A total of nearly 117 crore unclaimed shares were lying with the Investor Education and Protection Fund (IEPF) as of March 31, 2023. Sanchit Garg, CEO and Co-founder, of GLC Wealth, believes that these unclaimed shares would be worth Rs 40,000 to 50,000 crore in terms of value. Likewise, dividends worth Rs 5,700 crore have also been transferred to the IEPF account in the recent past. Before going ahead, one should understand that the unpaid or unclaimed amounts belonging to a company’s investors are pooled and credited into the IEPF.
How to track unclaimed shares or dividends?
In an exclusive interaction with Business Today, Garg said that there is no centralized database where information on such unclaimed shares and dividends can be retrieved at the click of a button. Most of these investments are several decades old investments when centralized linking to PAN or Aadhar was not prevalent. However, to track and trace out information on such unclaimed investments one can do the following:
- Collate all information from your records like physical share certificates, dividends, allotment letters, income tax returns, old records, or notes of investment maintained by you or your family member or accountant.
- The IEPF website has a facility to search for shares and dividends that have been transferred to the IEPF. One can try to look for the information by putting a name or folio number on this platform. However, the database is not very comprehensive and updated. Also, there are multiple scenarios where issues of name mismatch are due to changes in name, abbreviations, typing, or clerical errors. Hence it is not completely possible to trace 100 percent of your investments from the existing portal.
- Many companies disclose the list of investors who have not claimed their dividends on the website. One can visit the company’s website and try to locate his or her investments if the information is available. However, there are thousands of listed companies in India so practically it is impossible to visit every website.
How cumbersome is the process?
Claiming back such old unclaimed investments is a multi-step process involving multiple rounds of documentation which for a common investor might be a complex and cumbersome exercise. It also involves continuous follow-ups and running around with multiple parties involved including the company, its registrar and transfer agents, government authority which includes IEPF, and courts in case of deceased shareholders.
Garg further explained the entire process which includes:
- Collate all information about your investments that have been transferred to IEPF like folio numbers, share certificates, etc.
- Get your KYC, signatures, bank, and demat account details updated in the company’s records.
- If any share certificates are lost then comply with the documents for issue of duplicate shares.
- In the case of a deceased shareholder, the process of transmission has to be done by the legal heirs including the court process depending upon the value of the investments.
- Once the entitlement letter is issued by the company, file your claim by filing IEPF Form 5 on the MCA portal.
- Send the physical documents to the Nodal officer of the company.
- The company will file its verification report
- The claim will be approved and shares will be transferred to your demat account
The expert, who receives 50-75 calls per day for claiming shares or other assets, said that if all documentation is done properly, for a shareholder who is alive the process can take 6-18 months. In the case of a deceased shareholder where a transmission process through court is required, it can take upwards of 18 months. It depends upon how quickly you can execute the documents as per the company or government’s requirements.
Other than shares and dividends, individuals can also claim unclaimed deposits in savings and current accounts and term deposits, deposits in provident funds, mutual funds, and insurance policies
More about the IEPF account
IEPF was established under Section 205C of the Companies Act, 1956 by the Companies (Amendment) Act, 1999 to promote investor awareness and protect the interests of investors. Later, the IEPF Authority was established under Section 125 (5) of the Companies Act, 2013 to administer the IEPF Funds and provide refunds of shares, unclaimed dividends, matured debentures, and other deposits. to the investors and to promote investor awareness.
As per Section 124 (1) of the Companies Act 2013, companies are mandatorily required to transfer any dividends that go unclaimed or unpaid for 30 days from the declaration date to a special bank account created by the company i.e. Unpaid Dividends Account, within 7 days after the expiry of the said 30 days.
Under section 124 (5), any money transferred to the Unpaid Dividend Account of a company, which remains unclaimed or unpaid for seven consecutive years, needs to be transferred or sent to the Investor Education and Protection Fund established. This means that any investor who has not claimed any dividends for seven consecutive years will have to claim back his/her dividends from the Investor Education and Protection Fund (IEPF).
Further, as per section 124 (6) of the Companies Act 2013, the shares in respect of which dividends have not been paid or claimed for a period of seven consecutive years or more shall also be transferred by the company to the Investor Education and Protection Fund (IEPF) along with the unclaimed dividends. So any investor who has not claimed the dividends for a period of consecutive seven years will have to claim back the unclaimed dividends from the Investor Education and Protection Fund (IEPF) after following the complete procedure of filing the claim with the IEPF Authority.
How NRIs can claim the amount?
To claim back their investments an NRI needs to have a PAN card in India, an NRE or NRO bank account, a Demat account, and an OCI / PIO card in case of foreign nationals.
“One of the main concerns of investors settled abroad is whether they will have to physically come to India to claim such investments. They need not have to be physically present in India for this process. They can execute all the documents abroad along with the relevant attestations or notarizations required by the company or government and send the documents to India,” Garg said.