By Sanchit Garg
The Investors Education and Protection Fund (IEPF) was conceptualized to spread investor awareness and protect investor interests from any financial scams. Its mandate was also to refund to the investors, unpaid dividends and shares which have been transferred to the Fund. The IEPF Authority had recently come out with the “Consultation Paper on refund process at IEPF Authority“ to seek views from all stakeholders to ease the process of refund of shares and dividends to the investors. It is startling to see that the corpus of unclaimed dividends and other maturity amounts for the listed companies stood at a staggering Rs 5685 crores and total number of ~117 crore unclaimed shares have been transferred to the IEPF.
According to Rule 7 (1) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, shareholders can claim amounts transferred to the IEPF by submitting the IEPF-5 Form for unclaimed dividends, matured debentures, matured deposits, shares, refundable application fees, interest on fractional share sale proceeds, preference share redemption proceeds, etc.
The primary objective of the Government to create the IEPF Authority a few years back was to curb the misuse of shares lying unclaimed and promote and protect the shareholders’ interests; thereby providing safe and secure custody to unclaimed shareholder’s fund.
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Securities were transferred to the IEPF due to issues concerning transfer of shares, transmission of shares, corporate actions and unclaimed dividends. According to a recent reply by the IEPF Authority in Parliament, less than two per cent of the unclaimed shares only have been credited to the concerned shareholders by the IEPF in the last 6 years.
Presenting the Union Budget 2023 in Parliament on 1 February, the Finance Minister asserted that to further ease the process through which investors can reclaim their unclaimed shares and unpaid dividends, an integrated IT portal will be established.
The process of claiming the unpaid or unclaimed shares/dividend amount from IEPF Authority has also been streamlined and shareholders need to follow some easy procedures like logging into the MCA portal, then filling Form IEPF – 5 online, uploading all documents as required, after submission of the online form, printing the form and sending the copy of the same with all documents in an envelope labeled ‘Claim for refund from IEPF Authority’ to the company’s IEPF Nodal Officer/Registrar. The Nodal Officer after verification will upload an Approved Verification Report to the IEPF Authority which will in turn process the claim and release the shares within 60 days.
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However, recovery of shares/dividend from IEPF can be challenging for some shareholders, specially senior citizens, NRIs or legal heirs of deceased shareholders and to address these issues some companies and professionals are now providing shares and dividend recovery services to investors in the form of advisory on recovery of shares from IEPF.
However, only a few are providing end-to-end assistance in document filing and application submission with the concerned authorities, companies and registrars. Companies and their registrars on the other hand are also helping their shareholders with doubts and queries about issues concerning the transmission of shares, lost shares, name deletion, claims from IEPF etc.
(The author is Co-Founder of GLC Wealth)