IEPF stands for Investor Education and Protection Fund, and it was formed under the umbrella of the Ministry of Corporate Affairs by the Government of India on September 7, 2016, under the provisions of Section 125 of the Companies Act, 2013 (the Act), under which rules and regulations related to IEPF compliance are framed both for the investor and the company.
The IEPF authority was established by the government of India to protect the interests of investors who invested in the Indian stock market and whose dividends have been unpaid.
When dividends on shares are not claimed or are not encashed for 7 years consecutively, the dividends and shares of the investor are transferred to the IEPF authority.
If a corporation has awarded a bonus or split shares in the previous seven years, such claims will not be transferred to the IEPF. If no dividends have been claimed in the previous seven years, the bonus shares will remain with the owners even if the original shares are transferred to the IEPF.
The IEPF Authority has been bestowed with the responsibility of administering the Investor Education Protection Fund (IEPF) by reviving dormant shares and making refunds of unclaimed dividends, matured deposits, debentures, and interest thereon to investors. It also spreads awareness among investors and safeguards their interests.
What types of funds are transferred to the IEPF?
If not claimed on time, the following financial instruments are locked with IEPF:
- Unclaimed Shares
- Unclaimed Dividends
- Unclaimed Investments concerning debentures and interest due on them
- Unrealized matured time deposit proceeds of a company
Who is Eligible to Recover Shares from the IEPF Authority?
If you are a shareholder with unclaimed shares transferred to the IEPF, you are eligible to claim the refund of such shares from the Investor Education and Protection Fund. The process can be initiated by applying to the IEPF Authority. As per rule, a claimant is eligible to make only one claim in a financial year per company. Claimants should comply with the requisite legal formalities before claiming from the IEPF.
The company should also issue an entitlement letter prior to approving the claim.
Unclaimed Shares Transferred to IEPF:
Once shares have been transferred to the IEPF, there is a legal process to recover shares listed on an Indian stock exchange like the NSE or BSE. When the original shareholder is deceased, the legal heirs are required to transfer the shares into their name in order to get the shares released from IEPF. The process of claiming shares from the IEPF is cumbersome and tedious. Shares Recover assists in making this tedious process easy, along with making sure the claimant retrieves the shares from the Demat account.
Procedure for an IEPF Claim or IEPF Refund
Any investor whose shares, dividends, matured deposits, liens on deposits, or debentures have been transferred to the IEPF authority by a company or bank can claim their investments. If the original investor dies, their legal heirs can claim the investments from IEPFA after meeting all of the mandatory documentation requirements. The refund claim can be filed on the IEPFA website by filling out Form IEPF-5 with IEPF authority. Before proceeding to fill out Form IEPF-5, necessary approvals have to be obtained from the company or RTA, as applicable, to avoid any objections after filing the claim.
Requirements from the applicant for recovery of shares from IEPF
- To claim the investments pertaining to shares that transferred to IEPF, one must fill out Form IEPF 5 and submit it to the Nodal Officer of the company.
- An applicant is only permitted to submit one claim per year through one form for one company. If the claim is rejected for whatever reason, one will have to wait until next year.
- Only OTP verification, both from the applicant’s phone number and via email, is used to fill out the IEPF-5 form. Both the phone number and email address must be active and accessible to the claimant until the claim is retrieved from the claimant’s Demat account.
- The claimant can file the claim only when the PAN number is verified with the date of birth (DOB) while filling out the claim.
- After successfully filling the claim, claim documents should be submitted to the nodal officer of the company within 15 days from the date the SRN of the claim is generated.
The IEPF website also allows investors to track their claims or other details about their unclaimed investments.
The IEPF authority has been making its best efforts to protect the investor’s interest, and thus, before releasing any claim to the investor, the e-verification report is a mandatory document that must be provided to the Investor Education and Protection Fund Authority by the Nodal Officer of the company or bank, as applicable.
What are the steps to claim shares from the IEPF?
Investors having either unclaimed shares or unclaimed dividends or matured deposits or matured debentures or application money pending refund or interest or sale consideration from fractional shares or income proceeds from preference shares or any other assets stuck up with the IEPF can claim the investments under the provision of sub-section (6) of section 124 or make an application for a refund under clause (a) of sub-section (3) of section 125 or the proviso to sub-section (3) of section 125.
A legal counselor can assist in the transfer of unclaimed shares or unclaimed dividends from the IEPF. It is important to note that each company is only entitled to one consolidated claim per fiscal year. If the claimant is an administrator nominee, a legal heir, or a successor, they must first ensure that the transmission procedure has been completed by the relevant company or by the registrar transfer agent of the company before making any claim from the IEPF Authority.
A step-by-step guide to claiming shares from the IEPF:
Step 1: Complete the transmission (mutation) procedure with the company before claiming shares. It is necessary to complete the transmission procedure with the firm in question before submitting an application for such shares.
Step 2: Download E-Form IEPF-5 from the website, fill it out and upload it. This form asks for all the information about the unclaimed investment. It also requires the claimant’s personal information.
Step 3: After submitting the e-form, the claimant must mail copies of all relevant papers to the company’s Nodal Officer.
Step 4: Within 15 days of receiving the claim form, the company must deliver a verification report concerning authentication accepted or rejected to the authority.
Step 5: After receiving all essential documentation, the claimant verifies his or her rights. After that, a reimbursement sanction order is issued, and the transfer is made to the claimant’s Demat account.
How to Recover Unclaimed IEPF Shares
The process of utilizing the IEPF’s features to claim dividends has been deemed ineffective by many. They believe that the process is cumbersome, and very little data is provided on how to carry out the operation, which is largely attributed to the inconsistent information provided by the investors themselves, especially personal and bank account details like date of birth, age, residence, father’s name, and husband’s name. Apart from that, the portal seems to face technical issues, and work is still being done to improve them for further use.
Similarly, if a nominee or legal successor fails to complete the transmission of shares in the investor’s name after the investor’s death, unclaimed dividends will certainly occur. For all such unclaimed investments, one can approach our “IEPF recovery” advisors in India.
“Shares Connection” will provide professional solutions on such matters by enabling its legal and financial teams to conduct seamless due diligence that will make the recovery process smooth without any hassles to worry about. Non-adherence to the said procedure will keep the registration of unclaimed shares in the seller’s name instead of the actual buyer’s for eternity.
Shares Connection offers flawless and unparalleled services!
Because getting the shares out of the IEPF is a time-consuming and paper-intensive process. To make it easy for you, we will do all the paperwork for you. We work in a transparent manner and believe in “work first, pay later.”
We have a 100% success rate in claiming securities from the IEPF Authority and we are proud to introduce ourselves as the most experienced team in India. With an experience in this field for the last 40 years, we execute all legal actions necessary for the purpose of mutation to help you claim ownership in the absence of declared authorized heirs or successors, thus keeping future judicial disputes at bay.
In general, recovering shares from the IEPF is a time-consuming process, but with the assistance of our experienced team, we complete the procedure of recovering unclaimed investments in the shortest amount of time possible.
If you are eager to recover your investments that are stuck with the IEPF authority without having to go through painful administrative or judicial hassles, then contact Share Connection today.