Freezing of Folios of physical shareholders... Last date for KYC is 30th September 2023... Act now Ref: SEBI Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/37


A Guide to Recovery of Investments from the Stock Market

Recovery of Investments from Stock Market

Guide to Recovery of Investments from Stock Market

There can be times when people make investments in shares and securities but forgot about those investments after a while. Reasonably so, sometimes people try to wait for the right moment to make profits through those shares when their prices in the share market increase to a healthy amount. Sometimes, individuals just keep waiting and after some time, move on with their lives thinking they will come back to it after their investment has grown to a reasonable amount.

People might think that the value of the shares was so low that it doesn’t even matter, but over a long period the values change and it might be possible that shares are very profitable to redeem in the present scenario. In this scenario, people start to wonder about how they can redeem their shares bought years ago. This is what we are going to discuss in the following sections.

How to Recover Age-Old Investments?

At times like these, hiring a broker is a very important step. The broker has complete knowledge and can help you easily sell off all your remaining shareholdings of the old shares. Also, the physical shares available can only be submitted through brokers for sale in the stock market.

The other way is to get in contact with the Registrar of the company (whose shares you possess) if they are still running and approach them for help. They can help you with transferring all those physical shares to your Demat account which will allow you to buy more of those shares or sell those shares as you wish after the details of them are verified.

Those shares can then be sold off and the money will then be added to the Demat Account which can then be used to invest more shares from the stock market.

Why the Dematerialisation of Shares is Important?

Dematerialization means the proof of the ownership of shares is taken by the respective owner company and then destroyed after which the same amount of the shares is added to the investors account digitally. In simple words, it is the conversion of physical shares to the digital form.

Converting those physical shares into digital shares is immensely beneficial as it saves them from theft, loss, or damage. Plus, it makes managing all the shares way easier from a single place. And since it’s all digital, it doesn’t require any paperwork and in turn, leads to faster transactions while trading for better and efficient results.

All the unclaimed dividend and other unclaimed things which are left out are then verified and destroyed later to be put in the investor’s Demat account in digital form. So dematerialisation is very important since it reduces frauds to a great deal and makes the handling of shares easier and efficient. For the same reason, SEBI has also issued the directives for all the physical shares to be dematerialized by conversion into digital form.

How to Redeem the Physical Shares?

Earlier we discussed how we can recover the investments made but now let’s understand how we can redeem the physical shares. The first step is to search for all possible physical shares you can find, consolidate them, and sort them according to whether they are the Share Certificates or Mutual Funds Certificates.

Now to redeem all the gathered physical shares. As we discussed earlier, we’ll have to approach the registrar of the company to show them the physical shares and certificates we have to prove ownership. If for some reason the registrar is not available, then you can ask the broker to deal with your problems on the matter.

In the end, you’ll have to make sure that if the company is still listed anymore or not. That being the case, if the company is listed then everything will go smoothly. That means that all your documents will be verified, and all your physical shares will be redeemed by you in the end. But if the company is not listed anymore, then, unfortunately, nothing can be done in that matter and the physical shares will become obsolete.

All it comes down whether the company is still listed by the time you try to redeem all those physical shares or not. And in case of those mutual fund’s certificates, they can all be dealt with very easily and redeemed by just approaching the office along with all the valid documents. After this, all the due amount will be credited to your respective bank account, or you can approach the IEPF to help you in the matter.

What is IEPF?

It’s a government organization which focuses on promoting awareness among the investors with an aim to protect investor’s interest. The Investor Education & Protection Fund gives ways of redeeming old funds and shares. On the website, it shares ways for what steps are needed to be taken to guarantee the recovery of all your invested money. The IEPF fund set up by the government keeps all the old unclaimed dividends and shares of all listed companies. If the dividends for shares go unclaimed for 7 years then they must be transferred to IEPF. So, for old shares, the investor can simply apply to IEPF, get his/her documents verified from the company, and then wait as the company’s verifying officer sends the recovery application to the IEPF authority after verification. After this procedure, the IEPF will release the dividend corresponding to the value of old or lost shares.

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