SEBI Introduces Guidelines to Manage Unclaimed Dividends in Securities, REITs, and InvITs

SEBI Introduces Guidelines to Manage Unclaimed Dividends in Securities, REITs, and InvITs

VoM News Desk | November 8, 2023 | 10:30 PM IST | Breaking News | Follow on Google News

SEBI Introduces Guidelines to Manage Unclaimed Dividends in Securities, REITs, and InvITs

SEBI Introduces Guidelines to Manage Unclaimed Dividends in Securities, REITs, and InvITs

The Securities and Exchange Board of India (Sebi), which oversees the regulation of the Indian capital markets, has established comprehensive guidelines for the management of unclaimed investor funds held by entities with listed non-convertible securities, Real Estate Investment Trusts (REITs), and Infrastructure Investment Trusts (InvITs). This new set of procedures also includes specific methods for investors to claim such unclaimed amounts.

Uniform Process for Claiming Unclaimed Funds

Sebi’s latest circulars, effective from March 1, 2024, aim to provide a standardized process for the claim and management of unclaimed funds. The development of this framework follows Sebi’s board decision in September to amend regulations related to the Investor Protection and Education Fund (IPEF), along with REITs and InvITs. The standardized procedure is intended to facilitate the ease and convenience of investors when claiming their unclaimed funds.

Manner of Handling and Claiming Unclaimed Amounts

According to the circulars, Sebi has delineated the specific approach to be adopted for handling unclaimed funds associated with REITs, InvITs, and escrow accounts of listed entities that are not companies. These measures include the transfer of such funds to the IPEF and the subsequent claims by investors. Furthermore, Sebi has prescribed the processes that listed entities, REITs, and InvITs must follow to transfer these amounts to escrow accounts and for investors to lodge claims for their unclaimed funds.

Escrow Account Transfers and Investor Claims

Investors seeking to claim their unclaimed funds are advised to directly approach the respective debt-listed entity, REIT, or InvIT. The objective is to ensure a seamless process for investors to reclaim their investments with minimal disruption. In accordance with the new rules, any unclaimed amount that remains in the escrow account for a period of seven years will be mandatorily transferred to the IPEF. This move by Sebi is a step toward increased investor protection and a more efficient capital market system.

VoM News Desk

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