The Seven-Year Trigger
Under Section 124, dividends that remain unpaid or unclaimed for seven consecutive years from the date of transfer to the unpaid dividend account must be transferred to the Investor Education and Protection Fund, along with the underlying shares. The company must also transfer the dividend amounts that have remained unpaid for seven years. The transfer is not discretionary; it is a statutory consequence of the expiry of the seven-year period.
The Company’s Transfer Mechanics
The company must maintain an unpaid dividend account and transfer the unpaid amounts to the IEPF within the prescribed timeline after the seven-year period. The company must appoint a nodal officer for IEPF matters and file the requisite statements with the IEPF Authority. The board’s report and the annual return should reflect the transfers.
The Shareholder’s Claim Under IEPF-5
A shareholder whose dividend or shares have been transferred to the IEPF can claim a refund by filing Form IEPF-5 online on the IEPF portal, attaching the prescribed documents, and submitting the physical documents to the company’s nodal officer. The company verifies the claim and sends a verification report to the IEPF Authority, which then examines and approves the refund. The process is document-intensive: identity proof, share certificates or demat statements, entitlement proof, and bank details.
The Entitlement Letter
Before filing IEPF-5, the shareholder should obtain an entitlement letter from the company or the registrar and transfer agent. The entitlement letter confirms the shareholder’s holdings and the dividend amounts transferred. A claim filed without the entitlement letter is typically returned for want of verification.
The Dematerialisation Requirement
Where the claim involves shares transferred to the IEPF, the shareholder must dematerialise the shares before or as part of the claim process. The IEPF Authority credits the shares to the shareholder’s demat account upon approval. A claim that does not address the demat requirement is incomplete.
The Company’s Documentation
The company should maintain: the unpaid dividend register; the seven-year computation; the transfer statements; the IEPF challans; the nodal officer’s records; and the verification reports issued on shareholder claims. A company that cannot produce the transfer records faces a finding of non-compliance with Section 124 independent of any shareholder complaint.
Call to Action: For IEPF transfer reconciliation, IEPF-5 claim support, or nodal officer documentation, contact office@anujdesaiassociates.com or 9619456656. Website: https://anujdesaiassociates.com. LinkedIn: linkedin.com/in/ca-anuj-desai-122547230.