Investor Education and Protection Fund (IEPF)

What is IEPF?

IEPF strands for Investor Education and Protection Fund. The Indian government established this fund in order to safeguard investors’ interests and raise investor awareness. The Investor Education and Protection Fund’s main goal is to protect investors’ interests by holding onto matured deposits, unclaimed shares, and unclaimed dividends.
The IEPF was founded by the Ministry of Corporate Affairs (MCA). The IEPF Fund was incorporated under Section 205C of the Companies Act of 1956. To manage the IEPF Fund, the IEPF Authority was created in accordance with Section 125(5) of the Companies Act, 2013.

Principal facts of IEPF:

Unclaimed Dividends and Deposits: In accordance with the guidelines established by the Ministry of Corporate Affairs (MCA), firms and other entities transfer unclaimed dividends and matured deposits to the IEPF.
Unclaimed Shares: The profits from the sale of shares and dividends on shares that are left unclaimed for a predetermined amount of time are also transferred to the IEPF.
Investor Education: A portion of the fund is allocated to initiatives aimed at educating investors about financial markets, investment opportunities, and their rights’ protection.

Protection of Investor Interests: By guaranteeing that unclaimed funds are utilized for investors’ benefit rather than being kept by corporations, the IEPF serves as a protective measure for investors’ interests.
IEPF Authority: Through the IEPF Authority, the Ministry of Corporate Affairs oversees the management of the IEPF. The authority is in charge of overseeing the fund and carrying out the rules pertaining to the IEPF’s receipt of unclaimed funds.

Why did Dividends & Shares wind up at IEPF?

As per the Companies Act of 2013, Section 124(5), any dividend that is not claimed for seven years must be remitted to the IEPF.

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

What is the Form IEPF-5?

Usually, the refund procedure for shares and dividends that have been transferred to the IEPF is linked to Form IEPF-5. Investors can claim unclaimed dividends or shares by filing Form IEPF-5 when shares transferred to the IEPF because shareholders have not been in contact or when dividends announced by corporations go unclaimed for a predetermined amount of time.

How to get your shares back from the IEPF

Step 1: Before submitting a claim for shares from the IEPF, the claimant must confirm that the corporation has issued an entitlement letter.
Step 2: Fill out Form IEPF-5 online and send it, along with all the necessary information, to the government’s official MCA website.
Step 3: Upon correctly submitting the form, you will be provided with an SRN number that will enable you to monitor the report’s advancement.
Step 4: To begin the IEPF claim verification procedure, the claimant must transmit the completed e-form to the Nodal officer together with all necessary supporting documentation.

Step 5: Within 15 days of receiving the claim form, the corporation must provide the Authority with a verification report stating whether the authentication was accepted or rejected.
Step 6: Before issuing a sanction order for a share return in the claimant’s favor, the IEPF authority examines the claimant’s eligibility and the verification report. The corporation will send the verification report to the IEPF Authorities, and within 60 days, the shares will be credited to the claimant’s Demat account.

Documents required to file an IEPF claim

A copy of your Aadhar and PAN cards, self-attested.
B. Returned check leaf.
C. The Demat account’s client master list, which has been confirmed by the claimant and the DP.
D. SRN Recognition Self-Attestation
E. An indemnification bond that the claimant has seen and attested to
F. An advance stamped receipt including the witnesses’ signatures, the revenue stamp, and the claimant’s self-attestation
G. A letter from the registrar and transfer agent that the nodal official has authorized for use as evidence of entitlement
H.Original share and investment certificates, if held in physical form, or a copy of a transaction statement, if kept in Demat form, as proof of ownership of investments. In the case that the original share certificates are misplaced, documents submitted to RTA for the issuing of replica shares must be attached.
I. A copy of the passport and, if they are foreigners or NRIs, the OCI or PIO card.
J. Any additional supporting documentation that the company receives in order to issue duplicate shares, modify a name, address, or signature.

Some mistakes in the IEPF process?

Common mistakes committed when filing an IEPF Form-5.

The PAN database does not contain the applicant’s name.
The PAN database and the applicant’s date of birth do not match.
PAN number is not verified.
Incorrect Aadhar Card Number entered into the form.
Wrong passport and OCI/PIO card information in the case of international nationals.
It is improper to choose whether or not Rule 7 of the IEPF Rules is applicable. If the original shareholder dies, it has to be checked “Yes.”
When a name case is removed, Rule 7 is inadvertently selected as “Yes.” The IEPF does not cover the death of a joint holding’s joint holder; instead, it just causes a “Name deletion” (7)
Erroneous information was provided regarding the original security holder and beneficiary, a deceased shareholder.
The number of folios entered in the form is incorrect.
Total shares that were recorded on the form erroneously.
Inaccurate dividend data on the document submitted to the IEPF
The form’s financial year is incorrect.
Incorrect Demat or bank account information entered into the form. What counts is the bank account that is linked to the Demat account.
Incorrect attachments or no required attachments at all.