New IT Portal: The government has taken steps to help its investors or legal heirs to reclaim shares and dividends lying unclaimed for years. The Finance Minister announced during the Union Budget 2023 that the government will set up an integrated IT portal for the Investor Education and Protection Fund (IEPF) Authority. Announcing the new portal, the Finance Minister said that this step will strengthen the protection of investors, making it easier for them to claim their unclaimed shares or dividends. Through this portal, the entire financial sector will be made more robust and transparent.
What are unclaimed shares and dividends?
There are some companies in the world of stock market which give a share of their profits to their shareholders from time to time. This part received in the form of profit is called dividend. Unclaimed dividend means that the company has paid the dividend but it is yet to be claimed by the shareholders. This can happen due to various reasons like, the shareholder has not updated his address in the records of the company and the dividend has not been received by him or the bank account has not been updated in the records of the company or the shareholder has died. Apart from this, there are many other reasons like non-matching with the name present in the record.
When no one inquires or claims about dividend of shares for seven years, the shares are transferred to Unclaimed Suspense Account and then to IEPF Account. This can also happen due to various reasons like change of address, overseas migration of the investor, death of the investor, loss of share certificates or name mismatch.
Investor Education and Protection Fund (IEPF)
The Investor Education and Protection Fund was conceptualized in 2016 by the government under the Ministry of Corporate Affairs to raise awareness among investors about their unclaimed dividends and shares. The primary objective of the government was to prevent misuse of unclaimed shares and to promote and protect the interests of the shareholders.
Interestingly, unclaimed dividends worth Rs 5,685 crore have come to the notice of listed companies, which had no claimants or claimants. Similarly 117 crore unclaimed shares have been transferred to IEPF. According to the current market prices, today their value would be around Rs 50,000 crore.
Presently, to get the shares and dividends lying in IEPF, the claimants have to claim online by filling IEPF Form-5. After that the hard copy of the documents has to be submitted to the nodal officer of the concerned company. In this entire process it is necessary to follow up with the company, its Registrar and Transfer Agent (RTA) and IEPF authority. But the difficulties are that the claimants have either clear or non-existent information about this process and documentation. Apart from this, they do not have a single platform to deal with multiple parties and track their claims, due to which they have to face many problems. To ease the process, the IEPF claim Authority has recently introduced a “Consultation Paper on Refund Process in IEPF Authority” to seek feedback and suggestions from all stakeholders and also proposed an Integrated IT Portal for IEPF.
Integrated IT Portal for IEPF
This step of the government to set up this integrated IT portal will further ease the process of re-claiming unclaimed shares and unpaid dividends. Shareholders who have not tracked or claimed their dividends or shares for the last seven years can now visit the IEPF IT portal to see whether their unclaimed shares have been transferred to IEPF. After this, they can claim their shares or dividends directly through the portal by following the prescribed procedure. This will enable investors to check the real-time status of their claims and companies to deal with any discrepancy raised by the government. In addition, there is also a possibility that claims below a certain value may be approved through a direct process.