Investors’ Education Protection Fund (IEPF) - Companies Law - 06/2004

General Circular No. 06/2004 F. No. 17/63/99-CL.V Government of India Ministry of Company Affairs 5th Floor, A-Wing, Shastri Bhawan, Dr. R P Road, New Delhi 110001. Dated the 10th August, 2004. Investors Education Protection Fund (IEPF) TO, All Chambers of Commerce FICCI, ICAI, ICSI, ICWAI, ASSOCHAM RBI The Department has vide its Circular No. 22/2002 dated 23rd September, 2002 have clarified inter alia that the Investors' Education Protection Fund (IEPF) became operational only on 1st October 2001, and all amounts due for transfer between 1st November 1998 and 30th September 2001 should have been transferred to it within the grace period of 30 days, i.e., by 31st October, 2001. Accordingly all concerned were advised to transfer to IEPF all the amounts referred to in Section 205C immediately after issue of the said circular. 2. In the said circular it was also clarified how, when and the date from which the unpaid and unclaimed dividend due for payment prior to and after the amendment of Section 205A and the enactment of Section 205C by the Companies (Amendment) Act, 1999 should be transferred to IEPF. 3. It has come to the notice of the Department that some companies have deposited the requisite amounts within the said 30 days and while some others had deposited the same at a later date. Department has received representations stating that in making the said deposits, companies were faced with unavoidable practical difficulties arising from the following:- (1) Issue of various debt instruments with varied interest dates; (2) Acceptance of fixed deposits from the public and shareholders over a long period of time; (3) Segregation of accounts in respect of debentures redemption proceeds, fixed deposit repayments and interest thereon was time consuming; (4) Manual maintenance of records by some companies requiring that old records had to be retrieved and reconciled and (5) time required to obtain the arrear amounts from their respective bankers. (6) Time taken by the Registrar and Transfer Agents with their multiple clients for identification of the unclaimed and unpaid amounts to transfer to IEPF. (7) Delay due to the process of complication of data, reconciliation and audit thereof. 4. In view of the above, the matter was carefully considered in the Ministry. Having noted that in depositing the unpaid dividend and other amounts referred to in section 205C (which had become due for payment into the IEPF) subsequent to the issue of circular No.22/2002 dated 23.9.2002 companies were faced with practical difficulties as noted above, and a reasonable period of time was required to resolve the same, it has been decided that in cases where compliance had actually been made by the company in question on or before 31st March, 2003, by deposit of the requisite amount into the IEPF, the objective of the said circular shall be deemed to have been satisfied and therefore a company need not be proceeded against for any penal action on grounds of delay upto 31.3.2003. All Regional Directors and Registrars of Companies are advised to take note of the above while contemplating action under the section and proceed in only those cases where compliance had not been made by 31.3.2003. This would equally apply to cases where show cause notice has been issued. (E Selvaraj) Joint Director (T)