In its consultation paper, the regulator has proposed amendments to the Listing Obligations and Disclosure Requirements (LODR) Regulations to bring it in line with the provisions of the Companies Act, 2013 and the Investor Education and Protection Fund (IEPF) Rules.
Currently, Section 125 of the Companies Act stipulates that unclaimed amounts, including matured bonds and accrued interest thereon, may be transferred to the IEPF only after seven years from the maturity date.
Rule 3(3) of the IEPF Rules further clarifies that unclaimed interest after this period must be carried forward along with the matured bond amount.
However, Regulation 61A of the LODR Regulations currently requires that any unclaimed interest held in an escrow account for seven years be transferred to the IEPF or the Investor Protection and Education Fund (IPEF), regardless of whether the bonds have matured or not. This has led to an inconsistency between the two frameworks.
To address this, Sebi has proposed replacing Regulation 61A(3) with a new provision that would mandate transfer of unclaimed amounts to the IEPF only after seven years from the maturity date of the bonds. For entities not governed by the Companies Act, the funds will be transferred to Sebi’s IPEF after the same period. Sebi said the proposed “amendment would help bring about standardization across all entities having non-convertible securities. in terms of dealing with unclaimed amounts and ease of doing business as the entities have to transfer the remaining unclaimed amounts only once after expiry of seven years from the maturity date.”
These changes will also be beneficial to the investors as they can directly approach the entity up to seven years after the debt maturity date to demand repayment of their money, instead of having to approach IPEF/IEPF, it added.
The Securities and Exchange Board of India (Sebi) has sought public comments on the proposal till November 14.
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