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


Recover Your Lost Paper Shares Through IEPF

Paper shares

Recover Your Lost Paper Shares Through IEPF

What would you do if you forget a crucial document such as a stock certificate or “Paper Shares”? The concept alone can be a nightmare, as there’s a potential the Paper Shares could be mishandled, resulting in a financial loss. This article explains how to obtain duplicate share certificates from the firm/registrars in order to avoid financial loss. If you lose or misplace your share certificates for any publicly traded firm, you must immediately notify the corporation where the shares were held. You must also provide the corporation with the folio number and information of the share certificates for their records. When a firm receives notification that you’ve misplaced your shares, the folio number or other information given to the company is frozen in place of the missing one. The corporation does this to prevent any kind of fraud or share transfer.

The corporation offers you instructions on how to get a duplicate Paper Shares certificate, which involves completing an affidavit and signing a surety and indemnity bond agreement. In a letter, the corporation instructs you on how to carry out the procedure for issuing duplicate certificates. After that, you’ll need to draft an affidavit and an indemnification bond agreement with a franking fee of roughly Rs. 300. The affidavit and surety bond must also be notarized. This indemnification & surety bond should be signed by two witnesses who are not family members to lend credibility. It is critical to get a duplicate Paper Shares certificate and to furnish an indemnification and surety bond.

What You Must Do After Losing Paper Shares?

You must register an FIR (first information report) with the police after receiving this completed paperwork, including the specifics of the missing share certificates, such as the folio number, business name, Paper Shares certificate number, and a unique number of shares, among other things.

You must now issue a broad notice reporting the loss of share certificates in a government gazette. The shareholder’s information, share certificate numbers, and distinguishing numbers of missing shares should all be included in the notice.

It is customary to publish a general notice in a government gazette—at the location of the registered office—informing the public of the loss of the share certificate and the company’s request to consider issuing a duplicate share certificate in its stead.

The shareholder is usually responsible for the expense of publishing the general notice. You must send the following documents to the company/registrars: affidavit, indemnity & surety bond, authentic copy of FIR of police report disclosure loss of share certificates, and voucher copy of advertisement published in the government gazette publication regarding loss of share certificates.

The corporation/registrars will execute requests for duplicate Paper Shares certificate issues after verifying the papers supplied. From the date of receipt of all legal papers by the firm/registrars, it usually takes four to six weeks for the shareholders to get duplicates. Keep in mind that every issuing of a duplicate share certificate requires prior approval from the company’s board of directors or a committee.

The words ‘Duplicate issued in place of share certificate No XXX’ must be inscribed on the front of the duplicate share certificate, and the term ‘DUPLICATE’ must be stamped in strong letters across the face of the share certificate. The name of the shareholder to whom the duplicate share certificate is issued, as well as the number and date of the new share certificate, will be put in the register of renewed and duplicate share certificates.

All stock exchanges where the company’s shares are listed will be notified of the issuing of duplicate share certificates and the cancellation of existing share certificates.

Recover Your Lost Paper Shares From IEPF?

Many individuals put their money into stocks and forget to claim them, or they expire before they can be claimed. In such circumstances, the funds go unclaimed for a long time. The Investor Education and Protection Fund (IEPF) was established by the Ministry of Corporate Affairs (MCA) to ensure that unclaimed Paper Shares  were transferred to and received by the correct individual.

According to Section 124 of the Companies Act, 2013 and the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, a company’s shareholders can seek a refund of their unclaimed shares transferred to the IEPF by the firm.

How To Transfer Unclaimed Paper Shares to IEPF?

A corporation must transfer shares to the IEPF, together with any accumulated interest, if the dividend has not been claimed or paid for more than seven years. The corporation must notify the IEPF Authority of the transfer’s information. A shareholder can reclaim unclaimed shares transferred to the IEPF by submitting an application to the IEPF Authority, which keeps track of all accounts.

Apply For IEPF Authority for Recovery of Paper Shares

Any stakeholder whose unclaimed shares have been transferred to the IEPF can petition to the IEPF Authority for a return of those shares. In a financial year, however, a claimant can only file one combined claim on a firm. The data from the multiple Folios from the same firm should be included in the aggregated claim.

Before filing an IEPF claim with the authorities, the claimant should ensure that the firm completes the share transmission procedure and sends an entitlement letter to the legal heir, nominee, or successor of the registered shareholder.

What is the Process of Recovery of Paper Shares From IEPF?

Step 1: Sending Application to the Authority 

A claimant who desires to get a refund or recover shares in his or her name should fill out Form IEPF-5 and submit it to the MCA site. On the form, the claimant should include the following information:

  • Information about the application (claimant)
  • The firm details, including the CIN number, from which the payment is to be made.
  • The specifics of the Paper Shares that must be claimed
  • The amount of the dividend that must be claimed
  • When the claimant is an Indian citizen, the claimant’s Aadhaar number is used; when the claimant is an NRI or foreigner, the claimant’s passport/OCI/PIO card number is used.
  • Details of the Aadhaar-linked bank account where the claim will be repaid
  • Account number for depository receipts

Step 2: Submitting the Application to the Company 

  • After filing Form IEPF-5, the claimant should send a copy of the form, along with the accompanying papers, to the company’s IEPF Nodal Officer/Registrar in an envelope labelled “Claim for reimbursement from IEPF Authority.”
  • Copy of the acknowledgment with the SRN number and a printout of the filled-out Form IEPF-5 with the claimant’s signature.
  • Original indemnity bond signed by the claimant on non-judicial stamp paper in the amount specified by the Stamp Act Original advance stamped receipt signed by the claimant and witnesses
  • Share certifications that are authentic (if shares are in physical form “Paper Shares”) or a duplicate of the transaction statement (if securities are in Demat form).
  • Aadhaar card is a unique identification number issued by the government of India.
  • Proof of eligibility, such as a share certificate or an interest warrant application number.
  • In the case of NRIs and foreigners, a passport, Overseas Citizen of India (OCI), or Person of Indian Origin (PIO) card is required.
  • Check that has been cancelled
  • A copy of the client master list for a Demat account

Step 3: Complete Submission of Claim to the IEPF Authority 

After 15 days of receiving an application form from a claimant, the firm must create a verification report and send it to the IEPF Authorities together with the claimant’s documents.

Step 4: Recovery Completed!!

After receiving the verification report from the relevant firm that verified the claimant’s application, the IEPF Authority must make a decision on the claimant’s reimbursement application within 60 days.

When the claimant is entitled to the shares with the authorization of the competent authority, the IEPF Authority will issue a return sanction order. After validating the claimant’s entitlement, the IEPF Authority and the Drawing and Disbursing Officer will issue a bill to the Pay and Accounts Officer for payment. The claimant’s Demat account will be credited with the shares or the amount of the claimant’s entitlement.

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