Claiming Shares from IEPF- Are you looking to Claim your lost or forgotten money?

Overview

Imagine someday you discover that you have a certain number of shares or some of the money lying in a certain IEPF account, which you did not know about. Or you have no idea that some company has been making attempts to make payment of dividends which you failed to claim for years now. Such failure to claim shares could be due to factors including careless attitude or lack of awareness regarding investor rights.

Usually, businesses need help connecting suitable profits with the right shareholders, leading to capital markets. In order to eliminate this issue, the IEPF has enabled measures such as the compulsory declaration of PAN, registration of nominees, and digitization of securities.

Meaning of Unclaimed Shares

The IEPF rules state that any stockholder or his qualified legal heir who has not gained claim for shares and the dividend accrued upon it either held in physical or dematerialized form for a continued period of seven years or more could be labeled as Unclaimed Shares. Consequently, the applicant could have failed to claim shares due to:

• Out-of-date or incorrect address of the claimant
• Obsolete demat account in which shares are to be received
• Spelling error or inconsistency in the information that averts transfer of shares
• Overlooking or having no knowledge concerning ownership of shares for a particular company
• Inactive account of the shareholder for more than seven years in continuity, resulting in the company being unable to communicate with the shareholder or his appointed nominee
• Dormant Account of the Company for a period above seven years has failed to fulfill applicable regulatory compliances

IEPF - Role and Responsibilities

Under Section 124 of the Companies Act, 2013, and the IEPF Authority Rules, 2016, the authority is responsible for holding shares and proceeds for stockholders who have not claimed ownership of the unclaimed shares for up to seven years and allocate the same on verification of a genuine claim. Furthermore, the IEPF empowers stakeholders to know and practice their rights and protect themselves against investor fraud schemes.

Who can claim shares from the IEPF?

Any stakeholder whose shares and proceeds, deposits, debentures, share application money or interest accrued on it, profits from the sale of shares, the redemption of preference shares, etc., have been shifted from the concerned business to the IEPF authority may make an application to reclaim ownership and transfer of shares into demat a/c through submission of the application of IEPF portal.

How to check whether the concerned company has moved unclaimed shares to IEPF?

Where the applicant has yet to regain a claim over his shares for more than seven years, the first step to follow is to go through the stockbroker website account held in the Demat account. Besides, look for any previous corporate notices for dividends with statuses such as Failed, Wrong Address, or Unclaimed on the broker's website.

Next, if the company whose shares are unclaimed is still in existence, try to go to their website and look for information regarding unclaimed shares, as reputable businesses have a dedicated page offering information about Unclaimed shares. However, if a certain concern has been amalgamated or lost its existence, then consider contacting the Registrar and Transfer Agent (RTA), who may have data related to such unclaimed stock.

How to file a claim for unclaimed shares from IEPF?

1. Initially, login to the online website of the Ministry of Corporate Affairs and complete User Registration.
2. Next, sign in to the portal and select Investor Services to start applying.
3. Complete the form with all requisite information and supporting documents leading to Submission after which an acknowledgement form will be generated through the portal.
4. Now, take a printout copy and send it along with an executed indemnity bond to the verifying officer to verify your claim.
5. Once the application is checked thoroughly and verified, the authority will notify the concerned company to provide an online report authenticating the authenticity of the claim within one month. After which the authority may accept the claim and allow share transfer to the demat account of the applicant.

Documents Required

• Proof of Identification and address proof i.e. Aadhar/PAN/ Passport or utility bills, etc.
• Document to support a claim for entitlement of shares i.e. transaction statements, share certificates, demat a/c, or any similar document
• Cancelled cheque offering bank details in which dividend is to be refunded
• Client Master List (CML) offers demat account details in which shares will be transferred
• Original Death Certificate and Notarized Affidavit, where legal heirs of the original shareholder bring a claim for shares
• Transmission Request Form (TRF) to effectuate the transfer of shares from the original shareholder to his legal beneficiaries duly executed

Time Involved in Claim Shares from IEPF

Normally, it takes around 30-60 days from the date of receipt of an application for a claim of shares and their disbursal from IEPF in accordance with the established norms for IEPF claims processing under normal situations. But, where there is any inconsistency in the filled information, the application is found to be incomplete, or there is a lack of supporting documents leading to the need for form resubmission, or if the concerned company whose unclaimed shares are subject to the claim application is taking longer than usual to authenticate identification or title in case of unclear records, it may take up to three months or more depending upon the case.

Common Challenges While Filing Claims of Shares from IEPF

• Uncertainty related to title - To ensure the completion of the transfer process in a swift manner, it is necessary to ensure that the title of the shares is clear and free from any kind of ambiguity, lack of which could make the process long and tedious if the title is disputed wills or there are multiple claims for entitlement of unclaimed shares.
• Shares transmission process - Generally, shareholders still hold physical shares, and converting them into demat form and transmitting shares in case of death of the original shareholder are complex processes taking an extended amount of time.
• Requirement of various documents to prove claim - In specific cases such as the transmission of shares from the actual shareholder to his beneficiary there are multiple supporting documents required which could make the process difficult for people with no familiarity with legal procedures.

Final Thoughts

Therefore, in-depth authentication and assertion of ownership by the applicant is vital to the successful claim of shares and their proceeds from IEPF. The digitization of the process to claim shares from IEPF has become simple, faster, and convenient due to the joint efforts of the MCA and the IEPF authority for the ultimate benefit of the shareholder. However, making obvious mistakes could make the process more challenging for applicants for which they may consider availing advisory and filling assistance from experienced professionals at BizFoc.

Why choose BizFoc?

At BizFoc, we have a unique team of experts with years of experience to find solutions for all your woes related to the recovery of shares under one roof. Our unique features include:

• Expert Team of Professionals to guide and assist you with end-to-end support from registration to fulfillment of legal processes.
• Round-the-clock presence to hear your concerns.
• Efficient Services with reasonable charges in a timely manner.

FAQs

1. Is it possible for a shareholder to file more than one claim through the form?

   Stakeholders are allowed to file multiple claims through a single comprehensive form that permits applicants to effectuate the transfer of shares against different companies without any limit on the number of companies.

2. What is the maximum number of claims an applicant could submit to IEPF?

   No, the Companies Act and SEBI regulations do not put a cap on the applicant stakeholders to regain unclaimed shares or dividends from the approving authority. Though certain limits have been specified on the combined maximum claim that the shareholder could bring:

   • The value of unclaimed shares should not be higher than Rs. 5L in one claim making the utmost limit of Rs. 5L with one form.
   • The aggregate value of the unpaid dividend shall not be higher than Rs. 10L per claim. If the claim exceeds Rs. 10L, the applicant shall be required to fill out another form.

3. Can joint shareholders, co-claimants, or legal heirs bring the claim for shares?

   Yes, the IEPF authority allows the rightful heir to reclaim unclaimed shares and dividends after verifying their claim to the nominee, legal beneficiaries, or partners as representatives of the original investors representing their claims to protect their interests. The legal heir of the deceased or joint shareholder whose name has been registered as a joint holder could apply to reclaim shares with sufficient proof, including a statement from the company. On the other hand, the legal heir of the deceased stakeholder could submit a copy of the will probate, succession certificate, or similar documents to affirm the transmission of rights.

4. What is the maximum time limit to regain ownership of unclaimed shares and dividends?

   As per the rules laid under the Companies Act and SEBI regulations, original shareholders or their legal representatives could make an application for claiming shares from the concerned company for seven years, after which the unclaimed shares shall be transferred by the company to IEPF account making them the authority to hold shares until a valid claim from the shareholder is received.

5. Is there any fee applicable to file the IEPF refund claim?

   No, there are no applicable charges for the claim filing with the IEPF authority to reclaim unclaimed shares or dividends accrued upon them. The claim submission in form IEPF-5 is allowed free of cost to the applicant shareholder on the MCA portal. No fee is applicable for uploading forms or submitting attachments on the portal.

6. How can Non-Residents claim shares from the IEPF Authority?

   If the applicant is a Non-Resident Indian (NRI), he could apply for a claim to recover from IEPF by following the steps mentioned below:

   • Get an NRO bank account or a demat account to receive a refund for unclaimed shares and dividends if you do not have one.
   • Fill out the claim application stating PAN and other KYC details.
   • Submit supporting documents to substantiate your claim, i.e., bank statement, demat account transaction, Copy of passport, etc., which shall be attested where applicable, and sign the form digitally.
   The shared claim shall be authenticated post-submission based on supporting documents and proof of applicant identification.

7. How do you regain the claim of shares if the concerned company has been liquidated?

   If your unclaimed shares belong to a company that has now been liquidated, consider following the steps mentioned below:

   • Contact the IEPF authority regarding business liquidation along with the notice of dissolution of the business. Get communication details of the liquidator to facilitate claim submission for process pending sums.
   • Then apart from filling IEPF-5 also file a claim for the pending shares and dividend offering details of IEPF along with the proof of acknowledgement.
   • Keep tracking progress through follow-up with the liquidator by requesting him to include your name for the asset distribution.