General
Circular No. 22/2002
F.No.17/63/99-C.L.V
Government of
India
Ministry of Finance and Company
Affairs
Department of Company Affairs
**********
Shastri Bhavan, New Delhi.
Dated the 23rd of September,
2002
To
All Chambers of Commerce,
FICCI, ICAI, ICSI, ICWAI, ASSOCHAM
RBI
It has been brought to the notice of the Central Government that
provisions of Section 205C, inserted into the Companies Act on 31.10.1998, is
being interpreted by various companies, and other concerned persons, in a number
of ways, and this is leading to some confusion.
2.
Therefore, in supercession of all earlier letters or clarifications,
given either generally or specifically to any company, the correct legal
position is clarified as under:-
3.1 Prior to
the amendment of Section 205A and the enactment of Section 205C by the Companies
(Amendment) Act, 1999 with effect from 31st October, 1998, companies
were required to transfer to the general revenue account of the Central
Government any moneys transferred to the ‘unpaid dividend account’ which
remained unpaid or unclaimed for a period of three years from the date of such
transfer.
3.2 Therefore,
all amounts transferred to the ‘unpaid dividend account’ of a company on or
before 30th October, 1995 and which had remained unpaid or unclaimed
on 30th October, 1998 should have been transferred to the general
revenue account of the Central Government.
3.3 With the
amendment of Section 205A and the enactment of Section 205C by the Companies
(Amendment) Act, 1999, it is now provided with effect from 31st
October, 1998 that any moneys transferred to the ‘unpaid dividend account’ of
the company and remaining unpaid or unclaimed for a period of seven years from
the date of such transfer shall be transferred to the Investor Education and
Protection Fund.
3.4 Therefore,
all amounts transferred to the ‘unpaid dividend account’ of a company on or
after 30th October, 1995 or which have remained unpaid or unclaimed
for a period of seven years from the date of such transfer should be transferred
to the Investor Education and Protection Fund together with interest accrued
thereon, unless they have already been transferred to the general revenue
account of the Central Government prior to the enactment of the Companies
(Amendment) Act, 1999.
4.1 Section
205C enacted by the Companies (Amendment) Act, 1999 with effect from
31st October, 1998 also requires the following amounts to be credited
to the Investor Education and Protection Fund (the Fund) :
(a) The
application moneys received by companies for allotment of any securities and due
for refund;
(b)
Matured deposits with companies;
(c)
Matured debentures with companies;
(d) The
interest accrued on the amounts referred to in clauses (a) to
(c).
4.2 The above
amounts have to be transferred to the Fund when they have remained unclaimed or
unpaid for a period of seven years from the date they became due for
payment.
4.3
Accordingly, all amounts which had remained unclaimed or unpaid as on
30th October, 1991 (irrespective of the number of years they had
remained unclaimed or unpaid as on that date) and which remained unclaimed or
unpaid as on 31st October, 1998 should be transferred to the Fund
unless such amounts have been paid to the parties before the enactment of the
Companies (Amendment) Act, 1999.
4.4 In respect
of such amounts, which have become due for payment after 30th
October, 1991, the amounts should be transferred to the Fund if they remain
unclaimed and unpaid for a period of seven years from the dates they first
became due for payment.
5.1 Since the
Fund became operational only on 1st October, 2001 all amounts due for
transfer between 1st November, 1998 and 30th September,
2001 should have been transferred within the grace period of 30 days, i.e., by
31st October, 2001.
5.2 All
concerned are advised, that all transfers required to be made in terms of the
above clarification, if not already made, should be made
immediately.
(E. Selvaraj)
Joint Director (T)