE OF THE INFORMATION. This is only a knowledge sharing initiative and author do not intend to solicit any business or profession.