SEBI proposes uniform norms for unclaimed funds on non-convertible securities
Sebi has proposed changes to align regulations for entities issuing non-convertible securities, standardising the process for handling unclaimed amounts by allowing their transfer only after seven years from maturity. In its consultation paper, SEBI has proposed amendments to the Listing Obligations and Disclosure Requirements (LODR) Regulations to align them with the provisions of the Companies Act, 2013 and the Investor Education and Protection Fund (IEPF) Rules.
At present, Section 125 of the Companies Act mandates that unclaimed amounts, including matured debentures and the accrued interest thereon, be transferred to the IEPF only after 7 years from the date of maturity. Rule 3 (3) of the IEPF Rules further clarifies that unclaimed interest is to be transferred along with the matured debenture amount after this period.
However, Regulation 61A of the LODR Regulations currently requires that any unclaimed interest held in an escrow account for seven years be transferred to the IEPF or the Investor Protection and Education Fund (IPEF), irrespective of whether the debentures have matured. This has created an inconsistency between the two frameworks.
To address this, SEBI has proposed substituting Regulation 61A(3) with a new provision that mandates the transfer of unclaimed amounts to the IEPF only after 7 years from the maturity date of the debentures. For entities not covered under the Companies Act, the funds will be transferred to SEBI's IPEF after the same period.
Comments may be submitted on SEBI consultation paper by 14th November, 2025.
