What is the process of claim shares from IEPF?
Many individuals invest in shares and often forget to claim them, while others let them expire without action. In these scenarios, the funds can remain unclaimed for many years. To address this issue, the Ministry of Corporate Affairs (MCA) established the Investor Education and Protection Fund (IEPF) to facilitate the transfer and recovery of unclaimed shares by the rightful owners.
Shareholders of a company can reclaim their unclaimed shares that have been transferred to the IEPF according to Section 124 of the Companies Act, 2013, and the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.
Transfer of Unclaimed Shares to IEPF
A company is required to transfer shares with unclaimed or unpaid dividends for over seven years to the IEPF, along with any interest that has accumulated. The company must also provide the IEPF Authority with the details of these transfers. Shareholders can reclaim their unclaimed shares that have been transferred to the IEPF by submitting an application to the IEPF Authority, which keeps records of all accounts.
Who Can Apply to IEPF Authority for Recovery of Shares?
Any shareholder whose unclaimed shares have been transferred to the IEPF can request a refund for those shares by submitting an application to the IEPF Authority. It is important to note that a claimant may only submit one consolidated claim for a company within a financial year. This combined claim must encompass the information from multiple Folios associated with the same company.
When the claimant is the legal heir, nominee, or successor of the registered shareholder, it is essential for them to first confirm that the company has completed the share transmission process and issued an entitlement letter. Only then should they proceed to file the IEPF claim with the relevant authorities.
Process of Recovery of Share From IEPF
Step 1: Filing to Authority by Claimant
To request a refund or reclaim shares in their name, a claimant must submit Form IEPF-5 through the MCA portal. The claimant needs to include the following information in the form:
- The applicant’s (claimant’s) information
- The company information from which the amount is due, including CIN number
- Details of the shares to be claimed
- Details of the amount of the dividend to be claimed
- Aadhaar number, when the claimant is an Indian citizen or passport/OCI/PIO card number, when the claimant is an NRI or foreigner.
- Details of the bank account linked to Aadhaar to which the claim would be refunded
- Demat account number
Step 2: Submitting the Claim to the Company
After completing and submitting Form IEPF-5, the claimant should send a copy of the form in an envelope labeled ‘Claim for Refund from IEPF Authority’ to the company’s IEPF Nodal Officer or Registrar, along with the following documents:
- Printout of the filled Form IEPF-5 with the claimant’s signature
- Copy of the acknowledgement with the SRN number
- Original indemnity bond with the claimant’s signature on a non-judicial stamp paper of the amount stated under the Stamp Act
- Original advance stamped receipt with signature of the claimant and witnesses
- Original share certificates (if shares are in physical form) or copy of transaction statement (if securities are in Demat form)
- Aadhaar card
- Proof of entitlement, i.e. certificate of share, interest warrant application number, etc.
- Passport, Overseas Citizen of India (OCI), or Person of Indian Origin (PIO) card in case of NRIs and foreigners
- Cancelled cheque
- Copy of Demat account’s client master list
Step 3: Submission of Claim from the Company to the IEPF Authority
The company is required to prepare a verification report within 15 days of receiving a claim form from a claimant and submit it to the IEPF Authorities along with the claimant’s supporting documentation.
Step 4: Refund from IEPF Authority to the Claimant
The IEPF Authority is required to make a decision on the claimant’s reimbursement application within 60 days of receiving the verification report from the relevant company that has validated the application.
When the claimant is entitled to the shares, the IEPF Authority will issue a refund sanction order, with approval from the competent authority. After confirming the claimant’s entitlement, the IEPF Authority and the Drawing and Disbursing Officer will submit a bill to the Pay and Accounts Officer for payment. The shares or the extent of the claimant’s entitlement will then be credited to the claimant’s Demat account.
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