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Investor Education and Protection Fund Amendments

The Central Government notified the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund), Third Amendment, Rules, 2021, to amend the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.

Key amendments are as follows –

  • Earlier as per Rule 6 of section 124 of the Companies Act, 2013 the shares need to be transferred by the company to the Fund in respect of which dividend has not been paid or claimed by the shareholders for (7 consecutive years or more) to the Fund (administered by the Authority).
  • In the amendment rules it has been specified that the shares held in such DEMAT account shall not be transferred or dealt with in any manner except for the purposes of transferring the shares back to the claimant (shareholder) as and when he approaches the Authority.
  • As per section 236 of the Companies Act, 2013 in case majority shareholders having more than ninety percent or more of the issued equity share capital of the company, they can purchase minority shareholding by approaching the company for purchase of shares.
  • The company in turn will make an application to the authority and the Authority may receive the amount entitled on behalf of the minority shareholders from the company as per procedures provided under subsection 5 of the said section 236 and credit the amount to the Fund and a separate ledger account shall be maintained for such proceeds.
  • Any amount required to be credited by the companies to the Fund shall be remitted into the specified account of the IEPF Authority maintained in the Punjab National Bank and the details thereof shall be furnished to the Authority in Form No. IEPF-7 within thirty days from the date of remittance or within thirty days from the date of commencement of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund), Third Amendment, Rules, 2021, as the case may be.

The amended rules shall be effective immediately.

Kriti Mehta, Audit Associate, SW India

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