The Ministry of Corporate Affairs notified the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer, and Refund) Amendment Rules, 2021 wherein the Procedure of transfer of shares to Investor Education and Protection Fund (IEPF) Authority is elaborated.
The MCA has amended the Rule 3(2) of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 in respect of the Fund.
Before the amendment there shall be credited to the Fund, the amounts, namely all amounts payable as mentioned in clause (a) to (n) of sub-section (2) of section 125 of the Act; all shares in accordance with sub- section (6) of section 124 of the Act; all the resultant benefits arising out of shares held by the Authority under clause(b); all grants, fees and charges received by the Authority under these rules; all sums received by the Authority from such other sources as may be decided upon by the Central Government; all income earned by the Authority in any year; all amounts payable as mentioned in sub- section (3) of section 10B of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, section 10B of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, sub-section (3) of section 38A of the State Bank of India Act, 1955],and section 40A of the State Bank of India (Subsidiary Bank) Act, 1959; and’ all other sums of money collected by the Authority as envisaged in the Act.
Apart from the above amounts, as per the amendment all shares held by the Authority in accordance with proviso of sub-section (9) of section 90 of the Act and all the resultant benefits arising out of such shares, without any restrictions shall be credited to the Fund.
The Government inserted new Rule 6A in the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer, and Refund) Rules, 2016 which elaborates on the Manner of transfer of shares under sub-section (9) of section 90 of the Act to the Fund.
Under section 90 of the Companies Act 2013, every individual who holds beneficial interests, of not less than twenty-five percent in shares of a company or the right to exercise, or the actual exercising of significant influence or control over the company (namely significant beneficial owner) is required to make a declaration to the company, specifying the nature of his interest.
As per the new rule, 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.
“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 sub-rule (4) of rule 6A containing details of such transfer and the company shall also attach a copy of order of the Tribunal under sub-section (8) of section 90 of the Act along with a declaration that no application under sub-section (9) of section 90 of the Act has been made or is pending before the Tribunal,” the notification said.
The voting rights on shares transferred to the Fund shall remain frozen. 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.
The company shall maintain all such statements filed under sub-rule (3) in the same format along with all supporting documents and the Authority shall have the powers to inspect such records.
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.
The Government notified the substitution of eforms IEPF-4 and IEPF-7 with the updated versions of the same as to enable the requirement of filing the said eforms pursuant to the requirements introduced through Rule 6A of IEPFA (Accounting, Audit, Transfer and Refund) Rules, 2016.
