Procedure For Transfer of Unpaid or Unclaimed Dividend to The Investor Education and Protection Fund

Procedure-Transfer-Unpaid-Unclaimed-Dividend-Investor-Education-Protection-Fund

Procedure For Transfer of Unpaid or Unclaimed Dividend to The Investor Education and Protection Fund
The following procedure should be followed by the company:

    (1) The company shall prepare a statement stating all sums to be transferred from the Unpaid Dividend Account to the Fund, the nature of the sum, the names and last known addresses of the persons entitled to receive the same, the amount to which each person is entitled and the nature of his claim thereto and such other particulars as may be prescribed.
   (2) The procedure for transfer of the amount of unpaiddividend to Investor Education and Protection Fund is prescribed under the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001. The company must transfer the amount of unpaid dividend, by depositing the same in any of the branches of the Punjab National Bank specified in Rule 3 of these Rules.

(3) The amount shall be tendered by the companies on behalf of the Central Government in such branches of Punjab National Bank along with Challan (in triplicate) and the Bank will return one copy duly stamped to the Company as token of having received the amount.
(4) Every Company shall file with the concerned Registrar of Companies one copy of the Challan referred to above evidencing deposit of the amount to the Fund. The Company shall fill in the full description and the nature of the amount tendered and its Head of Account.
(5) The Company, when effecting a credit to the account of the Fund, will separately furnish to the concerned Registrar of Companies a statement electronically in e-Form 1INV.
Each company shall keep a record relating to folio number, Certificate Number etc. in respect of persons to whom the amount of unpaid or unclaimed dividend, application money, matured deposit or debentures, interest accrued or payable, for a period of three years.
(6) The money must be deposited as aforesaid within 30 days from the end of seven years from the date on which it was required to be transferred to the special unpaid dividend account as required by   section
124. [Rule 3]
(7)  The form must be signed by the Managing Director or Director or Manager or Secretary of the Company.
(8)  The e-form 1INV must also be certified by a
     Chartered Accountant practising in India; or
     Cost Accountant practising in India; or
     Company Secretary practising in India; or
     Statutory auditors of the company.
(9) Copy of challan evidencing deposit of the amount to the fund will be attached to the Form. It is desirable that the Company informs its shareholders by way of statement in the Annual Report that unpaid/ unclaimed dividend has been transferred to a special bank account and that it would remain there for a period of seven years from the date of declaration thereof. The shareholders may claim the unpaid/ unclaimed dividend from this account. It should also be brought to the notice of the shareholders that after the unpaid dividends are transferred to the Investor Education and Protection Fund at the end of seven years, no claim shall lie against the company in respect of the dividends so transferred will be entertained.
It is important to note that the Central Government has constituted a Committee consisting of persons of eminence to administer the Investor Education and Protection Fund and maintain other relevant records in respect of that fund in such form as may be prescribed, in consultation with the Comptroller and Auditor General of India. The Central Government has formulated the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001. These Rules provide inter alia the details regarding the amounts to be credited to the fund, the manner of funds, the audit of the accounts of the fund and provisions regarding constitution, function and meetings, agenda and voting of the committee, minutes of the committee and condition for utilisation of the amount lying in the fund.
Further, the Central Government has also prescribed e-Form 5 INV for Statement of Unclaimed and Unpaid Amounts pursuant to Rule 3 of the Investor Education and Protection Fund (uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012. Under these Rules, companies are required to upload information concerning dividends payable to shareholders on a year to year basis until the completion of seven years. The said prescription is contained in Notification No. GSR 352(E ) dated 10-05-2012 and is available on the MCA portal at www.mca.gov.in.The summarized requirements are as under:

(i) Every Company (including Non-banking Financial Companies and Residuary Non-banking Companies) shall, within a period of 90 days after the holding of Annual General Meeting or the date on which it should have been held as per the provisions the Act and every year thereafter till completion of the seven years period, identify the unclaimed amounts as referred to 124 of the Act, separately furnish and upload on its own website as also on the Ministry’s website or any other website as may be specified by the Government a statement or information through e-Form 5 INV, 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 considered relevant for the purpose;
(ii)The information referred to in Rule 3 shall be duly verified and certified by a chartered accountant or a company secretary or a cost accountant practicing in India or by the statutory auditors of the company.
(iii)If a company fails to furnish and upload information or furnishes and uploads false information on the website, the company, and every officer of the company who is in default, shall be liable and in such case the provisions of Section 124(7) of the Companies Act, 2013 shall be applicable.
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