Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2021

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Jun 30, 2021

Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2021

The MCA through a Circular dated June 9, 2021, notified the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2021 (‘Amendment Rules’). The Amendment Rules provide for the manner of transfer of shares to the Investor Education and Protection Fund Authority (‘IEPF Authority’) and the Investor Education and Protection Fund (‘IEPF Fund’) in cases where a company does not receive information regarding significant beneficial ownership of such shares, or the information received is incomplete. Some of the key provisions of the Amendment Rules are:

i. All shares that are held by the IEPF Authority in accordance with Section 90(9) of the Companies Act (‘Restricted Shares’), and all the resultant benefits arising out of the Restricted Shares, must be credited, without any restrictions, to the IEPF Fund within a period of 30 days of such shares becoming due to be transferred to the IEPF Fund.

ii. The voting rights on the Restricted Shares will remain frozen. However, for the purpose of the Securities and Exchange Board of India (SubstantialAcquisition of Shares and Takeovers) Regulations, 2011, the Restricted Shares will not be excluded while calculating the total voting rights.

iii. All benefits accruing on the Restricted Shares like bonus shares, split, consolidation, fractionshares and the like except rights issue will also required to be credited to the demat account of the IEPF Authority.

iv. In case of delisting, the IEPF Authority will be required to surrender the Restricted Shares on behalf of theshareholders in accordance with the Securities and Exchange Board of India (Delisting ofEquity Shares) Regulations, 2009 and the proceeds realised will be credited to the IEPF Fund.

v. In case of winding-up, the IEPF Authority may surrender the Restricted Shares to receive the amount entitled onbehalf of the security holder and credit the amount to the IEPF Fund.

vi. Any further dividend received on the Restricted Shares will be credited to the IEPF Fund.

vii. Any amounts to be credited pursuant to (iv), (v) and/or (vi) above will be without any restrictions and no application may be filed for claiming back such amounts from the IEPF Authority.

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