Do you think Rs 10000 invested in a company can make you a Crorepati? No, it is not a fraud scheme we are luring you in. If your father or your grandpa had invested Rs. 10000 in Eicher Motors in 1990, then the value of those shares in today’s date is worth more than ₹ 2 Crores.
Now, what does it indicate? It shows that if somehow you can find any proof of investment in Eicher Motors from the early 90s, then you can raise a claim on the unclaimed dividends for your shares and get the amount which will be huge compared to the invested amount. Finding lost shares like these is like finding hidden treasures. The obvious question is how to claim these funds and is it easy to raise a claim on such funds. Before we answer such questions, let us understand how Eicher Motors has managed to provide such growth to its investors and why is it logical to find unclaimed dividends of this company.
Financial History of the Company
Eicher Motors Ltd. was incorporated in 1982. It is a Large Cap company with a market cap of Rs 69254.03 Crore and operates in the auto manufacturing sector on India. It is the manufacturer of iconic Royal Enfield Motorcycles. It also manufactures other vehicles and auto spare parts. The company went public in 1982 and got listed on the Stock Exchange. The company performed tremendously so much so that its per-share price reached more than ₹ 2536.70 in November 2020. Due to this high value, it had become difficult for retail shareholders to invest in the company. Therefore, on August 11 2020, the company announced the splitting of its stock into 10 shares. Thus, each equity share worth ₹ 10 was worth 10 shares of Rs. 1 each. Even during the Covid-19 Pandemic, the company has managed to stay in the game and kept its growth momentum. The shares of the company have grown manifolds over the years with an average annual growth rate of 32%. Let us see how it has grown over the years with the following calculation.
- Suppose your father has bought 5000 shares of Eicher Motors in 1996.
- In 1996, the company shares had a valuation of Rs. 2.32.
- So the net amount invested by your father is Rs. 11600.
- 24 years down the line, the worth of those 5000 shares as per today’s closing rate of Rs. 2515 will be nearly Rs. 1,25,75,000.
- Source: https://in.finance.yahoo.com/quote/EICHERMOT.NS/history?period1=849139200&period2=1606521600&interval=1d&filter=history&frequency=1d&includeAdjustedClose=true
- The company due to an extreme rise in its share price split up its stock in the ratio of 1:10.
[By splitting the stocks, the company increases the number of shares in the market while decreasing its price by the same proportion. In this way, there is no change in the net value of the market capitalization, and it becomes easy for retail investors to invest in the company.]
Now, imagine if you find that your grandfather had in fact invested those Rs. 11660 in 1996 and then forgot to take notice of this investment. Over the years this investment and the dividend remained unclaimed and later in the years, your grandfather passed away without naming an heir to these shares. If you find these shares today and lay claim on the unclaimed dividend, then you can become a Millionaire in no time!
Now the issue is that you are not in the possession of these shares of Eicher Motors Ltd., though you know that as a grandson, you are the rightful owner of the same. As per the Government’s rule, these shares are now treated as unclaimed shares as no one has claimed dividends for seven years or more. Since the dividend remained unclaimed, the shares are now in the possession of the Government of India under the Investor Education and Protection Fund (“IEPF”). It was introduced in 2016 by the Government to resolve the issue of such ‘lost or forgotten shares.’ Earlier such unclaimed shares were transferred to the public fund of government for utilisation in public welfare schemes. but later when there were too many people coming out after years to lay claim on the shares, then the Government decided to make a fund to keep such lost or unclaimed shares secure. It also introduced an online procedure for anyone who wants to lay claim to their lost shares. Let’s understand more about the IEPF and recovery of lost shares in the following sections.
As per the data given below, the company’s paid dividend has grown by 1250% since 2001. If you calculate, it is an extraordinary level of growth on any standard.
|Dividend Year||Announcement Date||Dividend Type||Dividend amountper share (in Rs.)||Dividend (%)|
What is Investor Education and Protection Fund?
As stated above, IEPF was introduced by the Government to take care of the unclaimed dividend and unclaimed shares on behalf of the rightful shareholders. People usually forget that they own shares in a company which is the reason why the dividends on such shares remain unclaimed for years. The reason to forget about the existence of the shares can be any of the following:
- Investors tend to forget to appoint a nominee for their shares. After their death, their heirs remain clueless about their ownership of such shares, and the shares remain deserted.
- The amount of investment is too small to remember.
- Shares become a part of the property dispute and remain without ownerless till the verdict of the court.
There could be some other reasons also that could lead to investors forgetting about the shares. Due to this, many companies have shares that lie with them without any sign of ownership. IEPF is a medium that allows the public to claim their dividends and ask to refund their long-forgotten shares. They can claim their dividends and shares by applying to the managing authority of the fund manager. Due to the establishment of IEPF, people do not need to approach separate companies to procure their dividends and shares.
Regulating Laws of IEPF
Companies Act, 2013 and Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 govern the functioning of the IEPF. These laws state that after a company declares its dividend, the shareholders get 30 days to claim the dividend. If the shareholders fail to claim, then the company is forced to transfer such unclaimed dividend to a special account, opened in the name of the company, called ‘Unpaid Dividend Account’.
The company, within 90 days of transferring the amount to the ‘Unpaid Dividend Account’, must publish a list of all the shareholders along with their unclaimed dividend on their website. After that, a shareholder must file an application to the company for the payment of the unclaimed dividend. If the dividends remain unclaimed for a consecutive period of 7 years, then the company is obliged to transfer the unclaimed dividend to the IEPF. Once the 7-year time period gets over, the shares also get transferred to the IEPF, along with the dividend amount.
What happens to the shares and the dividend transferred to the IEPF? Will you lose all your dividend income along with your shares?
A shareholder, before the introduction of IEPF, used to lose his rights over the dividend amount and the shares once they were transferred to the Government funds. But now, with the introduction of IEPF, a shareholder does not lose his/ her right over the dividend and the shares. However, companies still urge their shareholders to claim their dividends before the shares go into IEPF. The reason behind this is that the procedure of claiming the refund of dividend and the shares from IEPF is very time-consuming. IEPF takes a longer time to refund the amount and shares to the rightful owner because it wants to be 100% sure that the dividend and shares are given to the rightful owners only. Due to this, they carefully scrutinize the applications before giving their approval of the transfer.
Procedure of IEPF Claim in Simple Steps
Step 1: Claimant to Authority
A claimant has to apply to MCA through IEPF Form-5 with details of their particulars, company, and shares to be claimed.
Step 2. Claimant to Company
After filling the online refund form, the claimant should send it to the Nodal Officer of the concerned company with attachments like indemnity bond, original receipts and certificates related to matures deposit or debentures, etc. these will help in verification of claim with the company.
Step 3. From Company to Authority
A company has to create a claim verification report within 15 days of receiving the claim form along with documents and send it to the authority in the prescribed format of the authority.
Step 4. Grant of Claim by Authority
The authority will grant the claim to the claimant after verification of all documents and the form sent by the company.
If the claimant has claimed shares, then the sanctioning authority will order a refund to be paid to the Demat account of the claimant. If there is any amount, then it will be transferred to the bank account of the claimant. Normally, the authority disposes of claims within 60 days of receiving the verification report from the company.
Why do You Need Legal Help?
The procedure to file an application for the refund of unclaimed dividends and lost shares to the IEPF Authority is a tricky and tedious task. Hiring a legal expert will ease out your process of filing the application. The application filing requires a certain degree of technical knowledge. The legal expert will ensure that the application contains no mistakes and thus, avoids the chances of it getting rejected. He will do all the tasks; from collecting the information from the company about the dividend and shares to filing the said application.
The legal expert can also help you to get your shares that are involved in a family dispute. As stated above, when a shareholder dies without appointing a nominee for its shares or does not draft a will as to what will happen to its shares after his death, then all the relatives of the deceased shareholder come to claim their share in the deceased’s property, a.k.a., shares in this case. I mean who will leave the shares of Eicher Motors Ltd. No family member of a deceased person will want to let go of the shares that were bought by him in the 90s. Due to these reasons, a claimant requires the help of a legal professional or a legal firm to manage all such disputes related to ownership of the shares. A legal expert knows all the laws and nitty-gritty around the loopholes regarding the partition of the family assets, therefore, he can provide you with the best deal possible.
As we have seen, Eicher Motors’s value of the shares has increased manifold. Thus, if you just came to know about the existence of such shares in your name, then it is the best time to redeem them, along with the dividend accumulated over time. Getting a sum in excess of crore is nothing less than winning a lottery. It is advised that you check the data on the company’s website to find the expiry date by which you can claim the dividend from Eicher Motors Ltd. If your shares are not transferred to the IEPF, then apply for the dividend claim to the Nodal/ Deputy Nodal Officer of the Company. However, if your dividend amount and shares are already transferred to the IEPF, then find a legal expert as soon as possible, and apply to the IEPF Authority for the refund of the unclaimed dividend and the recovery of the transferred shares. Hiring a legal expert will also help you to fight for the shares stuck in a legal dispute. These firms can also guide through the complete process and make your job of share recovery easy.