REPORTING OF UNCLAIMED DIVIDEND AND DEPOSITS TO IEPF AND ROC

Investor Education and Protection Fund (IEPF)

Financial awareness plays a very important role in every individual’s life, whether he is salaried individual or an individual who has its own business.  Having Knowledge of investing in financial markets How to invest, where to invest, how much to invest etc. is like a clumsy process for every Indian individual. As there are various opportunities are available in the market, we just need to consider them and invest wisely in the market.

Being aware about investing helps the investors to fully appreciate opportunities and associated risks, take informed decisions, understand the intricacies of financial markets and participate actively in the economic growth of the Country by converting savings into investments.

Keeping all this in mind, the Ministry of Corporate Affairs, Government of India established the Investor Education and Protection Fund (IEPF) under Section 205C of the Companies Act, (1956) with an aim to generate more awareness among the investors and thus protect them. The Fund is administered as per the provisions of Investor Education and Protection Fund (awareness and protection of investors) Rules, 2001.

The fund committee includes members from Reserve Bank of India, Securities and Exchange Board of India and other experts from the field of investors' education and protection.

ROLE OF IEPF

IEPF has been actively:

• Bringing out education programmes through media that are related to investors' education, awareness and protection.
• Imparting information on investors' awareness by organising Seminars and Symposia.
• Co-ordinating with voluntary associations and institutions such as Prime Investors Protection Association and League, Consumer Unity & Trust Society to organise more and more Investor Education and Protection activities.
• Providing institutional arrangements and financial infrastructure to organisations that are involved in investors' awareness, education and protection.

Apart from this, the IEPF also furnishes important information on key aspects relating to investment options such as Role of Capital Market, IPO Investing, Mutual Fund Investing, Stock Trading, Depository Account, Debt Market etc., thus making it easy for a lay investor to understand the meaning and intricacies of the terminology and procedures of the financial markets.

AMOUNT CREDITED TO THE FUND

The following amounts shall be credited to the fund as prescribed under the Companies Act, 1956 namely:-

a)   Amounts in the unpaid dividend accounts of Companies;

b)   The application moneys received by Companies for allotment of any securities and due for refund;

c)    Matured deposits with Companies;

d)   Matured debentures with Companies;

e)   The interest accrued on the amounts referred to in clauses (a) to (d);

f)   Grants and donations given to the Fund by the Central Government, State Governments, Companies or any other institutions for the purposes of the Fund; and

g)   The interest or other income received out of the investments made from the fund;

Provided that no such amounts referred to in clauses (a) to (d) shall form part of the Fund unless such amounts have remained unclaimed and unpaid for a period of seven years from the date they became due for payment.

Explanation:- For the removal of doubts, it is hereby declared that no claims shall lie against the Fund or the company in respect of individual amounts which were unclaimed and unpaid for a period of seven years from the dates that they first became due for payment and no payment shall be made in respect of any such claims.

FILING OF INFORMATION REGARDING UNPAID AND UNCLAIMED AMOUNTS

In order to create more awareness about the unclaimed dividend and deposits lying with Companies, the Ministry of Corporate Affairs has passed a notification dated 10^th May, 2012 termed as Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012.

This has mandated every company (including Non-Banking Financial Companies and Residuary Non-Banking Companies) to file eForm 5INV containing the information of unclaimed and unpaid amounts as referred to in subsection (2) of section 205C of the Companies Act, 1956. In this context, “Every Company” mean those companies who have declared dividend for past several years. It covers mostly listed companies whose shareholders are not able to claim their dividend. Through this process, an investor can check their details of unclaimed dividend and deposits lying with the Company on the IEPF website itself.

This information is required to be filed every year 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 of section 166 of the Act, and every year thereafter till completion of the seven years’ period.

For financial year ended on 31st March 2011, the eForm should be filed latest by 31^st July 2012. In this case, the Companies have to file all the information of unclaimed dividend for last previous seven years in which the companies had declared dividend.

The information is to be filed in Form 5- INV which shall contain investor wise details of unclaimed and unpaid amounts in respect of dividends, debentures, deposits, etc. The details of unclaimed and unpaid amounts shall need to be provided as on the Annual General Meeting (AGM) date. This form is to be filed annually within 90 days from the date of AGM. The form can be downloaded from the IEPF portal of the Ministry (http://www.iepf.gov.in/).

After the Form 5- INV is filled and uploaded on the IEPF portal, you are required to provide the investor wise details of unclaimed and unpaid amount.

Once the excel file(s) has been uploaded, user is required to confirm the upload of the same on the IEPF portal within 15 days of upload of the eForm 5-INV.

Please note that the filing of Form 5-INV shall be treated as complete only after the excel file(s) are uploaded and confirmed.

Ensure that the correct details are uploaded on the IEPF portal as excel file once uploaded cannot be deleted. To modify the details, an excel file with the same file name (as of the original file) shall have to be uploaded which shall replace the original file. Please note that no excel file can be modified after the upload has been confirmed. After confirmation, the details shall be processed and shall not be allowed to be modified. In case no excel file is uploaded within the prescribed time limit, the filing of Form 5-INV shall be treated as Defective and the form shall be rejected.

Clarifications from MCA:

Cut-off Date for the calculation of amount unpaid and claimed undividend This Rule requires that every company has to file a statement of unclaimed and unpaid dividend, within 90 days after the holding of Annual General Meeting, however the date as on which such amount has to be calculated was not clearly specified. But it has now been made clear that the amount has to be calculated as on the date of Annual General Meeting or the due date on which the meeting should have been held as per Section 166 of the Companies Act, 1956.

Calculation of amount of unpaid dividend for the form to be filed with respect to Financial Year ending on March 31, 2011 Proviso to Rule 3, states that companies need to file the form for financial year ending on March 31, 2011 also till July 31, 2012. However, the cut-off date for recognizing the amount to be filed for the financial year ending 31st March 2011 was not clear. But the clarification note has clarified that for financial year ending March 31, 2011, the statement of amount to be filed shall be the total balance of unclaimed and unpaid dividend and matured deposits appearing in the balance sheet as on March 31, 2011 to be updated further till the date of Annual General Meeting held for the financial year ending March 31, 2011.

Whether statement of amount of unpaid dividend filed for the respective financial year shall include the amount of unpaid dividend declared in the recently concluded Annual General Meeting. The due date of submission of Form 5 INV relates to the date of Annual General Meeting, i.e. within 90 days from the date of the Annual General Meeting, and therefore in this respect there was a doubt whether the amount of dividend which becomes unpaid, after it has been declared in the recently concluded Annual General Meeting is also required to be included in the statement to be filed after the conclusion of this meeting. It has now been clarified that the dividend remaining unpaid which was declared in the recently concluded Annual General Meeting and becoming unpaid after the expiry of 30 days, shall not be included in the form to be filed within 90 days from the date of Annual General Meeting. 

Recognition of the amount of Unpaid Dividend: The dividend which has been declared on 30th September, 2012 and becoming unpaid on 30th October, 2012 shall not be included in Form 5INV to be filed on or before 29th December 2012, and will be included in the form filed for the next financial year ending on 31st March 2013, since the cut-off date is the date of Annual General Meeting and the dividend declared in the recently concluded Annual General Meeting becomes unpaid after the meeting.