Ministry of Corporate Affairs came out with Investor Education and Protection Fund Rules, 2017. As per the provisions in these rules, any amount transferred to the Unpaid Dividend Account of the company pursuant to Section 124(1) of the Companies Act. 2013, which is unpaid or unclaimed for more than 7 years from the date of declaration dividend shall be transferred along with interest accrued, if any, to the Investor Education and Protection Fund (IEPF). The company shall submit the statement stating the details of such transfer in the prescribed format to the IEPF Authority and the authority shall issue a receipt as a proof of the transfer.
In case of shares for which the dividend is not paid or claimed for more than 7 years continuously shall be transferred to the IEPF by the company attaching with it the statement providing details about the transfer.
Procedure for IEPF Claim/ IEPF Refund
Any investor whose shares, unclaimed dividend, matured deposits or debentures, application money to be refunded and interest accumulated on the same, if any, sale proceeds of fractional shares, etc. are transferred to the IEPF, such investor can claim the shares under the procedure laid out vide subsection (6) of section 124 or can apply under clause (a) of subsection (3) of section 125 or can apply under the provision to subsection (3) of section 125 to the concerned authority.
- The claimant can file only one consolidated claim for a company in one financial year against one Aadhaar Number. Even details of multiple Folios of one company need to be included in the consolidated claim.
- In case if the claimant is the legal heir or successor or the nominee of the registered shareholder, then he or she has to ensure that the transmission procedure is completed by the company and an entitlement letter is issued to the legal heirs and then only file the IEPF Claim with the authority.
Step I Claimant to authority
A person, who wants to claim the shares back on his or her name, should apply to MCA by means of IEPF Form-5. The form must contain the following details:
- Particulars of applicant/claimant.
- Details of the company including the CIN no.
- Particulars regarding the shares to be claimed
- Particulars about the amount of dividend to be claimed
- Particulars of deposits and securities mentioned year wise
- Aadhaar number if the applicant is an Indian citizen and passport/OCI or PIO card number if the applicant is NRI or foreigner. Any other identity proof needs to be first approved by talking to the Authority.
- Details of bank account which is linked to Aadhaar and in which the refund of the claim will be made in case of a Resident Indian. (Linking of Aadhaar is no more mandatory after the recent Supreme Court of India judgment)
There is no option available in the form for attaching additional documents.
Step II Claimant to company
After filing the online refund form as prescribed, the claimant should send it to the Nodal officer of the company concerned/Registrar of the concerned Company along with the attachments mentioned below. This should be sent in the envelope marked with “Claim for refund form IEPF authority”. This is required for the verification of the claim. The documents to be attached are:
- Printout of properly filled form IEPF-5 along with the signature of the claimant on every page(bottom).
- A copy of acknowledgement bearing SRN no.
- Original indemnity bond with the signature of the claimant: If the claim is of more than Rs. 10000, then bond should be done on non-judicial stamp paper. If the claim is of less than this amount, then plain paper can be used for the bond. If claim is for refund of shares, then non-judicial stamp paper of the value described in the Stamp Act should be used.
- Original Advance Stamped Receipt with signatures of claimant and a couple of witnesses. (Sign across the revenue receipt)
- Original certificates in case of refund of matured deposit or debenture. (In case of loss, duplicate formalities should have been completed)
- Aadhaar card for Indian citizens and a copy of passport, OCI and PIO card in case of NRIs and foreigners.
- Entitlement proof. This can be original shares/interest warrant application number.
- Cancelled cheque leaf of the bank account mentioned in the IEPF Form-5.
- Self Attested copy of client master list of your demat account.
Step III Company to authority
Within 15 days of the receipt of the Claim form, the concerned company must create a verification report and send it to the authority in the prescribed format given by the authority and the documents submitted by the claimant.
Step IV Authority to claimant
After completion of the verification of the claimant’s entitlement, in reply to the amount claimed, the authority and the Drawing and Disbursement Officer of the authority shall submit a bill to the Pay and Accounts officer for payment based on the guidelines.
If the claimant has claimed the shares, the authority shall issue a sanction order for refund along with the approval of competent authority. The shares will be credited either to the demat account of the claimant to the scope of the entitlement of the claimant. If the shares are in the form of physical certificates, the duplicate certificates are cancelled and shares are transferred in favour of claimant.
The application for refund submitted by the claimant and verified by the company is sent to the authority. It shall be predisposed by the authority within 60 days from the date of receiving the verification report from the concerned company.