The Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016

Rule 6 Manner of transfer of shares under sub-section (6) of section 124 to the Fund

Chapter: I · The Fund and its Accounts

1(1) The shares shall be credited to DEMAT Account of 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:

1Provided that, in case the beneficial owner has encashed any dividend warrant 2or any dividend amount has been credited to bank account of the owner of such shares 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:

13Provided further that 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 October, 2017, the due date of transfer of such shares shall be deemed to be 31st October, 2017.

14Provided further that transfer of shares by the companies to the Fund shall be deemed to be transmission of shares and the procedure to be followed for transmission of shares shall be followed by the companies while transferring the shares to the fund.

14Explanation.- For removal of all doubts, it is hereby clarified that all shares in respect of which dividend has been transferred to Investor Education and Protection Fund on or before the 7th September 2016, shall also be transferred by the company in the name of Investor Education and Protection Fund.

1(2) For the purposes of effecting transfer of such shares, the Board shall authorise the Company Secretary or any other person to sign the necessary documents.

1(3) The company shall follow the following procedure while transferring the shares, namely:-

1(a) 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.

1(b) In case, where there is a specific order of Court or Tribunal or statutory Authority restraining any transfer of such shares and payment of dividend or where such shares are pledged or hypothecated under the provisions of the Depositories Act, 1996 or shares already been transferred under sub-rule (1) above, the company shall not transfer such shares to the Fund:

1Provided that the company shall furnish details of such shares and unpaid dividend to the Authority in Form IEPF-4 within thirty days from the end of financial year.

1(c) For the purposes of effecting the transfer, where the shares are dealt with in a depository-

1(i) the Company shall inform the depository by way of corporate action, where the shareholders have their accounts for transfer in favour of the Authority.

1(ii) on receipt of such intimation, the depository shall effect the transfer of shares in favour of DEMAT account of the Authority.

15(d) For the purposes of effecting the transfer shares held in physical form-

15(i) the Company Secretary or the person authorised by the Board shall make an application, on behalf of the concerned shareholder, to the company, for issue of a new share certificate;

15(ii) on receipt of the application under clause (a), a new share certificate for each such shareholder shall be issued and it shall be stated on the face of the certificate that “Issued in lieu of share certificate No….. for the purpose of transfer to IEPF” and the same be recorded in the register maintained for the purpose;

15(iii) particulars of every share certificate shall be in Form No. SH-1 as specified in the Companies (Share Capital and Debentures) Rules, 2014;

15(iv) after issue of a new share certificate, the company shall inform the depository by way of corporate action to convert the share certificates into DEMAT form and transfer in favour of the Authority.

1(4) The company shall make such transfers through corporate action and shall preserve copies for its records.

16(5) While effecting such transfer, the company shall send a statement to the Authority in Form No. IEPF-4 within thirty days of the corporate action taken under clause (c) of sub-rule (3) of rule 6 containing details of such transfer and the company shall also attach a copy of the public notice published under clause (a) of sub-rule (3) of rule 6 in Form No. IEPF-4.

1(6) The voting rights on shares transferred to the Fund shall remain frozen until the rightful owner claims the shares:

1Provided that for the purpose of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the shares which have been transferred to the Authority shall not be excluded while calculating the total voting rights.

17(7) The company shall maintain all such statements filed under sub – rule (5) in the same format along with all supporting documents and the Authority shall have the powers to inspect such records.

18(8) All benefits accruing on such shares like bonus shares, split, consolidation, fraction shares and the like except right issue shall also be credited to such DEMAT account [by the company which shall send a statement to the Authority in Form No. IEPF-4 within thirty days of the corporate action containing details of such transfer.]

19(9) The shares held in such DEMAT account shall not be transferred or dealt with in any manner whatsoever except for the purposes of transferring the shares back to the claimant as and when he approaches the Authority or in accordance with sub-rules (10), (11) and (11A).

1(10) If the company is getting delisted, the Authority shall surrender shares on behalf of the shareholders in accordance with the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 and the proceeds realised shall be credited to the Fund and a separate ledger account shall be maintained for such proceeds.

1(11) In case the company whose shares or securities are held by the Authority is being wound up, the Authority may surrender the securities to receive the amount entitled on behalf of the security holder and credit the amount to the Fund and a separate ledger account shall be maintained for such proceeds.

110(11A) In case an application for purchase of shares under section 236 is received through the company, the Authority may receive the amount entitled on behalf of the minority shareholders from the company as per procedures provided under sub-section 5 of the said section 236 and credit the amount to the Fund and a separate ledger account shall be maintained for such proceeds:

110Provided that Authority before such receipt of money on behalf of such shareholders shall verify that the conditions provided under the relevant section of the Act and rules framed thereunder have been satisfied and shall also call a report from the company on the following, namely:-

110(a) whether the acquirer to whom the shares held by the Authority would be transferred has fulfilled the requirements of section 236;

110(b) whether the shares have been valued in accordance with the provisions of sub-section (2) of section 236 and the rules made thereunder; and

110(c) any other relevant information:

110Provided further that the company shall be liable under all circumstances whatsoever to indemnify the Authority in case of any dispute or lawsuit that may be initiated and the Authority shall not be liable to indemnify the minority shareholder or the Company or any other person for any liability arising, leading to any litigation or complaint arising thereof:

110Provided also that any claimant entitled to claim transfer of such shares from the Authority under sub-section (6) of section 124 shall only be entitled to the amount received by the Authority on behalf of the minority shareholder without any interest thereon.

1(12) Any further dividend received on such shares shall be credited to the Fund and a separate ledger account shall be maintained for such proceeds.

1(13) Any amount required to be credited by the companies to the Fund as provided under sub-rules (10), (11) and sub-rule (12) shall be remitted online to the Authority within a period of thirty days from the date such amount becomes due and the details thereof shall be furnished to the Authority in Form No. IEPF-1.

110(13A) Any amount required to be credited by the companies to the Fund as provided under sub-rule (11A) shall be remitted online to the Authority within a period of thirty days from the date such amount becomes due and the details thereof shall be furnished to the Authority in Form IEPF-1.

1(14) Authority shall furnish its report to the Central Government as and when noncompliance of the rules by companies came to its knowledge.

2. Words ins. by G.S.R. 396(E), dated 9th June, 2021 (IEPFA (Accounting, Audit, Transfer and Refund) Amendment Rules, 2021), w.e.f. 9th June, 2021.

3. Proviso ins. by G.S.R. 1267(E), dated 13th October, 2017 (IEPF Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2017), w.e.f. 13th October, 2017, for an earlier proviso deeming the due date as 31st May, 2017.

4. Proviso and Explanation ins. by the same G.S.R. 1267(E), dated 13th October, 2017, w.e.f. 13th October, 2017.

5. Clause (d) subs. by the same G.S.R. 1267(E), dated 13th October, 2017, w.e.f. 13th October, 2017, for the former clause, which provided for duplicate share certificates rather than new share certificates, and referred to a share transfer Form No. SH-4 route instead of DEMAT conversion by corporate action.

6. Sub-rule (5) subs. by G.S.R. 571(E), dated 14th August, 2019 (IEPF Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2019), w.e.f. 20th August, 2019.

7. Sub-rule (7) subs. by the same G.S.R. 571(E), dated 14th August, 2019, w.e.f. 20th August, 2019.

8. Sub-rule (8) subs. by the same G.S.R. 571(E), dated 14th August, 2019, w.e.f. 20th August, 2019.

9. Sub-rule (9) subs. by the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund), Third Amendment, Rules, 2021 (G.S.R. 888(E), dated 28th December, 2021), w.e.f. 28th December, 2021, for the former sub-rule (9), which did not reference sub-rule (11A).

10. Sub-rule (11A) ins., and sub-rule (13A) ins., by the same Third Amendment Rules, 2021, w.e.f. 28th December, 2021.

[6. Manner of transfer of shares under sub-section (6) of section 124 to the Fund. (1) The shares shall be credited to DEMAT Account of 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 [or any dividend amount has been credited to bank account of the owner of such shares] 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:

[Provided further that 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 October, 2017, the due date of transfer of such shares shall be deemed to be 31st October, 2017.]

[Provided further that transfer of shares by the companies to the Fund shall be deemed to be transmission of shares and the procedure to be followed for transmission of shares shall be followed by the companies while transferring the shares to the fund.

Explanation.- For removal of all doubts, it is hereby clarified that all shares in respect of which dividend has been transferred to Investor Education and Protection Fund on or before the 7th September 2016, shall also be transferred by the company in the name of Investor Education and Protection Fund.]

(2) For the purposes of effecting transfer of such shares, the Board shall authorise the Company Secretary or any other person to sign the necessary documents.

(3) The company shall follow the following procedure while transferring the shares, namely:-

(a) 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.

(b) In case, where there is a specific order of Court or Tribunal or statutory Authority restraining any transfer of such shares and payment of dividend or where such shares are pledged or hypothecated under the provisions of the Depositories Act, 1996 or shares already been transferred under sub-rule (1) above, the company shall not transfer such shares to the Fund:

Provided that the company shall furnish details of such shares and unpaid dividend to the Authority in Form IEPF-4   within thirty days from the end of financial year.

(i) the Company shall inform the depository by way of corporate action, where the shareholders have their accounts for transfer in favour of the Authority.

(ii) on receipt of such intimation, the depository shall effect the transfer of shares in favour of DEMAT account of the Authority.

[(d) For the purposes of effecting the transfer shares held in physical form-

(i) the Company Secretary or the person authorised by the Board shall make an application, on behalf of the concerned shareholder, to the company, for issue of a new share certificate;

(ii) on receipt of the application under clause (a), a new share certificate for each such shareholder shall be issued and it shall be stated on the face of the certificate that “Issued in lieu of share certificate No….. for the purpose of transfer to IEPF” and the same be recorded in the register maintained for the purpose;

(iii) particulars of every share certificate shall be in Form No. SH-1 as specified in the Companies (Share Capital and Debentures) Rules, 2014;

(iv) after issue of a new share certificate, the company shall inform the depository by way of corporate action to convert the share certificates into DEMAT form and transfer in favour of the Authority.]

(4) The company shall make such transfers through corporate action and shall preserve copies for its records.

[(5) While effecting such transfer, the company shall send a statement to the Authority in Form No. IEPF-4 within thirty days of the corporate action taken under clause (c) of sub-rule (3) of rule 6 containing details of such transfer and the company shall also attach a copy of the public notice published under clause (a) of sub-rule (3) of rule 6 in Form No. IEPF-4.]

(6) The voting rights on shares transferred to the Fund shall remain frozen until the rightful owner claims the shares:

Provided that for the purpose of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the shares which have been transferred to the Authority shall not be excluded while calculating the total voting rights.

[(7) The company shall maintain all such statements filed under sub – rule (5) in the same format along with all supporting documents and the Authority shall have the powers to inspect such records.]

[(8) All benefits accruing on such shares like bonus shares, split, consolidation, fraction shares and the like except right issue shall also be credited to such DEMAT account [by the company which shall send a statement to the Authority in Form No. IEPF-4 within thirty days of the corporate action containing details of such transfer.]]

[(9) The shares held in such DEMAT account shall not be transferred or dealt with in any manner whatsoever except for the purposes of transferring the shares back to the claimant as and when he approaches the Authority or in accordance with sub-rules (10), (11) and (11A).]

(10) If the company is getting delisted, the Authority shall surrender shares on behalf of the shareholders in accordance with the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 and the proceeds realised shall be credited to the Fund and a separate ledger account shall be maintained for such proceeds.

(11) In case the company whose shares or securities are held by the Authority is being wound up, the Authority may surrender the securities to receive the amount entitled on behalf of the security holder and credit the amount to the Fund and a separate ledger account shall be maintained for such proceeds.

[(11A) In case an application for purchase of shares under section 236 is received through the company, the Authority may receive the amount entitled on behalf of the minority shareholders from the company as per procedures provided under sub-section 5 of the said section 236 and credit the amount to the Fund and a separate ledger account shall be maintained for such proceeds:

Provided that Authority before such receipt of money on behalf of such shareholders shall verify that the conditions provided under the relevant section of the Act and rules framed thereunder have been satisfied and shall also call a report from the company on the following, namely:-

(a) whether the acquirer to whom the shares held by the Authority would be transferred has fulfilled the requirements of section 236;

(b) whether the shares have been valued in accordance with the provisions of sub-section (2) of section 236 and the rules made thereunder; and

Provided further that the company shall be liable under all circumstances whatsoever to indemnify the Authority in case of any dispute or lawsuit that may be initiated and the Authority shall not be liable to indemnify the minority shareholder or the Company or any other person for any liability arising, leading to any litigation or complaint arising thereof:

Provided also that any claimant entitled to claim transfer of such shares from the Authority under sub-section (6) of section 124 shall only be entitled to the amount received by the Authority on behalf of the minority shareholder without any interest thereon.]

(12) Any further dividend received on such shares shall be credited to the Fund and a separate ledger account shall be maintained for such proceeds.

(13) Any amount required to be credited by the companies to the Fund as provided under sub-rules (10), (11) and sub-rule (12) shall be remitted online to the Authority within a period of thirty days from the date such amount becomes due and the details thereof shall be furnished to the Authority in Form No. IEPF-1.

[(13A) Any amount required to be credited by the companies to the Fund as provided under sub-rule (11A) shall be remitted online to the Authority within a period of thirty days from the date such amount becomes due and the details thereof shall be furnished to the Authority in Form IEPF-1.]

(14) Authority shall furnish its report to the Central Government as and when noncompliance of the rules by companies came to its knowledge.]

1. Rule 6 subs. by G.S.R. 178(E), dated 28th February, 2017 (IEPF Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017), w.e.f. 28th February, 2017, for the former rule 6, which credited shares to an "IEPF suspense account" rather than a DEMAT account and used a materially different transfer procedure.
2. Words ins. by G.S.R. 396(E), dated 9th June, 2021 (IEPFA (Accounting, Audit, Transfer and Refund) Amendment Rules, 2021), w.e.f. 9th June, 2021.
3. Proviso ins. by G.S.R. 1267(E), dated 13th October, 2017 (IEPF Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2017), w.e.f. 13th October, 2017, for an earlier proviso deeming the due date as 31st May, 2017.
4. Proviso and Explanation ins. by the same G.S.R. 1267(E), dated 13th October, 2017, w.e.f. 13th October, 2017.
5. Clause (d) subs. by the same G.S.R. 1267(E), dated 13th October, 2017, w.e.f. 13th October, 2017, for the former clause, which provided for duplicate share certificates rather than new share certificates, and referred to a share transfer Form No. SH-4 route instead of DEMAT conversion by corporate action.
6. Sub-rule (5) subs. by G.S.R. 571(E), dated 14th August, 2019 (IEPF Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2019), w.e.f. 20th August, 2019.
7. Sub-rule (7) subs. by the same G.S.R. 571(E), dated 14th August, 2019, w.e.f. 20th August, 2019.
8. Sub-rule (8) subs. by the same G.S.R. 571(E), dated 14th August, 2019, w.e.f. 20th August, 2019.
9. Sub-rule (9) subs. by the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund), Third Amendment, Rules, 2021 (G.S.R. 888(E), dated 28th December, 2021), w.e.f. 28th December, 2021, for the former sub-rule (9), which did not reference sub-rule (11A).
10. Sub-rule (11A) ins., and sub-rule (13A) ins., by the same Third Amendment Rules, 2021, w.e.f. 28th December, 2021.