Financial Daily from THE HINDU group of publications
Monday, Oct 07, 2002
Regulatory Bodies & Rulings
Transfer of unclaimed moneys to investor fund DCA warns defaulter-cos
NEW DELHI, Oct. 6
COMPANIES, which have not been transferring their "unpaid dividend" and "other unclaimed amount" to the Investor Education & Protection Fund (IE&PF) will soon be targeted by the Department of Company Affairs (DCA).
The DCA plans to undertake a survey of such companies that have failed to adhere to the prescribed norms in co-ordination with Indian Banks Association and the Reserve Bank of India, and take stringent penal action as per law against them.
"The department wants to send a message that the corporates cannot afford to take its norms lightly. Wherever it has been found that the regulations need clarification, the department is doing the same," sources said.
IE&PF was established on October 1, 2001 pursuant to the provisions of Section 205C of the Companies Act, 1956, which came into force on October 31, 1998. Necessary rules for operationalising the fund were also notified.
The amounts that remained unclaimed or unpaid as on October 30, 1991, irrespective of the number of years they remained unclaimed or unpaid in the following accounts; the application money received by the companies for allotment of any securities and due for refund, matured deposits with companies, matured debentures with companies and the interest accrued on the said amounts; should also be forthwith transferred to the fund.
"However, it came to the notice of the department that companies were interpreting the requirements of the Section and the rules thereof differently and the purpose and result of the provision were not followed in letter and spirit," the department said. Hence, DCA issued a clarification on September 16.
The department has clarified that all amounts remaining unpaid for a period of seven years in "unpaid dividend account" on or after October 31, 1995, should be transferred to IE&PF forthwith, unless already transferred.
"It is learnt that several companies, including some very large companies, have started depositing such due amounts to the IE&PF," DCA official said, adding that the "the Government expects all companies and banks would adhere to the correct legal position given in vide its recent circular and transfer remaining unpaid and unclaimed amount to the IE&PF."
Reliance informs dept of compliance
CLOSE on the heels of DCA clarification on unpaid dividend and other unclaimed amounts, which have remained unpaid or unclaimed for a period of seven years, the Reliance group has informed the department of transfer of such amounts to the fund.
Reliance Industries has transferred a sum of Rs 24,24,63,902 to the IE&PF, a DCA official said. Reliance Petroleum, which has now been merged with RIL, has transferred a sum of Rs 1,33,39,276 to the IE&PF.
"We expect that other companies which have not already transferred such amounts to the fund would do the same, now that we clarified certain issues on the rules relating to IE&PF", a DCA official said.
Reliance Capital Ltd has also transferred a sum of Rs 20,68,432 to the fund. Also, following suit was Reliance Industrial Infrastructure, which has transferred Rs 3,13,125.
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