Unpaid dividend to go to investor fund

NEW DELHI Oct. 5. The Department of Company Affairs has clarified that all dividend amounts remaining unpaid for a period of seven years in ``unpaid dividend'' account on or after October 31,1995 should be immediately transferred to the Investor Education and Protection Fund (IEPF).

The clarification has been issued since it came to the DCA's notice that some companies were interpreting the rules on this issue differently. The interpretations gave scope for reconking the period of seven years from the date on which the provisions of Section 205 C of the Companies Act came into force.

The following 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 are also to be immediately transferred to the fund: application moneys received by companies for allotment of any securities and due for refund, matured deposits with companies, matured debentures with companies, the interest accrued in the amounts from these three accounts.

The DCA also plans to undertake a survey of companies which have failed to adhere to the circular in coordination with the Indian Banks Association and the Reserve Bank of India and take strict penal action as per law against such defaulting companies.

An official release says the IEPF was established on October 1, 2001 under the provisions of this Section of the Companies Act which came into force on October 31, 1998. Necessary rules for operationalising the fund were also notified.

It says that several companies including some very large ones have already started depositing such due amounts to the IEPF. ``Government expects all companies and banks would adhere to the correct legal position given in the circular and transfer all remaining unpaid and unclaimed amounts to IEPF in the DCA'', the release says.

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