In view of upcoming due date of transfer of shares, i.e., May 31, 2017 in respect of which dividend(s) have not been claimed for last 7 years to IEPF Suspense Account, the Ministry of Corporate Affairs has issued a notification dated April 24, 2017 vide General Circular No. 03/2017 with respect to special demat account for transfer of shares to IEPF (hereinafter referred to as “IEPF”) Suspense Account. 


The Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules 2016 (hereinafter referred to as the ‘Rules’), were notified by the Ministry of Corporate Affairs (hereinafter referred to as the ‘Ministry’) with effect from September 6, 2017 wherein companies registered under the Companies Act are required to transfer all unclaimed/unpaid shares in respect of dividends which have remained unclaimed for the last seven years continuously to the IEPF Suspense Account.

Various representations were received by the Ministry about the Rules regarding simplification of transfer process of shares and extension of date of transfer of shares to IEPF.[1] Subsequently, the IEPF Amendment Rules (hereinafter referred to as, 2017 were notified on February 28, 2017 wherein Rule 6 was amended to state that all unclaimed/unpaid shares in respect of dividends which have remained unclaimed for the last seven years shall be credited DEMAT Account of the IEPF Authority within 30 days of shares becoming due to be transferred to Authority. However, if the period of 7 years has been completed or is being completed during the period from September 7, 2016 to May 31,2016 then  the due date of transfer of such shares shall be deemed to be May 31, 2017.

Special Demat Account of IEPF

i. Demat account of IEPF with NSDL

The notification of the Ministry dated April 24, 2017 states that to facilitate the process of transfer of shares to DEMAT Account of the IEPF Authority, the IEPF Authority has decided to open a special demat account with National Securities Depository Limited (hereinafter referred to as NSDL) through a Depository Participant of NSDL.

ii. Obligations of companies to share transfers

Ministry has mandated for all companies to transfer shares to the special demat account of IEPF Authority, irrespective of whether shares are held in dematerialized form or physical form. Companies also have to provide information of shareholders whose shares are being transferred to NSDL in the prescribed format.

File format for transfer of shares was supposed to be notified by NSDL on April 30, 2017. However, such format has not been notified yet. NSDL has been directed to prescribe operational procedures for transfer of shares by May 15, 2017.

iii. Fees for transfer and maintenance of shares

NSDL shall levy charge to companies to upload and maintain records of transferred shares.

For effecting transfer of shares to Demat Account of IEPF Authority, transaction fees shall be charged at the rate of INR 10 per record subject to a minimum of INR 500.

For maintenance of records of shares transferred, annual maintenance fees shall be charged at the rate of INR 11 per record subject to minimum based on paid capital of the company as follows:

Please click here to view the table. 

The charges mentioned are in addition to the fees that Depositories levy on the companies for corporate actions. Corporate action means any action taken by the company relating to transfer of shares and all the benefits accruing on such shares namely, bonus shares, split, consolidation, fraction shares etc., except right issue to the Authority.[2]

iv. Features of the Demat Account

The Ministry has clarified that special demat account shall function in paperless manner using digital processes to support IEPF operations and facilitate record keeping of shares transferred to IEPF. However, the details of the demat account are yet to be issued by the Ministry. 


The introduction of a completely digital demat account and mandating companies to transfer shares to demat account is yet another step by the Indian Government towards an e-governed economy. However, the benefits of such account will be realized only after the account shall start operating. Also, the Ministry needs to elaborate on the charges to be levied by Depository for corporate actions of companies.