{"id":63371,"date":"2023-03-01T11:26:58","date_gmt":"2023-03-01T05:56:58","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=63371"},"modified":"2023-03-01T15:50:48","modified_gmt":"2023-03-01T10:20:48","slug":"iepfa-issues-consultation-paper-on-refund-process-at-iepf-authority","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/iepfa-issues-consultation-paper-on-refund-process-at-iepf-authority\/","title":{"rendered":"IEPFA Issues Consultation Paper on Refund Process at IEPF Authority"},"content":{"rendered":"

The IEPF Authority was established as per Section 125 (5) of the Companies Act 2013 by the  Government of India for administering the Investor Education and Protection Fund (the fund).  The responsibility of such administration is entrusted with the authority through section 125 (3) of the Companies Act 2013.<\/p>\n\n\n\n

The Central Govt had notified the IEPF (Accounting<\/a>, Audit, Transfer and Refund) Rules, 2016, on 5th<\/sup> September 2016, for facilitating the refund of claims regarding shares, unclaimed dividends, debentures etc.  In order to effectuate the transfer of shares<\/strong><\/a> to the Authority, two DEMAT Accounts, one for each of the depositories, are opened. NSDL and CDSL are engaged as depositories for maintaining the DEMAT accounts of the Authority.<\/p>\n\n\n\n

In lieu of the same, the authority issued Consultation Paper on the refund process at IEPF Authority on 09.01.23 with the objective of simplifying and expediting the process of claim refund filed with IEPF Authority under the Companies Act 2013<\/strong>[1]<\/strong><\/a><\/sup>. The present article shall discuss the aspects covered in the consultation paper to provide clarity on the same.<\/p>\n\n\n\n

Utilization of Investor Education and Protection Fund<\/h2>\n\n\n\n

Section 125(3) of the Authority has been entrusted with the responsibility of adminitering  the fund as per section 125 (3) of the Companies Act 2013, which mandates utilization of funds for:<\/p>\n\n\n\n

  1. The refund  of unclaimed dividends, matured deposits, matured debentures, the application money due for refund and interest there on;<\/li>
  2. Promoting the investors’  awareness, education and protection;<\/li>
  3. Distributing any disgorged amount among eligible and identifiable applicants for debentures or shares,  debenture-holders, shareholders or depositors who have suffered losses due to wrong actions by any person, in accordance with the orders made by the Court which had ordered disgorgement; <\/li>
  4. Reimbursement of legal expenses incurred in pursuing class action suits u\/s 37 and 245 by members, debenture-holders or depositors  that have been sanctioned by the Tribunal; and<\/li>
  5. Any other purpose incidental thereto,  as per such rules as may be prescribed.<\/li><\/ol>\n\n\n\n

    Refund process at IEPF Authority<\/h2>\n\n\n\n

    The refund process at IEPF Authority is enumerated below –<\/p>\n\n\n\n

    Filling an Application<\/h3>\n\n\n\n

     For initiating the refund process at the IEPF authority, the claimant must file an application with authority in the prescribed manner. Such refund shall be settled after verification of the claims by the companies.<\/p>\n\n\n\n

    Transfer of application to the Nodal Officer<\/h3>\n\n\n\n

    Once the application is filed by the claimant, it is transferred to the company’s Nodal Officer in MCA21.<\/p>\n\n\n\n

    Furnishing of E-Verification Report<\/h3>\n\n\n\n

    Upon the receipt of the application to the nodal officer, a verification report is furnished by such officer to the Authority.<\/p>\n\n\n\n

    Processing of Claim for Refund<\/h3>\n\n\n\n

    Subsequent to the furnishing of the verification report, the claims are processed in the IEPF authority for refund.<\/p>\n\n\n\n

    Communication regarding the Approval\/Discrepancy\/Rejection<\/h3>\n\n\n\n

    Any discrepancy or objection and even the approval is communicated to the claimant via system-generated emails<\/p>\n\n\n\n

    Refund of Shares<\/h3>\n\n\n\n

    The shares are refunded through the depository system after the objection and discrepancies are sorted. <\/p>\n\n\n\n

    Refund of Amount<\/h3>\n\n\n\n

    Finally, the amount is refunded through PFMS System, which completes the refund process.<\/p>\n\n\n\n

    Shares in the Name of<\/strong><\/td>Form Filed By<\/strong><\/td>Type of Claim<\/strong><\/td>Remarks<\/strong><\/td><\/tr>
    A<\/td>A<\/td>Demat<\/td>Same Source & Destination demat account<\/td><\/tr>
    A<\/td>A<\/td>Demat<\/td>Different Source & Destination demat account<\/td><\/tr>
    A<\/td>A<\/td>Physical<\/td>Physical to Demat account<\/td><\/tr>
    A<\/td>B<\/td>Physical<\/td>A’s death, Physical to Demat’s account<\/td><\/tr>
    A & B<\/td>A<\/td>Physical<\/td>B’s Death RTA to delete the name of B<\/td><\/tr>
    A&B<\/td>C<\/td>Physical<\/td>A & B’s death, transmission executed by RTA<\/td><\/tr>
    A<\/td>B<\/td>Physical<\/td>Sale of shares by A to B, transfer deed executed by RTA<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    Categorization of Types of Claims Filed by the Authority<\/h2>\n\n\n\n

    The categorization of Claims filed by the authority is demonstrated below – <\/p>\n\n\n\n

    \"Types<\/figure>\n\n\n\n

    Documents required for claims filed with Authority as per SOP<\/h2>\n\n\n\n

    The important documents with regard to the same are enlisted below –<\/p>\n\n\n\n