Process to get back shares from IEPF (Investor Fund)

PROCESS TO GET BACK SHARES FROM INVESTOR EDUCATION AND PROTECTION FUND

Introduction – Investor Education and Protection Fund

• The government of India introduced the service related to IEPF, in order to address the ever-increasing problem of investors. This fund was launched with the aim to promote the protection of interest and awareness of the investors.
• Where any amount of dividend remains unclaimed in the unpaid dividend, for a period of 7 years, the same is required to be credited to IEPF and the same is taken care of by the Govt on behalf of the respective shareholders.
• There could be multiple reasons for a person forgetting about their shareholding in a company. Some of these reasons are –

1. No Nominee –

   It is generally seen that investors do not appoint any nominee/ heir of their shares after their death. In such a case, the shares remain deserted because the legal heirs are clueless about such shares.

2. Small Investments –

   Another reason could be the size of the investment. In case a small amount is made, the investors tend to forget about the same.

3. Property Dispute –

• Where the shares get attached to the court because of proceedings regarding the property dispute, the shares remain ownerless till the final verdict of the court.
• There can be many other reasons due to which an investor tends to forget about his/ her shareholding in a company. And because of this, the companies face difficulty in finding the real owner of the shares.
• Before the introduction of the IEPF, companies used to transfer the unclaimed dividends and unclaimed shares to the government funds and the government was allowed to use such funds for various public welfare schemes and various developmental works.
• However, with the increasing cases, of people forgetting their shareholdings in a company, the Government realized such an act is somehow, causing losses to the investors.
• Therefore, the Government decided to introduce a fund in the name of IEPF. Here, all the members who have their shareholding transferred to these funds, can approach then and claim their shares and dividends.
• Such a funds shall use the amount transferred by the companies, for the benefit and awareness of the investors. People can claim their dividends and shares relating to different companies under a single platform instead of visiting each and every company individually.

Governing Provisions of Investor Education and Protection Fund

• The functioning of IEPF is governed by the Companies Act, 2013 along with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.
• Where a company declares a dividend and the shareholder donor claim the same within 30 days from the date of declaration, then the said amount be transferred to a special account known as ‘Unpaid Dividend Account’.
• The company is required to publish the list shareholder whose dividends remained unclaimed, and the same be made within 90 days from transfer of amount to Unpaid Dividend Account.
• Apart from this, the company shall use the other mode of communication to convey to the members about their unclaimed dividends.
• Where a shareholder comes forward to retrieve their unclaimed dividend, an application be filed with the share transfer agent of the company.
• If the shareholder fails to claim the dividend for a continuous period of 7 years, the said amount of dividend shall be transferred to the IEPF Account and the shares in respect of which such dividend was declared shall also be transferred to the IEPF.

Provisions Initiated By MCA regarding IEPF

• MCA started a fund in the name of Investor Education and Protection Fund, as regulated by the Investor Education and Protection Fund Authority Rules, 2017. Under this, where the money is transferred to the Unpaid Dividend Account of a company and the same remains unpaid or unclaimed for seven years (7 years and 37 days from the date of declaration of dividend) from the date of transfer, the same shall be transferred by the company along with interest accrued on it, to Investor education and protection fund.
• What is the process to get refund of Share from IEPF?
• A person requiring a refund of their shares, being transferred to IEPF, due to one reason or the other, can claim them back by complying with the provision of section 124(6) or apply for a refund under section 125 (3)(a) or under section 125 (3), as the case may be.
• How many no of IEPF filing claims form can be file in a FY ?
• A person being a claimant can file a single consolidated claim in respect of a company in a single financial year.
• So person need to be very conscious while filing the IEPF form since the same can be filed only once in a financial year.

• What is basic procedure of filing claims form IEPF ?

1. The claimant should be in receipt of a Demat Account with NSDL/ CDSL since the shares will be transferred to their demat account only.
2. The Claimant is required to file an application with MCA in e-form IEPF-5 and the application shall include the following details –

• • Detailed particular of the claimant/applicant.
  • Detailed particular of the Company, whose shares are claimed.
  • Complete details of the shares claimed like their folio number and distinctive number.
  • Details of the amount related to the claim.
  • Year-wise details of securities/deposits of the company.
  • ID proof of the applicant in the form of Aadhaar Number or Passport/OCI/PIO Card No.
  • Bank account details, where the claimed amount is refunded.

3. After filing of the application, the applicant shall send the following documents to the Nodal Officer (IEPF) of the respective company, and the same be provided in an envelope marked with “claim for refund form IEPF Authority” –

• • The original Share Certificate/ bond/ Debenture Certificate is in the physical form.
  • An original indemnity bond having the signature of the claimant, with the following particulars –
  • On a non-judicial Stamp Paper of value prescribed under the Stamp Act, where the amount of the claim is Rs.10, 000 or more.
  • On plain paper, where the amount claimed does not exceed Rs.10,000.
  • On a non-judicial Stamp Paper of value prescribed under the Stamp Act, where there is a refund of shares.
  • The original of advance Stamped receipt along with the signature of the claimant and two witnesses.
  • Copy of the Aadhaar Card of the claimant and the witnesses.
  • Copy of duly filled claim form IEPF-5 bearing the signature of the claimant.
  • Copy of acknowledgment receipt generated.
  • A Cancelled Cheque leaf for updating the bank account details.
  • Also, a copy of the Passport, OCI, and PIO card, where the claimant is a foreigner or NRI

4. Every company requiring to credit amounts or shares to IEPF or has deposited any amount or transferred any shares to the Fund, shall nominate a Nodal Officer, who can be any Director or Chief Financial Officer or Company Secretary of the company, and the said person shall look into the verification of claims and accordingly coordinate with Investor Education and Protection Fund Authority:

• The Nodal Officer shall be responsible for all the actions undertaken by the Deputy Nodal Officer, as appointed by the Nodal officer himself. In case any company fails to appoint Nodal Officer, their director shall deem to be the nodal officer and shall be liable for any default or failure of duty.

The details of the Nodal Officer, as well as the Deputy Nodal Officer, shall be published on the website of the company along with the following information –

• • Designation of the officer in the company.
  • Their postal address for communication.
  • Their telephone or mobile number for official communications.
  • Authorized ID issued by the company.
• These details be also provided to IEPF in Form No. IEPF – 2, within fifteen days from the date of publication of rules.

5. Once the claim is filed, the company is required to dispatch the verification report along with the submitted documents, to the Authority in the format specified by them, within 30 days from receipt of claim application.

• The Company can also attach the scanned copy of the original documents submitted by the claimant, provided the same is duly certified by the Nodal Officer.
• It is to be noted, that were the company fails to comply with the above provision, they shall be liable to pay an additional fee of Rs 50 per day, for each day of delay after 30 days, subject to a maximum of Rs 2500. In case the Authority does not receive the documents within 60 days from the date of filing of Form IEPF-5, the application be rejected, after giving an opportunity to the claimant to furnish their reason for delay, within 15 days from the expiry of 60 days.

6. After the verification is done, the Authority and the Drawing and Disbursement Officer shall present a bill to the Pay and Accounts Office for a refund of the amount to the claimant. However, in case of refund of Shares, the Authority shall issue a refund sanction order after taking approval of the Competent Authority and shall credit the shares directly to the Demat account of the claimant.

• The said procedure be completed by the Authority within 60 days from the date of receipt of the verification report from the Nodal Officer.

What happens on filling out an incomplete application?

• Where the Authority finds the application to be incomplete and some other necessary information is required, the same shall be intimated by the Authority through e-mail to the claimant and the company.
• The mail shall state the defect or deficiency found in the application, and shall direct the applicant to furnish the required information or to rectify the identified defects, within fifteen days from the date on which the mail is received. In case, no reply is received within the said period, the Authority may reject the application form.
• Other Documents
• Where the claimant is a legal heir or successor or administrator or nominee of a deceased shareholder, they are required to submit a self-attested scanned copy of all documents detailed in Schedule II of IEPF rules, along with Form No. IEPF-5.
• However, where the securities have been lost, the applicant is required to submit a self-attested scanned copy of additional documents detailed in Schedule III, along with Form No. IEPF-5. The original documents are dispatched to the registered address of the Nodal officer of the respective company for verification.

Documents in case of loss of Securities

1. Copy of FIR/ Police Compliant containing information of security holder, holding details, folio number and distinctive numbers of share certificate, duly notarized by the notary.
2. Surety Affidavit equal to the market value of shares as on date of execution along with his Proof of identity like Pan Card of sureties duly attested by Notary.
3. Indemnity bond by security holder on a non-judicial stamp paper of requisite value duly attested by Notary Public and the same be signed by the real holder.
4. Copy of advertisement in respect of lost of securities, being issued in at least one English language daily newspaper and in one regional language daily newspaper, circulating near the area of registered office of company.

Documents for transmission of Securities

Securities held in Physical Mode :

1. Share held under single name with the nomination –

• • The Transmission Request form, duly signed and attested by the nominee.
  • Original or copy of death certificate, duly issued by the authority.
  • Copy of PAN card, self-attested by the applicant.
  • Original share certificate(s), issued in the name of the deceased.
  • Any other Government ID, acting as a proof of the nominee.

2. Share held under the single name without nomination –

• The Transmission Request form, duly signed and attested by the applicant.
• Original or copy of death certificate, duly issued by the authority.
• Copy of PAN card, self-attested by the applicant.
• Original share certificate(s), issued in the name of the deceased.
• Any other Government ID, acting as a proof of the nominee.
• Affidavit from all the legal heirs, on a non-judicial stamp paper, evidencing their identity as heirs of the deceased, provided there is no will or succession certificate be executed by the deceased in some other person’s name.
• In case the value of securities is up to Rs. 2,00,000, per issuer company, the following documents be presented –
• The Succession certificate or will as executed, as per the Indian Succession Act, 1925.
• Or, they can provide a No Objection Certificate from all legal heir(s), evidencing of having no objection in the transmission of shares.

3. Shares held jointly with nomination –

• The Transmission Request form, duly signed and attested by the nominee.
• Original or copy of death certificate, duly issued by the authority and certified by all the joint owners.
• Copy of PAN card, self-attested by the applicant.
• Original share certificate(s), issued in the name of the deceased.
• Any other government ID, acting as a proof of the nominee.

4. Shares held jointly without nomination –

• The Transmission Request form, duly signed and attested by the applicant.
• Original or copy of death certificate, duly issued by the authority and certified by all the joint owners.
• Copy of PAN card, self-attested by the applicant.
• Original share certificate(s), issued in the name of the deceased.
• Any other Government ID, acting as a proof of the nominee.
• Affidavit from all the legal heirs, on a non-judicial stamp paper, evidencing their identity as heirs of the deceased, provided there is no will or succession certificate be executed by the deceased in some other person’s name.
• In case the value of securities is up to Rs. 2,00,000, per issuer company, the following documents be presented –
• The Succession certificate or will as executed, as per the Indian Succession Act, 1925.
• Or, they can provide a No Objection Certificate from all legal heir(s), evidencing of having no objection in the transmission of shares.

• Securitas held in Demat Mode :

1. Shares held in single name with the nomination –

• • The Transmission Request form, duly signed and attested by the nominee.
  • Original or copy of death certificate, duly issued by the authority.
  • Copy of PAN card, self-attested by the applicant.
  • Copy of the statement issued and certified by the Depository Participant, with whom such demat account is opened.
  • Any other Government ID, acting as proof of the nominee.

2. Share held under the single name without nomination –

• • The Transmission Request form, duly signed and attested by the applicant.
  • Original or copy of death certificate, duly issued by the authority.
  • Copy of PAN card, self-attested by the applicant.
  • Copy of the statement issued and certified by the Depository Participant, with whom such demat account is opened.
  • Any other government ID, acting as a proof of the nominee.
  • Affidavit from all the legal heirs, on a non-judicial stamp paper, evidencing their identity as heirs of the deceased, provided there is no will or succession certificate be executed by the deceased in some other person’s name.
  • In case the value of securities is up to Rs. 2,00,000, per issuer company, the following documents be presented –
  • The Succession certificate or will as executed, as per the Indian Succession Act, 1925.
  • Or, they can provide a No Objection Certificate from all legal heir(s), evidencing of having no objection in the transmission of shares.

3. Shares held jointly with the nomination –

• • The Transmission Request form, duly signed and attested by the nominee.
  • Original or copy of death certificate, duly issued by the authority and certified by all the joint owners.
  • Copy of PAN card, self-attested by the applicant.
  • Copy of the statement issued and certified by the Depository Participant, with whom such demat account is opened.
  • Any other government ID, acting as proof of the nominee.

4. Shares held jointly without nomination –

• • The transmission Request form, duly signed and attested by the applicant.
  • Copy or Original copy of death certificate, duly issued by the authority and certified by all the joint owners.
  • PAN card copy self-attested by the applicant.
  • A statement issued and certified by the Depository Participant, with whom such demat account is opened.
  • Any other Government ID, acting as a proof of the nominee.
  • Affidavit from all the legal heirs, on a non-judicial stamp paper, evidencing their identity as heirs of the deceased, provided there is no will or succession certificate be executed by the deceased in some other person’s name.
  • In case the value of securities is up to Rs. 2,00,000, per issuer company, the following documents be presented –
  • The Succession certificate or will as executed, as per the Indian Succession Act, 1925. Or, they can provide a No Objection Certificate from all legal heir(s), evidencing of having no objection in transmission of shares.

VERIFICATION REPORT

• The verification report is the most important document available with the authority. The report shall state the following aspects –

1. The KYC documents submitted the applicant in the form of PAN Card, Aadhar Card should be self-attested. In case, the shares are held jointly, the documents be provided for all the joint holders.
2. The Advance Receipt and Indemnity Bond be duly stamped and the details of the witness shall be clearly mentioned on it. Also, the Revenue stamp be duly affixed on the Advance receipt.
3. A valid proof of Entitlement shall be attached.
4. The Client-Master List submitted by the applicant shall be duly attached.
5. In case the claim relates to shares, the report issued by RTA confirming the amount and no of shares transferred to IEPF Authority be also attached.
6. The Non-liability clause be also mentioned properly in the Verification Report.

PROOF OF ENTITLEMENT

• Dividend warrant or self-attested copy of share certificate, in case claim involves Unpaid/Unclaimed Dividend.
• Original share certificate & Letter from Registrar & Transfer Agent of company duly verified by Nodal Officer, in case claim involves share held in physical form & any Unpaid/ Unclaimed Dividend transferred to IEPF.
• Letter from Registrar & Transfer Agent, in case involves shares held in Demat form and Unpaid/ Unclaimed Dividend transferred of IEPF.
• All the documents be duly verified and attested by the Nodal Officer, before dispatching the same to the authority.

RECTIFICATION FORM IEPF-5

• Where any discrepancy is identified in Form IEPF-5, the same is communicated to the applicant and the company on the MCA portal.
• In case the form is marked as RSUB or PUCL, the applicant is required to resubmit Form IEPF-5 or file Form GNL-4(Addendum), respectively.
• Every applicant is required to file Form GNL-4 (Addendum) electronically, where the Form IEPF-5 is marked as PUCL, and failing to which, will lead to the treatment of submitted documents as invalid and the same shall be canceled.

NEED FOR LEGAL ASSISTANCE

• whole procedure foe claiming the refund of unclaimed dividends and lost shares is quite difficult and lengthy.
• However, the same can be taken care of by the expert hired, and all the work and formalities will be done by the expert.
• Hiring a legal professional can help save time and cost and also relieve the claimant from tedious task.
• Where any mistakes are identified by the authority, they will straight away reject the application, and the claimant would be required to repeat the whole procedure.
• Also, in case of family dispute, hiring a lawyer will be very beneficial. Many a times, shareholder die without making any nominee, and also without drafting any will.
• In such a case, all the family members become the legal heir and can claim their right to the deceased’s property.
• In this situation, without a lawyer, the other party can over power and can easily take the advantage. Since a lawyer is equipped with the knowledge of low,
• they can protect their clients from all the loopholes and thus can provide them with the best deal possible.

 

• APPLICATION TO AUTHORITY
• ANNEXURE I                           
•  ADVANCE RECEIPT
• Received from the Investor Education and Protection Fund Authority the sum of Rs…………… and No. of Shares ……………… being the amount and shares payable to me from the Investor Education and Protection Fund as …………. (Dividend on Equity / Preference shares / matured deposits / matured debentures / application money due for refund / interest accrued on……………………. /Dividend credited to IEPF under Companies Act, 1956 or Companies Act, 2013/ Dividend credited to General Revenue Account under Companies Act, 1956 / others, specify…) # which was originally due from M/s……………………………………………………………………. (Name of the Company)
• Signature of claimant with date

Affix Revenue Stamp

• Signature of witness:

1. Signature with date

• Name
  Address

1. Signature with date

• Name
  Address
• ANNEXURE II
• INDEMNITY BOND
• To
• The Investor Education and Protection Fund Authority
• ………………………
• In consideration of the payment of Rs.……………. and No. of shares…………………. being the amount and shares due to me as …………………… (Dividend on Equity /Preference shares / matured deposits / matured debentures / application money due forrefund / interest accrued on……………………. /Dividend credited to IEPF under Companies Act, 1956 or Companies Act, 2013/ Dividend credited to General Revenue Account under Companies Act, 1956 / others, specify………….) # For the Financial Year………………………………. from M/s ………………………………………. (Name of the Company) out of the Investor Education and Protection Fund by the Authority, I ……………………………. son /daughter /wife# of……….…………………. do hereby agree and undertake to indemnify the Investor Education and Protection Fund Authority to the extent of any claim not exceeding the amount hereinbefore mentioned which may be preferred against the Investor Education and Protection Fund Authority, and which it has to lawfully discharge.
• Signature
• Date:
  Place:
• Witnesses:
• Signature of witness:

1. Signature with date

• Name
  Address

2. Signature with date

• Name
• Address
• # Strike off whichever is not applicable

• VERIFICATION REPORT

• Original Claim                       Resubmitted Claim
• – Name of Company:                                         ………. Limited
• – Verification Report of claim made vide SRN No ……………… to IEPF Authority

1. Name of the Applicant:
2. Folio No/ DP ID/ Client ID:
3. Amount claimed:
4. Type of security:      Equity
5. Period for which the claim relates:
6. Details of challans through amount was deposited, with verified copy of challans and year wise detail: –

Name of Claimant	SRN of form IEPF-1/ INV-1	Challan Number	Date	Amount of Refund
			Total	Rs.

1. Detail of share transferred with verified copy of year wise details: –

Name of Claimant	SRN of form IEPF-4	Date of transfer	Number of shares to be refunded	Type Of Shares (Physical/Demat)

8. Whether claimant’s bank details tally

• With the cancelled cheque leaf:

9. Whether the claimants Demat account

• Details tally with Company record             ………………………………………………….

10. Recommendation

• If approved then:
• (a) Proposed refund amount:
• (b) Amount in Figures:
• (c) Proposed number of shares for refund:
• If rejected, reason thereof: –
• (a) Data Bank of company does not find the name of applicant as security holder
• (b) Mismatch in Folio no./DP ID/ Client ID
• (c) Signature mismatch
• (d) Mismatch in nature of Security
• (e) Any Litigation is pending (Give details)
• (f) Incomplete documents (give Details)
• (g) Duplicate claim made by applicant (Give details of earlier claim allowed)
• (h) Any other reason:
• Note: Mismatch of amount claimed is not a reason of rejection.
• Attachment with resubmitted claim:

1. a) ……….
   b) ……….
   c) ……….Non-Liability Clause

• –  The Company shall be solely liable under all circumstances whatsoever to indemnify the IEPF Authority in case of any dispute or lawsuit that may be initiated due to any incongruity or inconsistency of disparity in the verification report or otherwise.
• –  The IEPF Authority shall not be liable to indemnify the security holder of Company for any liability arising out of any discrepancy in verification report submitted etc., leading to any litigation or complaint arising thereof.
• Name of Nodal Officer:
• Signature:
• Date:
• Stamp:

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