IEPF Claim & Recovery Process: A Step by Step Guide

What is IEPF

IEPF stands for Investor Education and Protection Fund. It is a fund established by the Government of India to promote investor awareness and protect the interests of investors. The primary purpose of the Investor Education and Protection Fund is to safeguard the unclaimed dividends, matured deposits, and unclaimed shares for the benefit of the investors.

The Ministry of Corporate Affairs (MCA) established the IEPF. The Companies Act of 1956, Section 205C, was used to incorporate the IEPF Fund. The IEPF Authority was established under Section 125(5) of the Companies Act, 2013 in order to oversee the IEPF Fund.

Key points about IEPF:

  • Unclaimed Dividends and Deposits: The IEPF holds unclaimed dividends and matured deposits that have been transferred by companies and other entities as per the regulations specified by the Ministry of Corporate Affairs (MCA).
  • Unclaimed Shares: If dividends on shares or the proceeds from the sale of shares remain unclaimed for a certain period, these are also transferred to the IEPF.
  • Investor Education: Part of the fund is utilized for investor education and awareness programs to educate investors about financial markets, investment opportunities, and protection of their rights.
  • Protection of Investor Interests: The IEPF is designed to act as a safeguard for the interests of investors by ensuring that unclaimed amounts are used for the benefit of the investors and not retained by companies.
  • IEPF Authority: The Ministry of Corporate Affairs administers the IEPF through the IEPF Authority. The authority is responsible for managing the fund and implementing the regulations related to the transfer of unclaimed amounts to the IEPF.

Why Shares & Dividends got to IEPF?

Any dividend that remains unclaimed for seven consecutive years is obligated to be transferred to the IEPF, per Section 124(5) of the Companies Act of 2013.

Additionally, all shares for which dividends have not been claimed for seven or more consecutive years shall be transferred to the IEPF in accordance with Section 124(6) of the Companies Act of 2013.

 

What is IEPF Form-5?

Form IEPF-5 is typically associated with the refund process for shares and dividends that have been transferred to the IEPF. When dividends declared by companies remain unclaimed for a certain period, or when shares are transferred to the IEPF due to non-communication from the shareholders, the investors can claim their unclaimed amounts or shares by filing Form IEPF-5.

 

Steps to recover of shares  from  IEPF

Step 1: The claimant must make sure that an entitlement letter has been issued by the company before they may make a claim for shares from the IEPF.

Step 2: Online and email it to the official MCA website of the government with all the relevant details.

Step 3: After the form has been properly submitted, you will receive an SRN number that will allow you to track the report’s progress.

Step 4: After submitting the e-form, the claimant must send the same form to the Nodal officer together with all other supporting evidence in order to start the IEPF claim verification process.

Step 5: The company has to give the Authority a verification report indicating whether the authentication was approved or denied within 15 days of receiving the claim form.

Step 6: The IEPF authority verifies the claimant’s eligibility and the verification report before issuing a sanction order for a share return in the claimant’s favor. The shares will be credited to the claimant’s Demat account within 60 days of the company submitting the verification report to the IEPF Authorities..

 

Documents required to file an IEPF claim

A. Self-attested copy of your PAN and Aadhar cards.

B. Cancelled cheque leaf.

C. The client master list for the Demat account, which has been verified by both the DP and the claimant.

D. Self-attestation of SRN Recognition

E. An indemnity bond that has been witnessed and self-attested by the claimant

F. An advance stamped receipt with the revenue stamp, the claimant’s self-attestation, and the witnesses’ signatures

G. A letter from the transfer agent and registrar that has been approved for use as proof of entitlement by the nodal officer

H. As evidence of ownership of investments, original certificates of shares and investments, if held in physical form, or a copy of a transaction statement, if held in Demat form. Documents submitted to RTA for the issuance of duplicate shares must be attached in the event that the original share certificates are lost.

I. Copy of passport and OCI /PIO card in case of foreigners and NRIs.

J. Any further supporting documentation that is provided to the business in order to change a name, address, signature, issue duplicate shares, etc.

What are some mistakes in the IEPF process?

  • Typical errors made when submitting an IEPF Form-5.
  • The applicant’s name does not match the PAN database.
  • The applicant’s date of birth does not match the PAN database.
  • PAN No. not validated.
  • Wrong Aadhar Card No. put in the form.
  • In the case of foreign citizens, incorrect passport and OCI/PIO card information.
  • The choice of whether or not Rule 7 of the IEPF Rules applies is incorrect. In the event that the original shareholder passes away, it must be marked “Yes.”
  • Upon deletion of a name case, Rule 7 is mistakenly chosen as “Yes.” The demise of a joint holding’s joint holder just results in a “Name deletion” and is not covered by the IEPF (7)
  • Information about the beneficiary and original security holder—a deceased shareholder—was erroneously stated.
  • Incorrect folio number or numbers of folios entered in the form.
  • Total shares that were incorrectly entered on the form.
  • Incorrect dividend information on the form that was transferred to the IEPF
  • Wrong financial year provided in the form.
  • Wrong bank account or Demat account details put in the form. The bank account that is connected to the Demat account is the one that matters.
  • Wrong attachments or absence of obligatory attachments.