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How has digitization affected old/physical shares and wealth of the older generation?

Digitization mandates that all physical share certificates be converted into the Demat (dematerialized) form.

How has digitization affected old/physical shares and wealth of the older generation?
Still owning old/physical shares? Know how to protect your wealth. Representative image

By Shweta Gupta

Our parents, in their twilight years today, worked and saved hard to give us a good life. One of the instruments safeguarding and growing their hard-earned money was through investing in shares – physical shares which were issued in the form of paper share certificates. 

As the years rolled by, parents aged, the children grew up, they moved locations, and as is the way with time, some elderly people passed on. In recent times, digitization has been introduced. This mandates that all physical share certificates be converted into the Demat (dematerialized) form. While the intent is to safeguard the investments made, this nonetheless poses a challenge to the elderly unfamiliar with the technology. On top of this, unclaimed dividends have become another stumbling block as these have been directed towards the original address mentioned in the (records of the company) physical share purchase certificates with no one there in the present day to claim them.

The ensuing confusion and stress have been dealt with by SEBI stepping in to set things right. Along with the ministry of corporate affairs (MCA), it has initiated the Investor Education and Protection Fund (IEPF), which serves as safekeeping of shareholders’ funds and collects all dividends from asset management firms as well as deposits that have matured, share application interests, debentures, and other types of interests that are unclaimed for a minimum period of seven years and twenty-six days. 

Also Read: How a money insurance plan can protect your cash

In the event of death, however, the legal heir has to initiate a process of transmission of the shares and not a transfer. While the transfer is a shareholder-initiated voluntary action, transmission is the operation by law. The process to reclaim the legacy our elders left behind is here and simple to follow.

How to claim shares from IEPF

A claimant must complete Form IEPF-5 and upload it to the MCA website in order to get a refund or recover shares that were issued in his or her name. 

The following needs to be filled:

Step I

  • Particular of applicant
  • Company  details
  • Details of shares to be claimed 
  • Details of the amount, i.e. the dividend claimed 
  • Details of securities/deposits, year wise
  • Aadhaar number or passport/OCI/PIO Card No. (in the case of NRI/foreigners
  • In the case of Indian residents, the Aadhar-linked bank account details 
  • PAN card
  • Client Master List of Demat Account of the Shareholder/Claimant.

Step II 

Email the completed online refund form, along with the aforementioned attachments, to the relevant company’s nodal officer/ registrar after completing it as directed. Mark the envelope with “Claim for refund form IEPF authority”, along with the claimant’s signature at the bottom of every page.

The documents needed are:

  • A duplicate of the acknowledgement bearing the SRN number
  • Original indemnification bond bearing the claimant’s signature. The bond should be completed on non-judicial stamp paper if the claim is for more than Rs. 10,000. Plain paper can be used for the bond if the claim is less than this sum. Use non-judicial stamp paper with the amount specified in the Stamp Act if the claim is for the refund of shares.
  • An original advance stamped receipt including the claimant’s and a few witnesses’ signatures. ( The signature has to be across the revenue receipt)
  •  Original certificates if a deposit or debenture has matured. (If it has been lost, then duplicate formalities should have been completed)
  •  For Indian citizens, Pan Card, Aadhaar card, and for NRIs and foreigners, copies of their passports, OCI, and PIO cards
  •  Proof of entitlement. This can be the number on the initial shares/interest warrant application. 
  • Cancelled cheque leaf. This should be of the bank account listed in the IEPF Form-5.
  • A self-attested copy of the Demat account’s client master list.

Step III 

Within two weeks of receipt of the claim form, the relevant company should create an E- verification report and send it to the IEPF authority in the prescribed format along with the documents submitted by the claimant.

Step IV 

The authority and the drawing and disbursement officer of the authority shall send a bill to the pay and accounts officer for payment in response to the amount claimed after completion of the verification of the claimant’s entitlement, in accordance with the rules.

The authority must issue a sanction order for a refund together with the consent of the relevant body if the claimant has already claimed the shares. The claimant will receive credit for the shares in their Demat account. In the case of physical shares certificates, duplicate certificates are cancelled, and the shares are transferred in the claimant’s favour.

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By converting paper share certificates to Demat form, the pain of maintaining and safeguarding them is thus dealt with effectively.

In our opinion, the MCA and SEBI’s decision to enable genuine shareholders to recover their money from the IEPF is a reassuring and positive step in the right direction. It ensures that the older generation’s efforts and life savings are protected, and the legacy that they have left behind for future generations is safeguarded. Aapki Amanat – Aap tak.

Claim your investments now. You deserve your money back in your wallet.

(The author is Founder and CEO, MUDS Management)

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