November 10, 2023: The Securities and Exchange Board of India (Sebi) on November 8, 2023, came out with detailed procedures for dealing with unclaimed funds of investors lying with entities having listed non-convertible securities, REITs and InvITs, according to a PTI report. Also, the regulator has put in place a manner of claiming such unclaimed amounts by investors. The new framework will come into effect from March 1, 2024, the Sebi said in three separate circulars.
The move is aimed at prescribing a uniform process of claim for such unclaimed funds in a streamlined manner for the ease and convenience of investors. Going by circulars, Sebi has defined the manner of handling the unclaimed amounts lying with REITs, InvITs, and in the escrow accounts of the listed entities (which are not companies), transfer of such amounts to IPEF and claim thereof by the investors. Additionally, the regulator has standardised the process to be followed by a listed entity, REITs and InvITs for the transfer of such amounts to escrow accounts and by the investors for making claims thereof.
Investors may approach the debt-listed entity/ REIT/InvIT to claim their unclaimed amounts, thereby ensuring minimal disruptions in the claim process for investors. Under the rule, any amount transferred to the escrow account remaining unclaimed for a period of seven years shall be transferred to IEPF. If an investor makes a claim at this point, then the listed entity must release the funds to investors and then get a refund for that from the IPEF. The latest circulars have given a detailed framework, including timelines and penalties, for this.
Entities listed on the stock exchange that have issued non-convertible securities must transfer any unclaimed interest, dividend, or redemption amount to the escrow account within seven days of the 30-day expiration period. In case of a delay, they are liable to pay 12% per annum interest from the default date to the transfer date. These entities are required to appoint a nodal officer as a contact point for investors seeking to claim the amount. They must also display on their website, in a specified format, details of the transferred amount to the Investor Protection and Education Fund (IPEF), along with the nodal officer’s contact information. Additionally, entities must provide a search facility for investors to easily check for any claims. For Infrastructure Investment Trusts (InVITs) and Real Estate Investment Trusts (REITs), the investment manager has a shorter time frame of seven days from the expiry of 15 days to transfer the unclaimed amount.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
