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Informist, Friday, Oct. 24, 2025

 

MUMBAI – The Securities and Exchange Board of India has proposed an amendment to its listing regulations to harmonise the treatment of unclaimed interest and redemption proceeds related to listed debt securities with the provisions of the Companies Act, 2013. The market regulator floated a consultation paper on Friday seeking public comments on its plan to remove inconsistencies and simplify compliance for entities issuing non-convertible securities, such as debentures and preference shares.

 

At present, Regulation 61A of the regulations mandates that if interest, dividend, or redemption proceeds remain unclaimed for 30 days after their due date, the amount must be moved to an escrow account within seven days. If such funds remain unclaimed for seven years, they are required to be transferred to the Investor Education and Protection Fund under the Companies Act, 2013, or to SEBI's Investor Protection and Education Fund, in the case of entities not defined as companies.

 

However, SEBI noted that this framework does not explicitly link the transfer timeline to the maturity date of the underlying debenture or security. This has resulted in a situation where unclaimed interest amounts could be transferred before the instrument itself matures--a position inconsistent with the Companies Act.

 

"This lack of alignment between the LODR Regulations and the Companies Act can lead to interpretational ambiguity and operational inefficiency," SEBI observed in the consultation paper. To address the discrepancy, SEBI has proposed to substitute the existing regulations with a new provision.

 

The revised rule would mandate that any amount remaining unclaimed in the escrow account be transferred to the Investor Protection and Education Fund maintained by SEBI seven years after the maturity date of the security. The regulator also reiterated that once the amount is transferred, it will not earn any interest.

 

SEBI said the move would bring regulatory consistency, reduce compliance burdens, and make the process more investor-friendly. "This amendment would help standardize procedures across all entities issuing non-convertible securities, ensure ease of doing business, and simplify the process for investors," SEBI said.

 

SEBI has invited public comments from all stakeholders and they can submit their feedback by Nov. 14, through SEBI's online public comment portal, the regulator said.  End

 

Reported by Kabir Sharma

Edited by Akul Nishant Akhoury

 

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