The Securities and Exchange Board of India (“SEBI”) vide Circular SEBI/HO/DDHS/DDHS-RAC-1/P/CIR/2023/176 dated 8th November, 2023 (“Circular”) has standardized the process to be followed by a listed entity for transferring unclaimed interest/dividend/redemption amounts of non-convertible securities as mandated under Regulation 61(A)(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”) to Escrow Account and by the investors for making such claims. Refer to the attached document “Annexure – A” for the process flow of such transfer and claim. Listed entities which have unclaimed amounts in the Escrow Account for less than 7 years, as on February 29, 2024, will compute interest, as per provisions of Annex -A, from March1, 2024.
Further, Regulation 61(A)(3) of LODR Regulations provides that unclaimed amounts which is transferred to the escrow account and which remains unclaimed for seven years thereafter, will be transferred to the Investor Education and Protection Fund (“IPEF”). Vide this Circular, SEBI has also introduced a framework to define the procedure to be followed by the listed entities (which are not companies within the definition of “company” under the Companies Act, 2013 and the Rules made thereunder) for transferring such unclaimed amounts from the Escrow Account to the IPEF and claim thereof by an investor. Refer to the attached document “Annexure – B” for such framework. Listed entities which are not companies within the definition of “company” under the Companies Act, 2013 and Rules made thereunder, and have unclaimed amounts in the Escrow Account for more than 7 years, as on February 29, 2024, will transfer the unclaimed amounts of the investors to IPEF, as per provisions of Annex -B, on or before March 31, 2024
SEBI directs Recognized Stock Exchanges, Issuers and Depositories to comply with the following under this Circular:
1. conditions laid down herein;
2. disseminate the provisions of the circular on their websites;
3. put in place necessary systems and infrastructure for implementation of this circular;
4. communicate and create awareness among investors;
5. Stock Exchanges to bring the provisions of this Circular to the notice of listed entities/ issuers of listed Non-Convertible Securities and make consequential changes, if any, to their respective bye-laws.
The two frameworks laid in the Circular will come into effect from 1st March, 2024.
Source: Securities and Exchange Board of India
