Introduction

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On October 25, 2023, the Securities and Exchange Board of India (SEBI) notified amendments to Regulation 61A of the Listing Obligations and Disclosure Requirements (LODR) Regulations, which prescribe provisions for dealing with unclaimed non-convertible securities and benefits accrued thereon. The amendment inserted a new proviso which states that the amount transferred to the Investor Education and Protection Fund (IEPF) shall not bear any interest.

This amendment is significant because it reverses the previous practice of paying interest on unclaimed amounts transferred to the IEPF. The previous practice was based on the principle that the IEPF is a trust fund and that the beneficiaries of the trust fund are entitled to interest on their unclaimed amounts.

However, SEBI has justified the amendment by stating that it is necessary to ensure that the IEPF is able to meet its statutory obligations. SEBI has also stated that the amendment is in line with the best practices adopted by other jurisdictions.

Implications of the amendment

The amendment will have a number of implications for investors, companies, and the IEPF.

For investors:

  • Investors who have unclaimed amounts that have been transferred to the IEPF will no longer be entitled to interest on those amounts.
  • Investors who have unclaimed amounts that have not yet been transferred to the IEPF should take steps to claim those amounts before they are transferred to the IEPF, in order to avoid losing out on interest.

For companies:

  • Companies should continue to make efforts to identify and contact investors who have unclaimed amounts.
  • Companies should transfer unclaimed amounts to the IEPF within the specified time period.

For the IEPF:

  • The IEPF will be able to reduce its administrative burden by not having to pay interest on unclaimed amounts.
  • The IEPF will be able to use its resources more effectively to fulfill its statutory obligations.

Analysis of the amendment

The amendment is a positive step in the direction of improving the efficiency of the IEPF. The amendment will reduce the administrative burden on the IEPF and allow the IEPF to use its resources more effectively to fulfill its statutory obligations.

However, the amendment may have a negative impact on investors who have unclaimed amounts that have been transferred to the IEPF. Investors who are affected by the amendment should take steps to claim their unclaimed amounts as soon as possible.

How to claim unclaimed amounts from the IEPF

Investors can claim unclaimed amounts from the IEPF by filing an application in Form IEPF-5. The application form can be downloaded from the IEPF website.

The application form must be accompanied by the following documents:

  • Proof of identity
  • Proof of address
  • Proof of ownership of the unclaimed amount

Once the IEPF receives the application form and all supporting documents, it will process the claim and release the unclaimed amount to the investor.

Conclusion

The amendment to Regulation 61A of the LODR Regulations is a positive step in the direction of improving the efficiency of the IEPF. However, investors who are affected by the amendment should take steps to claim their unclaimed amounts as soon as possible.

Additional thoughts

The amendment to Regulation 61A of the LODR Regulations is likely to have a significant impact on the way in which unclaimed amounts are handled. It is important for investors and companies to be aware of the implications of the amendment and to take steps to protect their interests.

Investors should regularly review their investment portfolios and identify any unclaimed amounts. If an investor has an unclaimed amount, they should take steps to claim it as soon as possible.

Companies should continue to make efforts to identify and contact investors who have unclaimed amounts. Companies should also transfer unclaimed amounts to the IEPF within the specified time period.

The IEPF should continue to streamline its processes and make it easier for investors to claim their unclaimed amounts. The IEPF should also provide investors with regular updates on the status of their claims.

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