NEW DELHI
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New Delhi: In a much-required revamp of corporate disclosures, the government has simplified the reporting process for companies on unclaimed dividends, deposits, and share application refunds—a move that will also further smoothen the claim process for investors.
To reduce the compliance burden on companies, the ministry of corporate affairs in a recent order simplified how businesses need to report the transfer of unclaimed dividends and underlying shares to a fund maintained by the Investor Education and Protection Fund Authority (IEPFA).
This will also enhance the authority’s ability to process such data.
For investors and their heirs, the government is working on a platform that will allow them to search the database to see if amounts owed to them by companies are lying with the Investor Education and Protection Fund.
The total balance amount in the IEPF was estimated to be about ₹5,600 crore as of 31 January 2023, as per the latest official data available. In 2022-23, up to 31 January, IEPFA had approved more than 8,200 claims and returned 6.6 million shares to investors.
A Simplified Regime
An amendment to the IEPFA (Accounting, Audit, Transfer and Refund) Rules, effective from Tuesday, merges different forms and allows online transfers of amounts to the investor education and protection fund, allowing for smoother disclosures.
Businesses are required to provide detailed reports to IEPFA on unclaimed dividends, which they must maintain in a separate account, and on the transfer of any amount or shares unclaimed for seven years to the investor education fund.
This reporting regime has now been modified.
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The ministry has merged the two forms into two other forms for reporting the transfer of unclaimed shares, dividends, and other amounts to the investor education fund to simplify filings, explained Subodh Dandawate, associate director-regulatory services at Nexdigm, a business and professional services company.
The new forms will be transited to the ministry of corporate affairs’ new MCA21 portal and be processed under the straight-through process—i.e., the forms will be automatically approved on filing.
“Also, it is clarified that the amount to be deposited in the specified account of the IEPF Authority shall be transferred online,” said Dandawate.
Improved Security, and Quicker Processing
The latest version of the forms is web-based and includes two-factor authentication for improved security. The modifications will also allow for real-time verification of the information being keyed in and enable the Registrar of Companies to analyse the data, detect compliance trends, and take quick remedial action.
As part of the changes, the statutory filing portal will be able to send reminders to businesses about due dates for filing forms.
For investors, the process of claiming refunds from IEPF is entirely online. In 2021, the ministry simplified the process of claiming refunds and introduced self-attestation of documents in lieu of attestation by a notary.
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