As we all are aware MCA has set Investor Education and Protection Fund Authority Rules 2017. According to these rules any money as dividend not claimed by the investor within 7 years and 37 days from the declaration date of the dividend along with the interest accumulated, if any will be transferred by the company to Investor education and protection fund. This means that, all shares for which dividend has not been claimed or paid for seven years or more shall be transferred by the company on the name of Investor education and protection fund. Shares of many people have been transferred since the rule is applied practically. Now, the main question in front of common people is how to get these shares recovered in their name. So, let’s try to understand the process to claim these shares from IEPF to your demat account. Let’s also discuss the common mistakes one commits while applying.
Some important questions:
- Can a shareholder claim transfer of shares or dividend from Investor education and protection fund?
Yes, any shareholder whose shares are transferred to the IEPF is entitled to claim for transfer of shares back in their name. However, they need to follow due procedure and submit the documents required.
Any person whose shares, dividend which is unclaimed, matured deposits, debentures, refund of application money or interest on it, sale proceeds of fractional shares redemption proceeds of preference shares, etc. has been transferred on the name of IEPF can claim the shares under the provision to subsection (6) of section 124. They can also apply for the refund under clause (a) of subsection (3) of section 125 or under provision to subsection (3) of section 125 to the concerned authority.
2. In a financial year, a claimant can file how many claim form in respect of a company?
A claimant can file only once claim in respect of a company in a financial year. One has to be very careful while filling the form as only one chance is provided for a company in one financial year.
- Can a legal heir or successor or nominee of a registered shareholder apply directly to IEPF for the refund of shares or dividend?
If the claimant is the legal heir or successor or nominee of the registered shareholder, then he or she to make sure that the company completes the transmission process before filing the claim with authority.
Step I- Claimant to authority
In this step the person has to apply to MCA through e-form IEPF-5 by furnishing below mentioned details:
- Details of the applicant
- Details of the company
- Particulars of the shares to be claimed.
- Amount to be claimed
- Details of deposits or securities year wise
- Aadhaar details or Passport or OCI or PIO Card No. If you are NRI or foreigner
- Particulars of bank account in which the refund has to be done. The account should be linked to Aadhaar if the applicant is not NRI or foreigner
- What are the documents required to be attached with the form IEPF-5?
No document is required to be attached with the form.
The claimant has to download IEPF-5 form from the official website http://www.iepf.gov.in/. Then, fill in the above mentioned details carefully and upload the form on same website.
Step II Claimant to Company
After filing the refund claim through the online form, the claimant should send the prescribed attachments to the Nodal Officer of the company taking care of IEPF related matters. The name and the email id of the officer is provided on the website. These attachments should be sent in an envelope labeled as “Claim for refund from IEPF authority. This is done for the verification of the claim. The attachments to be sent are mentioned below:
- Printout of the IEPF-5 form filled duly with the signature of claimant.
- Acknowledgement copy.
- Original indemnity bond with the signature of claimant. This should be done on the non-judicial stamp paper of the value mentioned under Stamp Act if the amount of the claim is more than or equal to Rs. 10000. If the amount is less than 10000, then the acknowledgement can be done on plain paper. If you are claiming the refund of shares, then the acknowledgement should be done on the non-judicial stamp paper of value mentioned in the Stamp Act.
- Original advance stamped receipt along with the signature of claimant and two witnesses.
- If you are claiming for the refund, then original certificate of deposit or debenture.
- If you are an Indian citizen, then copy of Aadhaar card.
- Proof of entitlement which includes certificate of share or application number of interest warrant.
- Cancelled cheque.
Step III Company authority
The company should send verification report to the authority within 15 days from receipt of claim form in the format prescribed by the authority. The documents submitted by the claimant should also be submitted.
If the authority does not receive the documents 90 days after the date of filing of form IEPF-5, it gives 30 days’ of time to the claimant to furnish the response and may reject the form if does not get it.
Step IV Authority to claimant
After completing verification process of the entitlement of the claimant, the authority and its Drawing and Disbursement officer will present the bill to be paid to the Accounts officer for the purpose of e-payment according to the guidelines, if the claimant has claimed the amount.
If the claimant has claimed the shares, the authority will issue sanction order for refund with the approval of concerned authority. Then, it will either credit the shares lying in IEPF suspense account with lying depository participant. It is done to demat account of the claimant to the level of his or her entitlement. If there are physical certificates, then the duplicate certificates are cancelled and shares are transferred on the name of claimant.
The application duly verified and submitted by the company for refund of any claim to the authority, must be prepared by the authority within 60 days from the date of receipt of verification report submitted by the company.
If the application is incomplete or is rejected, authority should communicate properly with the claimant as well as the related company regarding the deficiencies in the application.