According to Section 126 (6) of the Companies Act of 2013, an amendment was passed in accordance with the transfer shares to the IEPF. The amendment stated that if the person has failed to recover unclaimed shares of a certain company for seven consecutive years, they are liable to be transferred to the user’s DEMAT account of the IEPF. The amendment further elaborates that all the shares that are held in a physical or dematerialized form and are required to be transferred to the IEPF authority, they will all be done so to the DEMAT accounts of the IEPF through corporate authorities.
The shareholders can transfer both the unclaimed shares and dividend to the IEPF and they can also be claimed from the authorities at the discretion of the shareholder. There are certain rules that they have to go through before doing so and one should not that there is no claim that can lie against the company with regards to the unclaimed shares and the dividend amount that is transferred to the DEMAT account of the IEPF. There is a procedure that has to be followed for the transfer of shares by the company to the authorities of the IEPF.
There are a few things to be kept in mind in order to transfer the dividend or shares to the IEPF authorities:
- The transfer of shares must happen within a period of 30 days after the completion of the seven consecutive years of holding the unclaimed shares or dividend amount. It needs to be specifically transferred to the “unpaid dividend account” of the IEPF authority.
- It is essential to note that the shares will not be eligible to be transferred if the owner of the unclaimed Businesses shares or dividends has uncashed or withdrawn dividend warrants during the last 7 years.
- The shareholder needs to ensure that they hold the board resolution that authorizes the company’s secretary who is carrying out the procedure or giving effect to the required acts for the purpose.
- The respective shareholder need to be informed about the transfer at least 3 months before the deadline of the transfer of these shares.
The transfer of shares needs to be carried out according to the following procedure:
- If the shares are in a DEMAT form, the concerned company should fill out the corporate actions form with the depository. If the shares are in a physical form, the company’s secretary must file an application on behalf of the shareholder who is under the ‘IEPF claim refund’ category. A new share certificate will be issued to such users. The DEMAT hold the functions and the features to support any operation regarding the IEPF and it also meets all requirements.
- The new share certificate that is issued will be recorded in the register for the maintenance of records.
- After the issue, the company shall let the depository know that they have to convert their shares certificates in the form of SEMAT so that it can be transferred in favor of the IEPF authorities. This has to be done through corporate action.
- After this entire procedure, the concerned company should send in a statement to the IEPF authorities through an IEPF – 4 form and that must consist the details regarding the transfer of the dividend amount or shares while affecting the same.