Do you have share application money pending allotment in your balance sheet? Is it still unallotted? Or is it allotted but you have not yet filed the return of allotment with the department? If any of the answer of the above questions is in affirmative, then you need to buckle up read on. Do not be surprised if you find notices from ROC zooming in and gate crashing your office. The ROC has got up and is wide awake. This week almost 40 companies were sent notices for non-filing of Form 5 INV. The notices have left the companies baffled and clueless. The consequences are again not so pleasing. Hence, file Form 5 INV before ROC sends you notices. 

In which cases are you required to file Form 5 INV?

The Investors Education & Protection Fund (IEPF) rules make it mandatory to file Form 5 INV in the following cases:

(a) Amount of Unclaimed and unpaid dividend
(b) Amount of application moneys received and due for refund
(c) Amount of matured deposits
(d) Amount of matured debentures
(e) Interest accrued on the amounts referred to in clause (a) to (d) above

When is it mandatory for a company to file Form 5 INV?

Rule 3 of IEPF (Uploading of Information regarding unpaid and unclaimed amount lying with companies) Rules, 2012, defines this. Every company shall, within a period of 90 days after holding its AGM or the date on which it should have been held and every year thereafter till completion of 7 years, identify the unclaimed amounts, separately furnish and upload on its website and also on Ministry’s website the details of the said amount. These details shall be furnished by way of filing of Form 5 INV separately for each year containing the following information:

• Names and last known addresses of the persons entitled to receive the sum;
• Nature of the amount;
• Amount to which each person is entitled;

Analysis of “Amount pending and due for refund”?

Interestingly, the old Act, under which these notices are being sent does not define this “due for payment” angle. As per the new Act, the share application money shall be refunded within 15 days from the expiry of 60 days from the date of receipt of application money.

When is a company required to credit amount to IEPF?

Application amount shall be transferred to IEPF only after expiry of 7 years from the date it becomes ‘due”.

Pointers:

Balance sheet shows share application money pending allotment as on 31.03.2013 and notice for non-filing of Form 5 INV has been received.

• In case such money is already refunded before 90 days from the date of AGM, then the Form is not required to be filed.
• In case where such shares have been allotted before 90 days from the date of AGM, then return of allotment has to be filed with the ROC and accordingly a written reply has to be sent to the ROC.
• In case such money is refunded or shares allotted before 01.04.2014, you have to file Form 5 INV now along with return of allotment.

Conversion of such pending amount to loan after 31.03.2014

The new Act does not permit the conversion /adjustment of share application money. Company has to refund the amount to the applicant within 15 days of from the date of completion of sixty days. In case the company fails to do so, it shall be liable to repay that money with interest at the rate of 12 % p.a. from the date of expiry of the sixtieth day .

To conclude, past is not past. It is high time we start looking back and rectify the balance sheet before ROC starts digging up old graves and sending you flying notices.

 

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