TRANSFER OF AMOUNTS
OF UNPAID DIVIDEND ACCOUNTS TO IEPF TO BE MONITORED STRINGENTLY
The Department
of Company Affairs has clarified that all amounts remaining unpaid
for a period of 7 years in "Unpaid Dividend Account"
on or after 31.10.1995 should be transferred to Investor Education
and Protection Fund forthwith, unless already transferred. It
is learnt that several companies, including some very large companies
have started depositing such due amount to the IEPF. This has
been done after it came to the notice of the DCA that companies
were interpreting the requirements of Section 205 C and the rules
thereof differently and the purpose and result of the provision
were not followed in letter and spirit. The interpretations gave
scope for reckoning the period of seven years from the date on
which the provisions of Section 205 C came into force. Hence the
DCA issued a clarification by way of Circular No. 22 of 2002 dated
16 September, 2002.
Government expects
all companies and banks would adhere to the correct legal position
given in the circular and transfer all remaining unpaid and unclaimed
amounts to the following accounts to IEPF in the DCA. DCA also
plans to undertake survey of companies which have failed to adhere
to the Circular in co-ordination with Indian Bankers Association
and Reserve Bank of India and take strict penal action as per
law against such defaulting companies.
Investor Education
and Protection Fund (IEPF) was established on 1st October,
2001 pursuant to the provisions of Section 205 C of the Companies
Act, 1956 which came into force on 31 October, 1998. Necessary
rules for operationalising the Fund were also notified.
The following amounts
that remained unclaimed or unpaid as on 30.10.1991, irrespective
of the number of years they remained unclaimed or unpaid in the
following accounts should also be forthwith transferred to the
aforesaid Fund:-
- The application money received
by companies for allotment of any securities and due for refund;
- Matured deposits with companies;
- Matured debentures with companies
- The interest incurred on the
amounts referred to in clauses (a) to (c)
