Background

Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016[1] (‘Principal Rules’) was brought by MCA on 5th September, 2016 wherein it laid down inter alia the detailed procedure to transfer the shares to the IEPF  Authority. The detailed procedure provided in the Principal Rules had technical as well as practical difficulties while implementing. Accordingly, based on the representations made by the stakeholders, MCA vide its circular dated 8th December, 2016 expressed its intention to revise the aforesaid Rules with respect to transfer of shares.

After a long and curious wait of almost three months, MCA vide its notification dated 28th February, 2017 [2] has finally come up with the IEPF (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017 (‘Revised Rules’).

Key Features of the Revised Rules

  1. Definition of ‘Company’.

The revised Rules includes a ‘subsidiary bank’ as defined in clause (k) of section 2 of State Bank of India (Subsidiary Bank) Act, 1959 (38 of 1959) to be covered under the existing definition. Even though, the inclusion of subsidiary banks in the definition of companies does not serve much purpose as now the subsidiary of many banks will cease to exist w.e.f. 1st April, 2017.

  1. The term “Corporate action” has been defined.

The term “Corporate Action” will mean any action taken by the company relating to transfer of shares and all benefits accruing on such shares namely, bonus shares, split, consolidation, fraction shares etc., except rights issue to the IEPF Authority.

  1. Opening of Demat Account by the IEPF Authority in place of the existing requirement of identification of IEPF Suspense Account with a DP.

 The IEPF Authority itself will now be required to open the Demat A/c in which the shares shall be credited unlike the earlier provisions where the companies were required to transfer the shares to a suspense account with one of the depositories as identified by the IEPF Authority. Further, there was an ambiguity as in who will open the said account which has now been made clear by the Revised Rules. However, the Revised Rules are still silent on the operational part of the said Account.

  1. Due date for transfer for certain cases (Transitional arrangement).

The Revised Rules provides for transitional arrangement for transfer of shares to Demat Account in the following cases, where the seven years period-

a.has already completed, or

b.will complete during the period starting from 7th September, 2016 till 31st May, 2017,

In the aforesaid cases, the due date for transfer of such shares shall be taken as 31st May, 2017. Evidently, the transitional arrangement has been provided for considering the practical difficulties faced by the companies with respect to the compliance of sending of individual prior notices along with public advertisement which is too, 3 months prior to due date. Since the revision in Rules is made w.e.f. 28th February, 2017, 3 months period, in case the due date falls on 31st May, 2017, shall be 28th February, 2017. The companies therefore, are required to complete the formalities so that the transfer of shares can positively be made within 30 days from 31st May, 2017.

Many companies have already sent notices and came out with newspaper publication as the Principal Rules provided for an instruction to follow the procedure of transfer immediately and complete the actual transfer on completion of 3 months for the shares whose due date of transfer has been expired or was to be expired within 3 months from the date of enforcement of the said Rules i.e. 7th September, 2016. However, the implementation of the requirements of the Principal Rules created lots of practical difficulties considering lack of clarification in various places.

  1. Particulars of newspaper advertisement.

 The Principal Rules did not provide for what all details are to be published in the newspapers. The Revised Rules have made it clear that the newspaper advertisement will contain the fact that the DP /Client ID or Folio No. of the shareholders whose shares are due for transfer to the Demat A/c are available on the website of the company. The same will also provide the web address of the company.

  1. Restriction on transfer of pledged or hypothecates shares.

The Principal Rules provided for a restriction on transfer of those shares by companies which are restrained from transfer by virtue of an order of Court/ Tribunal/ Statutory Authority. Additionally, the Revised Rules now restricts transfer of those shares which are pledged or hypothecated under the Depositories Act, 1996 and also those shares which have already been transferred. While the intention behind the restriction on pledged or hypothecated shares is understood that the same is provided considering the interest of the pledge, however, it is not clear so as to what restriction actually the Ministry wants to put on the shares which have already been transferred.

  1. No more delivery instruction slips for shares in demat form.

For effecting the transfer of demat shares, the company has to merely inform the depository by way of corporate action, where the shareholders have their accounts for transfer in favor of the IEPF Authority. On such information, the depository shall give effect to the transfer in favor of the Demat account of the IEPF Authority. Signing and depositing of delivery instruction slips as required under the Principal Rules have been done away with.

  1. The requirement of execution of share transfer forms in Form SH-4 for physical shares done away with.

The Principal Rules provided for execution of a share transfer form in Form SH-4 for the purpose of transferring the shares to the Authority which has been done away with. Now after the receipt of the duplicate share certificates, the company has to inform the depository by way of corporate action to convert such certificates into demat form and thereafter, to transfer in favor of the Authority.

  1. Copies of corporate action of transfer of shares to be preserved.

All transfers are to be effected through corporate action and the copies thereof have to be preserved for records.

  1. Directory of shareholdings transferred to IEPF.

Company is required to maintain the details of shareholding of each individual shareholder whose shares have been credited to the Demat A/c of the Authority.

  1. Accrued benefits.

All benefits accruing except rights issue has to be transferred to the Demat a/c (In Principal Rules, IEPF Suspense A/c).

  1. Verification of transmission documents by the company in case of claiming back of shares from the Authority.

The Principal Rules were specific on the verification of transfer documents of the claimant by the company, whereas, there was no such specificity for transmission even though the claimant was required to ensure the completion of transmission process by the company. The Revised Rules, however, provides for the same. Therefore, in case where the claimant is a legal heir, or successor or administrator or nominee of any other registered security or where the request of transfer or transmission of shares is received after the transfer of shares by company to the Authority, the company shall verify all requisite documents required for registering transfer or transmission and shall issue letter to the claimant indicating his entitlement to the said security and furnish a copy of the same to the Authority while verifying the claim of such claimant.

  1. Changes in e-Forms.

Certain changes in e-Forms IEPF-3 and IEPF-5 in line with the change in the definition of companies and other forms filed with the IEPF Authority.

For ease of reference a comparative table is provided below –

Sr. No. Rule No. Provisions under the IEPF Rules Provisions under the Revised Rules Remarks-
1.        2 (1) (d) Company” means company as defined in sub-suction (20) of section 2 of the Act and includes ‘corresponding new bank’ as defined in sub-section (d) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) and clause (b) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980). (d) “Company” means a company defined in sub-section (20) of section 2 of the Act and includes ‘corresponding new bank’ as defined in sub-section (d) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 (5 of 1970) and clause

(b) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980) and ‘subsidiary bank’ as defined in clause (k) of section 2 of State Bank of India (Subsidiary Bank) Act, 1959 (38 of 1959).

 

The inclusion of subsidiary banks in the definition of companies does not serve much purpose as now the subsidiary of many banks will cease to exist w.e.f. 1st April, 2017.

 

2.      Inserted as 2 (1) (da) “Corporate action” means any action taken by the company relating to transfer of shares and all the benefits accruing on such shares namely, bonus shares, split, consolidation, fraction shares etc., except right issue to the Authority;  
3.        3 (2) (g) all amounts payable as mentioned in sub-section (3) of section 108 of the Banking Companies (Acquisition and Transfer of Undertakings) Act. 1970 and section 10B of Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980. all amounts payable as mentioned in sub-section (3) of section 108 of the Banking Companies (Acquisition and Transfer of Undertakings) Act. 1970 and section 10B of Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 and section 40A of the State Bank of India (Subsidiary Bank) Act, 1959; and

 

This amendment is in line with the change in the definition of “Company”.
4.        6 (1) The shares shall be credited to an IEPF suspense account (on the name of the company) with one of the depository participants as may be identified by the Authority 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 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.

 

(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, 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, and on  their website giving details of such shareholders and shares due for transfer;

 

Provided that in cases, where the seven years as provided under sub-section (5) of section 124 have been completed or are being completed within three months from the date of coming into force of these rules, the company shall initiate the aforesaid procedure immediately and transfer the shares on completion of three months;

 

(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, 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 No. IEPF 3 within thirty days from the end of financial year;

 

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

 

(i) the Company Secretary or the person authorised by the Board shall sign on behalf of such   shareholders, the delivery instruction slips of the depository participants where the shareholders had their  accounts for transfer in favour of IEPF suspense account (name of the company);

 

(ii) on receipt of the delivery instruction slips, the depository shall effect the transfer of shares in favour of the Fund in its records.

 

(d)       For the purposes of effecting the transfer where the shares are held in physical Form.-

(i) the Company Secretary or the person authorised by the Board shall make an application, on behalf of the concerned shareholders, to the company, for issue of duplicate share certificates;

 

(ii) on receipt of the application under clause (a), a duplicate certificate for each such shareholder shall be issued and it shall be stated on the face of it and be recorded in the register maintained for the purpose, that the duplicate certificate is “Issued in lieu of share certificate No..___ for purpose of transfer to IEPF” and the word “duplicate” shall be stamped or punched in bold letters across the face of the share certificate:

 

(iii) particulars of every share certificate issued as above shall be entered forthwith in a register of renewed and duplicate share certificates maintained in Form No. SH-2 as specified in the Companies (Share Capital and Debentures) Rules, 2014;

 

(iv) after issue of duplicate share certificates, the Company Secretary or the person authorised by the Board, shall sign the necessary Form No, SH 4 i.e., securities transfer Form as specified in the Companies (Share Capital and Debentures) Rules, 2014, for transferring the shares in favour of the Fund;

 

(v) on receipt of the duly filled transfer forms along with the duplicate share certificates, the Board or its Committee shall approve the transfer and thereafter the transfer of shares shall be effected in favour of the Fund in the records of the company.

 

(4) The company or depository, as the case may be, shall preserve copies of the depository instruction slips, transfer deeds and duplicate certificates for its records.

 

(5) While effecting such transfer, the company shall send a statement to the Fund in Farm No. IEPF 4 containing details of such transfer.

 

 

(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) Once the physical shares are transferred in the name of the Authority, the Authority shall dematerialise these shares and it shall keep only those shares in physical form, where dematerialisation of shares is not possible.

 

(8) The Authority shall maintain IEPF suspense account (name of the company) with depository participant on behalf of the shareholders who are entitled for the shares and all benefits accruing on such shares e.g. bonus shares, split, consolidation, fraction shares etc. except right issue shall also he credited to such IEPF suspense account (name of the company).

 

(9) The shares held in such IEPF suspense 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-rule (10) and (11).

 

(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,

 

(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) 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 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 31′ May, 2017, the due date of transfer of such shares shall be deemed to be 31′ May, 2017.

 

(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 No. IEPF 3 within thirty days from the end of financial year.

 

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

 

(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 where the shares are held in physical form-

(i) the Company Secretary or the person authorised by the Board shall make an application, on behalf of the concerned shareholders, to the company, for issue of duplicate share certificates;

 

(ii) on receipt of the application under clause (a), a duplicate certificate for each such shareholder shall be issued and it shall be stated on the face of it and be recorded in the register maintained for the purpose, that the duplicate certificate is “Issued in lieu of share certificate No for purpose of transfer to IEPF” and the word “duplicate” shall be stamped or punched in bold letters on the first page of the share certificate;

 

(iii) particulars of every share certificate issued as above shall be entered forthwith

in a register of renewed and duplicate share certificates maintained in Form No.

SH-2 as specified in the Companies (Share Capital and Debentures) Rules, 2014;

 

(iv) after issue of duplicate share certificates, the company shall inform the depository by way of corporate action to convert the duplicate 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 containing details of such transfer.

 

(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 the details of shareholding of each individual shareholders whose shares have been credited to the DEMAT account of the Authority.

 

(8) All benefits accruing on such shares e.g., bonus shares, split, consolidation, fraction

shares etc., except right issue shall also be credited to such DEMAT account.

 

(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-rule (10) and (11).

 

(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.

 

(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. The Revised Rules provides that the IEPF Authority shall be opening the Demat account for transferring the shares therein. Earlier the shares were supposed to be transferred to the IEPF suspense account.

 

2. The second proviso to the said rules provides that for the cases where the period of seven years has already completed or will complete during the period starting from September 1, 2016 to May 31, 2017, the due date for transfer of such shares shall be May 31, 2017. However, there seems to be a typing error in the same with respect to the section reference provided therein. The section reference should be sub-section (6) of section 124 instead of sub-section (5) of section 124 as sub-section (6), not sub-section (5) talks about transfer of shares.

 

3. Earlier the contents of the newspaper advertisement was not very clear and was rather kept open ended. However, the Revised Rules states that the company shall through the newspaper advertisement inform the shareholders that the names and folio number or DP ID -Client ID is available on the website of the Company and also give the website address.

 

4. Earlier the shares on which there was a specific order of the Court or Tribunal were restricted from being transferred to the IEPF Authority. Now in addition that the shares which are pledged or hypothecated will also not be transferred to the IEPF Authority. This is a welcome change as transferring such shares would result in undue hardship to the pledgee in case of invocation of the pledge or hypothecation.

 

Further, the said rules also say that ‘shares already been transferred under sub-rule (1) above’ shall not be transferred, The intention of the Ministry is unclear as the transfer has already been taken place.

 

5. To effect the transfer of demat shares; now the companies will have to simply inform the depository through corporate action which in turn will transfer the said shares to Demat A/c opened by the IEPF Authority.

 

The above amendment has simplified the transfer process as compared to the earlier rules in this regard where the companies were required to execute Delivery Instruction Slips (‘DIS’)which resulted in operational inconvenience to the company as the same looked very unreasonable that one has to execute DIS with various DPs all over the country.

 

6. The requirement for executing transfer deed in form SH-4 has been done away with. Now the companies will only be required to inform the depository by way of corporate action to convert the duplicate share certificates into DEMAT form and transfer in favor of the IEPF Authority. However, the requirement of issuing duplicate share certificates has been retained in the Revised rules in spite of the same being redundant in nature.

 

7. The company will now be required to maintain the details of shareholding of each individual shareholders whose shares have been credited to the DEMAT account of the Authority. This is a new requirement.

5.         

7

 

(1) Any person, whose shares, unclaimed dividend, matured deposits, matured debentures, application money due for refund. or interest thereon, sale proceeds of fractional shares, redemption proceeds of preference shares. etc. has been transferred to the Fund, may claim the shares under provision to sub-section (6) of section 124 or apply for refund, under clause (a) of sub-section (3) of section 125 or under proviso to sub-section (3) of section 125, as the case may be, to the Authority by making an application in Form IEPF 5 online available on website www.iepf.gov.in along with fee, as decided  by  the  Authority  from  time  to  time  in  consultation  with  the  Central Government, under his own signature.

(2)        The claimant shall after making an application online in Form IEPF-5 under rule (1), send the same duly signed by him along with, requisite documents as enumerated in Form IEPF-5 to the concerned company at its registered office for verification of his claim.

 

(3) The company shall, within fifteen days of receipt of claim Form, send a verification report to the Authority in the format specified by the Authority along with all documents submitted by the claimant.

 

(4) After verification of the entitlement of the claimant-

 

(a) to the amount claimed, the Authority and then Drawing and Disbursement Officer of the Authority shall present a bill to the Pay and Accounts Office for e- payment as per the guidelines.

 

(b) to the shares claimed, the Authority shall issue a refund sanction order with the approval of the Competent Authority and shall either credit the shares which are lying with depository participant in IEPF suspense account (name of the company) to the demat account of the claimant to the extent of the claimant’s entitlement or in case of the physical certificates, if any, cancel the duplicate certificate and transfer the shares in favour of the claimant.

 

(5) The Authority shall, in its records, cause a note to be made of all the payments made under sub-rule (4).

 

(6) 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 sixty days from the date of receipt of the verification report from the company, complete in all respects and any delay beyond sixty 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.

 

(7) In cases, where the application is incomplete, a communication shall be sent to the claimant by the Authority detailing deficiencies of the application.

 

(8) In case, claimant is a legal heir or successor or administrator or nominee of the registered security holder, he has to ensure that the transmission process is completed by the company before filing any claim with the Authority.

 

(9) The claimant shall file only one consolidated claim in respect of a company in a financial year.

 

(10) The company shall be solely liable under all circumstances whatsoever to indemnity the IEPF Authority in case of any dispute or lawsuit that may be initiated due to any incongruity or inconsistency or disparity in the verification report or otherwise. The IEPF Authority shall not be liable to indemnity the security holder or Company for any liability arising out of any discrepancy in verification report submitted etc leading to any litigation or complaint arising thereof.

 

(1) Any person whose shares, unclaimed dividend, matured

deposits, matured debentures, application money due for refund, or interest thereon, sale proceeds of fractional shares, redemption proceeds of preference shares etc., has been transferred to the Fund, may claim the shares under proviso to sub-section (6) of section 124 or apply for refund under clause (a) of sub-section (3) of section 125 or under proviso to sub-section (3) of section 125, as the case may be,  to the Authority by submitting an online application in Form IEPF-5 available on the website www.iepf.gov.in along with fee as specified by the Authority from time to time in consultation with the Central Government.

 

(2) The claimant shall after making an application in Form IEPF-5 under rule (1), send the same duly signed by him along with, requisite documents as enumerated in Form IEPF-5 to the concerned company at its registered office for verification of his claim.

 

(3) The company shall, within fifteen days from the date of receipt of claim, send a verification report to the Authority in the format specified by the Authority along with all the documents submitted by the claimant.

 

 

(4) After verification of the entitlement of the claimant-

 

(a) to the amount claimed, the Authority and then Drawing and Disbursement Officer of the Authority shall present a bill to the Pay and Accounts Office for e- payment as per the guidelines,

 

(b) to the shares claimed, the Authority shall issue a refund sanction order with the approval of the Competent Authority and shall credit the shares to the DEMAT account of the claimant to the extent of the claimant’s entitlement.

 

(5) The Authority shall, in its records, cause a note to be made of all the payments made under sub-rule (4).

 

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

 

(7) In cases, where the application is incomplete or not approved, a communication shall be sent to the claimant and the concerned company by the Authority detailing deficiencies of the application.

 

(8) In case, claimant is a legal heir or successor or administrator or nominee of the registered share holder, he has to ensure that the transmission process is completed by the company before filing any claim with the Authority.

 

(9)  In case, claimant is a legal heir or successor or administrator or nominee of any other registered security or in cases where request of transfer or transmission of shares is received after the transfer of shares by company-to the Authority, the company shall verify all requisite documents required for registering transfer or transmission and shall issue letter to the claimant indicating his entitlement to the said security and furnish a copy of the same to the Authority while verifying the claim of such claimant.

 

(10) The claimant shall file only one consolidated claim in respect of a company in a financial year.

 

(11) The company shall be liable under all circumstances whatsoever to indemnify the Authority in case of any dispute or lawsuit that may be initiated due to any incongruity or inconsistency or disparity in the verification report or otherwise and the Authority shall not be liable to indemnify the security holder or Company for any liability arising out of any discrepancy in verification report submitted etc., leading to any litigation or complaint arising thereof.

 

As per sub-rule (9) of rule 7 where the  claimant is a legal heir or successor or administrator or nominee of any other registered security or in cases where request of transfer or transmission of shares is received after the transfer of shares by company to the Authority, the company shall be required to verify all requisite documents required for registering transfer or transmission and thereafter issue letter to the claimant indicating his entitlement to the said security and furnish a copy of the same to the Authority while verifying the claim of such claimant.

Conclusion

Even though it can be said that the Revised Rules have simplified the whole transfer process, certain redundant requirements such as, issue of duplicate share certificates are still there. Further, it cannot be said that the Revised Rules removed the hardship created to the companies as many companies have already taken steps for circulation of notice, publication of the same in terms of the Principal Rules. Whether these companies need to go for further compliance in terms of the Revised Rules or the compliance under the Principal Rule will suffice is not clear.  Further, the companies which have not yet initiated the process will now be required to gear up and start the process immediately so that they give a reasonable time to their shareholders to revert. However, companies will be restrained to proceed with unless there is a clarification w.r.t the opening of Demat A/c and fulfillment of other requirements applicable to the Authority.

[1] http://www.mca.gov.in/Ministry/pdf/Rules_06092016.pdf

[2] http://iepf.gov.in/IEPF/pdf/IEPF_Refund_Amendment_Rules_03032017.pdf

 

-by Munmi Phukon (munmi@vinodkothari.com) & Pammy Jaiswal (pammy@vinodkothari.com)