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Analysis on the IEPF (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017

Companies have less than3months time to transfer shares

Munmi Phukon [email protected]

Pammy Jaiswal [email protected]

Corporate Law Services Division

6th

March, 2017

Article

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IEPF (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017 Companies have less than 3months time to transfer shares

Background

Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 20161 (‘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.

2. 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 http://www.mca.gov.in/Ministry/pdf/Rules_06092016.pdf

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

http://www.mca.gov.in/Ministry/pdf/Rules_06092016.pdf

http://iepf.gov.in/IEPF/pdf/IEPF_Refund_Amendment_Rules_03032017.pdf


3. 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.

4. 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 by 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. It is further to be noted that in normal case,


companies have 30 days period for actual transfer of shares which will not be available for the shares which are due for

transfer after 2nd

May, 2017 to 31st May, 2017.

5. 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.

6. 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.

7. 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.


8. 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.

9. 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.

10. 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.

11. Accrued benefits.

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

12. 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.


13. 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




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




1970 (5 of 1970) and clause

(b) of section 2 of the Banking



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;

The manner of implementing or

effecting the corporate action by

the companies is not mentioned

under the Revised Rules.

3. 3 (2) (g) all amounts payable as

mentioned in sub-section (3) of



Transfer of Undertakings) Act.

1970 and section 10B of Banking



1980.

all amounts payable as

mentioned in sub-section (3)

of section 108 of the Banking


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

(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

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


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

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

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


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

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

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


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.-

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.

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.

However, the said Rules do not

clarifies on how the corporate

action will take place.

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


(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

(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

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.


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

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 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

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


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

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


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.

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".

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

(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

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.


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

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


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

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.


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

(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


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


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


litigation or complaint arising

thereof. 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.


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.

To read other write-ups on IEPF related topics, click here

FAQs on transfer of shares to IEPF, click here

To read our other resources, click here

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