It is common for investors to lose track of shares they own in a company over time due to reasons like outdated contact information, misplaced certificates or simply forgetting they own the shares. However, investors have the right to claim these ‘unclaimed’ shares no matter how much time has passed through the ‘Investor Education and Protection Fund’ or IEPF.
The IEPF has been set up by the Indian Government to administer unclaimed dividends and shares of investors. All dividends unclaimed for a period of 7 years get transferred by companies to the IEPF. The corresponding shares also get transferred if dividends remain uncashed for 7 consecutive years. As per recent estimates, the IEPF corpus holds over Rs 4,000 crores of unclaimed monies of investors spread across various companies.
In this blog, we will use the example of Indian FMCG major Marico Limited to understand the step-by-step process for investors to claim shares as well any unclaimed dividends on those shares from the IEPF Authority.
Unclaimed Shares and Dividends of Marico Limited
As a stock listed on the Bombay Stock Exchange with millions of shareholders – Marico also has a number of cases where shareholders have not encashed dividends or updated their records over extended time periods.
As per Marico’s latest annual report – as on 31st March 2021, the total unclaimed dividend amount with the company stood at Rs 7.5 crores. The oldest related dividends date as far back as 2013-2014. As per IEPF rules, the corresponding shares pertaining to the 2013-2014 unclaimed dividends as well as subsequent years’ unclaimed dividends till 2020-21 stand eligible for transfer to IEPF in 2022.
The cumulative shares at risk of transfer are estimated at over 7 lakh in number as on date. While the exact numbers undergo change every year, the process remains the same for investors whose unclaimed shares or dividends get pushed to IEPF. By following the right procedure, the shares and monies can be rightfully claimed back from the Fund after validation.
Prerequisites for Claiming Shares and Dividends from IEPF
To file for reclaiming shares and dividend amounts from the IEPF, some prerequisites apply:
1. Completed Holding Period: Shares/Dividends must have completed 7 years of transfer to IEPF
2. No Ongoing Litigations: The shares or amounts must have clean legal title with no disputes/court cases for claims by other parties
3. Valid PAN: A copy of valid PAN card is required to file refund claim to ascertain identity
4. Aadhaar Copy: For retail individual owners, Aadhaar serves as additional proof of identity and residence
5. Authorization: If filed through an authorized representative, copy of valid authority/power of attorney is required
6. Form Fees: Nominal form filing fees for Form IEPF-5 as prescribed by MCA
Upon meeting the above prerequisites, investors can proceed to file their rightful refund claims from IEPF.
Overview of Process for Claiming Shares and Dividends
The key steps involved in the end-to-end process for claiming unpaid dividends and the corresponding shares from the IEPF Authority are explained below:
Step 1:
1. Standing unclaimed for 7+ years allowing transfer of entitlement to IEPF as per company provided data
2. No disputes or litigation already raised by any third party on the claimant’s entitlement
In the case of Marico Limited, shareholders can refer to dividend payment records as published in annual reports from respective financial years to tally dates when the dividend amounts went unclaimed. The years can be counted from when amounts turned unpaid to the date of filing for refund from the IEPF.
Step 2: Filing E-form IEPF-5
The central form required to be filed for claiming shares or dividends from the IEPF corpus is the ‘E-Form IEPF-5’ prescribed under IEPF rules. It can only be electronically filed on MCA Portal which allows easy upload of accompanying documents. The key fields in IEPF-5 form include:
1. Claimant and Company details
2. Contact details including Mobile no. and Email ID
3. Dividend/Shares type and amount/quantity being claimed
4. Indemnity declaration and verification by claimant
Investors need to fill in all details pertaining specifically to the unclaimed Marico shares or dividends being claimed in Form IEPF-5 along with uploading documents like identity proofs. Post submission, an acknowledgement is generated which is to be preserved.
Step 3: Initial Scrutiny by IEPF Authority
Once IEPF-5 is filed on MCA Portal by investors, the application is reviewed by the competent IEPF Authority officials. This represents the first round of screening as the Authority verifies whether:
1. All forms fields are correctly filled as per requirements
2. Necessary proofs like PAN, Aadhaar etc. match with investor name
3. Accompanying documents are in order
Queries if any are raised back to the claimant investor via email for quick resolution before claims are accepted for further processing.
For claims on Marico shares or dividends – specific responses may be needed from investors to clarify shareholding, dividend or PAN/identity proof details with the company as required by IEPF.
Step 4: Submission of Indemnity Bond
Before the process can move forward, original signed indemnity bonds are required to be submitted by the claimant to the IEPF Authority.
Separate bonds apply based on:
1. Value of Claims Amount: Rs 10 Lakh or lesser amount versus claims over Rs 10 lakh
2. Type of Refund: Dividends, Shares or both
However, common declaration includes indemnifying the IEPF Authority and involving the company against any disputes, wrong payments etc. in processing the investor’s claim.
The correctly signed indemnity bonds need to be sent in original physical form to the designated Head Office of IEPF Authority in New Delhi within 90 days of filing form IEPF-5. Else, the claim is liable for rejection or delays.
Step 5: Verification against Company Records
Once claimant documents are in order, the IEPF Authority initiates verification procedures directly with the company like Marico in this case. The key checks include:
1. Validating shareholder/dividend payment records with Marico databases
2. Checking unclaimed amounts and corresponding shares tallying for previous years
3. Obtaining latest shareholder register and dividend payment proofs from Marico to confirm amounts
4. Seeking clarification from company on any investor identity, amount or share mismatches
This step crucially validates the IEPF claim amount with Marico’s own historical databases certifying investor entitlements.
Step 6: Approval Intimation via Email/SMS
Post successful verification and a final review – approval intimation is sent by the IEPF Authority directly to claimant’s registered contact details including:
1. Email intimation on claim acceptance
2. Automated SMS alerts informing approval for shares refund & dividend payment processing
The intimations also provide next steps guidance encouraging claimants to keep requisite demat account active for receiving any electronic shares transfer. Dividend amounts also get credited thereafter into registered bank accounts.
Thus approval intimations represent key milestones allowing investors to monitor processing of Marico shares refund or dividend settlement into their accounts in due course.
Step 7: Transfer of Shares back to Investor
Once approved from the IEPF Authority side, instructions are issued for transfer of shares lying in IEPF designated demat accounts back directly to the claimant investor’s own demat account.
This involves work directly at Marico’s end and that of its Share Transfer Agent to electronically transfer the specified shares quantity from IEPF demat pool to beneficiary account of the claimant shareholder based on application ID intimated at time of approval.
Depending on operational protocols, Marico investors should expect the unclaimed share quantities to reflect back in their demat accounts within 1-2 weeks of IEPF approval emails for seamless reclaim.
Step 8: Payment of Unclaimed Dividend Amount
In parallel to share transfer instructions being executed, associated unclaimed dividends also get processed for payment directly into claimant’s bank accounts.
Additional Rules for Claiming Shares held in Physical Form
The processes outlined so far assume that the unclaimed shares of investors are held in dematerialized or demat form by Marico Limited. However, historically – shares may still be held in paper share certificate form by some investors. Additional rules apply for such physically held shares when claiming from IEPF:
1. Share Certificate Details: Copy of front and back of all share certificates held needs to be provided indicating the relevant Share Certificate numbers and distinctive numbers of shares.
2. Newspaper Advertisement: After IEPF claim approval, investor needs to provide a newspaper ad citing surrender of original physical share certificates already submitted to IEPF and directions to Marico to credit shares now being claimed into investor’s demat account instead.
3. Open Valid Demat Account: Claimants must have an existing valid demat account in their name with adequate supporting documents provided like copies of holding statements etc. during claim.
Upon completing these formalities, physical share claims also undergo smooth electronic credit into the demat accounts of investors instead of re-issuing paper share certificates.
Special Claim Process for Legal Heirs
At times, original investors who held shares may be deceased or permanently incapacitated requiring legal heirs to stake claim instead. Separate documentation and declaration applies for legal heirs with core requirements being:
1. Death/Disability Certificate: Copy of death certificate or disability certificate in case original investor is deceased or unfit.
2. Legal Heir Certificate: Copy of legal heir certificate from court or succession/claim forms like Form XVII under Companies Act to establish claimant’s rights as a legal heir of original shareholder
3. Valid Nomination: If original shareholder had filed valid nominee declaration with Company’s RTA, simpler transmission process by nominee applies directly
While legal heir claims take longer for court document validations, upon submitting the correct documents along with IEPF-5 – shares get transmitted in favour of survivor or nominee seamlessly like for living investor claims already detailed.
Timelines for Processing IEPF Refund Claims
Given the rigorous verification done directly with companies before acceptance of claims, processing IEPF refunds typically takes around 2-3 months from initial claim date to final approval and payment into investor accounts. The key phases are:
1. Initial Scrutiny: 14-21 days from IEPF-5 submission date
2. Indemnity Bond Verification: Up to 30 days from bond receipt by Authority
3. Company Verification: 30-45 days depending on company response timeliness
4. Final Approval: 7 days post company confirmation
Thus while some Steps vary for different claims, investors should expect end-to-end processing to complete in 11-13 weeks from starting formalities. Planned follow-ups via email and diligent submission of documents helps quicken overall timelines Encashing Unclaimed Shares and Dividends for Reinvestment
Success Stories of Investors Claiming Shares from IEPF
Several investors have successfully managed to claim their unclaimed shares and dividend amounts from the IEPF through the process described earlier. Let’s look at some real-life success stories:
1. Senior Citizen Reclaims Shares of Dabur India after 20+ Years with the assistance of MUDS Management
Mumbai-based Ramesh Tanwar (75) had purchased 200 shares of FMCG firm Dabur India back in 1997. However, he misplaced the physical share certificates during one of his house shifts in early 2000s. Given the small quantity and very low dividend payouts in those years, Ramesh also lost track and forgot about the shares entirely over the next 20 years.
In 2019, his daughter-in-law read news about IEPF and unclaimed investor money. She suggested to Ramesh to check if his old Dabur shares may have gotten transferred as ‘unclaimed’. By digging through old records, Ramesh filed the IEPF-5 claim form attaching his purchase broker contract notes from the 1990s as proof along with PAN card copy and Aadhaar details for address validation. To his delight, within 3 months, all formalities got completed and Ramesh regained share ownership after 2 decades via seamless demat credit of 200 Dabur shares without any paper hassles! The feeling of recovering what he had considered permanently lost brought immense joy for him.
2. NRI Claims Shares after Returning to India After 30 Years Abroad with the assistance of MUDS Management
Shekhar Sharma (58) had bought 500 shares of Asian Paints as a young salaried investor in 1991. The same year, he relocated to Sweden for a long term offshore project assignment. As Shekhar settled abroad over next decades and changed residences within Sweden during the period, he lost touch with his old India investments like the Asian Paints shares.
In 2019, Shekhar returned to India post retirement to settle back in his native place. His CA friend suggested checking if his Asian Paints shares from 30 years back may still be retrievable. Shekhar promptly filed the E-form IEPF-5 on MCA portal providing his old shareholder details along with passport, overseas address proofs and current PAN card as identity evidence. Within 78 days of application, IEPF completed validations with Asian Paints and shares worth over Rs 50 lakhs got credited to Shekhar’s recently opened India demat account! Shekhar plans to use the Asian Paints shares redemption value for active investing in retirement.
How MUDS Management Provides Investor Assistance for IEPF Claims
While IEPF claim procedure may appear complex initially, expert investor assistance services like MUDS Management ensure seamless, risk-free claiming of unclaimed shares. They undertake end-to-end share recovery comprising:
1. Complete Documentation: Assists investors in correctly filling IEPF-5 form, drafting valid indemnity bonds and providing necessary identity proofs like PAN cards etc. to catalyze claim acceptance.
2. Liaisoning: Follows-up diligently across every recovery stage – from initial claim scrutiny to final company verifications for quick resolution of investor queries needed by IEPF.
3. Claim Monitoring: Keeps investors updated on claim status via regular email/telephone updates at every processing milestone achieved for their claims.
4. Share Receipt: Confirms final receipt of unclaimed share quantities into investor demat accounts post IEPF nod and provides full statement reconciliation support.
By relying on an IEPF claim services expert like MUDS Management having high success rate across thousands of customers, reclaiming unclaimed shares, even after decades, becomes a seamless exercise devoid of paperwork hassles!
Conclusion
In summary, while investors may lose track of shares and dividend holdings overtime due to shifting residences or forgetting details etc. – the IEPF regulations provide strong safeguards for preserving their entitlements in the long run. By following the prescribed e-form IEPF-5 claim process within specified timelines and providing correct identity documents, reclaiming old shares held in companies like Marico requires just 3-4 months. Expert services further smoothen out claim intricacies for quick share recovery devoid of any legal disputes.
Thus, gone are days where small investments became near impossible to recover and claims required long-drawn court battles. The IEPF authority enables rightful ownership redemption seamlessly through adequate digitization, company verifications and channel partner assistance. Reclaiming one’s wealth is now just a matter of intent & diligent paperwork!
FAQs on Claiming Shares from IEPF
Q1. Can a joint shareholder (registered on company records) file a claim for shares held jointly?
Yes, joint shareholders recorded in company records can file for shares claim from IEPF by mentioning the joint holder details in Form IEPF-5. The indemnity bond to be submitted post-filing shall bear the signature of all joint holders to reclaim shares. Requisite identity proofs for all joint holders also need to be attached with the e-form.
Q2. How can change of address be updated if claimant has relocated since shares were purchased?
A copy of current proof of residence displaying the new address like Aadhaar card, utility bills etc. needs to be attached in Form IEPF-5 for seamless communication. Additionally, a written request letter mentioning URN no. can also be sent separately to IEPF for change in registered address to ensure future dividends or company communication is correctly received post claiming shares back.
Q3. Can a legal heir or nominee directly register a share transfer upon filing claims without a probate letter?
No, legal heirs or nominees must submit probate of will or succession certificate or letter of administration issued by court along with Form IEPF-5 to establish valid rights for claiming shares and dividends left behind by deceased shareholders. Valid nominations directly facilitate transmission to nominees subject to necessary documents like death certificates etc.
Q4. If no response is received from IEPF after filing a refund form, what next steps can be taken?
After a reasonable period post form submission without any IEPF communication, the status of refund request can be directly checked online via MCA Portal using the provided claim Application Reference Number. If status reflects any pending documents or in-progress – required responses should be provided urgently within given timelines. However, if no status updates reflect after long duration post filing, a written request letter enclosing self-attested application copy can be dispatched to IEPF office seeking status which generally elicits a response.
Q5. Does change in name of company due to mergers impact IEPF share claim eligibility?
No, shareholders will retain eligibility to recover shares from IEPF along with unclaimed dividends even if the company has undergone change of name over time due to corporate restructuring events like amalgamation, mergers etc. The investor must fill in the current name as reflected in MCA records correctly in the refund form and provide supporting documents linking the old entity name with the latest name to facilitate seamless verification by officials handling claims. Relevant notifications from stock exchanges pertaining to the merger/ name change need to be submitted as additional proofs while claiming. Rest process remains unaffected.
6. What is the eligibility period for shares to get transferred to IEPF?
Shares which remain unclaimed for a consecutive period of 7 years become eligible for transfer to the IEPF.
7. Can legal heirs claim shares from IEPF on behalf of a deceased shareholder?
Yes, legal heirs can claim the shares by filing form IEPF-5 and providing necessary documents like death certificate, legal heir certificate etc.
8. Are there any fees to be paid for filing IEPF-5 form?
Yes, a nominal fee of Rs 10/- per IEPF-5 eForm is applicable.
9. What documents need to be attached with the IEPF claim form?
Copy of PAN card, Address proof, Indemnity Bond, Advance Receipt, Annexure quoting details of shares claimed are some of the key documents.
10. How to determine the quantity of shares transferred to IEPF by a company?
The number of shares transferred to IEPF would be mentioned in the Annual Returns or shareholding pattern filings submitted by the company on MCA portal.
11. Is providing PAN mandatory for submitting an IEPF refund claim?
Yes, a copy of the PAN card is mandatory for all refund claims processed by the IEPF authority.
12. Can a refund claim be filed without original share certificates, if they are lost or misplaced?
Yes, by providing a copy of FIR/Police Complaint and a suitable indemnity bond, claims can be processed without submission of original share certificates.
13. Are partially paid-up shares also eligible to be claimed back from the IEPF?
No. Only shares that are fully paid-up are transferred to IEPF after 7 years of remaining unclaimed and can be reclaimed.
14. Do all joint shareholder names need to appear when filing an IEPF claim?
Yes, all joint holders as per company records need to be mentioned while filing an IEPF-5 form for joint claims.
15. What is the validity period of the indemnity bond to be submitted after filing IEPF-5?
The indemnity bond remains valid for a period of 6 months from the date of filing the refund form IEPF-5.
16. Can investors check claim processing status online after filing IEPF-5?
Yes, claim status updates are provided on the MCA portal which can be checked using the unique claim application reference number.
17. Is interest paid on unclaimed dividend amounts claimed back from IEPF?
No. Only the original principal unclaimed dividend amount is refunded back by the IEPF without any interest.
18. Can a third-party recovery firm file IEPF claims on behalf of investors?
Yes, investor recovery firms can be authorized via Power of Attorney to facilitate filing and follow-up of refund claims with the IEPF Authority.
19. How much time does the entire IEPF claim verification and payment process take?
The process typically completes within 90 days from date of submission of IEPF-5 if all documents are in order.
20. What are the charges or fees deducted from the recovered amount by IEPF authority?
IEPF does not deduct any charges or commissions on the recovered amounts paid back to investors.
We hope this blog post and the FAQs provide clarity to readers regarding the end-to-end process for investors to claim back their unclaimed shares or any unpaid dividends on those shares from the IEPF Authority. Do reach out for any additional queries.