Sebi seeks unclaimed funds info from non-corp entities


MUMBAI: Markets regulator Sebi has asked issuers of all the listed non-convertible debentures (NCDs), entities that do not qualify as a ‘company’ under the laws, to disclose the quantum of unclaimed interest, dividend and principal lying with them. The regulator has sought this information from these NCD issuers since listing agreements require them to transfer all unclaimed amounts lying with them for more than seven years to the government’s Investor Education & Protection Fund (IEPF), officials said.
There have been instances of issuance of NCDs by registered entities, which do not qualify as a company under the Companies Act, 2013. Recently, Sebi received representations from certain entities that since they do not qualify as a company, they are not required to transfer unclaimed funds to the IEPF.
Last month, acting on a public interest litigation (PIL), the Supreme Court had asked the government, Sebi, the RBI and some others to provide it with details about unclaimed funds, dividends, interest, shares, etc, that have been transferred to the IEPF.
According to officials, a situation has arisen which is facing contradictory regulations. On one hand, under the laws, issuers of listed NCD that are not companies are not required to transfer unclaimed dividend, interest, principal to the IEPF. On the other, listing agreements require them to transfer all such unclaimed funds to the IEPF. “Hence, there is a need to clarify the manner of dealing with unclaimed amounts pertaining to non-convertible securities by statutory bodies and/or developmental financial institutions,” an official note said. Thus, “Sebi is seeking information from entities who had/have listed debentures and still have unclaimed interest/ redemption amounts”.
On August 16, TOI reported that it was estimated that just the shares lying with the IEPF were worth about Rs 40,000 crore. In addition, there are funds from other instruments too that are with the IEPF.
Sebi on Tuesday said that all these NCD issuers should send details of the unclaimed funds as of August 31, 2022, to the regulator by September 15. The instruments, together bracketed as NCDs, include non-convertible debt securities, non-convertible redeemable preference shares, perpetual non-cumulative preference shares and perpetual debt instruments, Sebi said.





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