What are Unclaimed Shares?

Unclaimed shares refer to stocks or investments that have been left untouched or unclaimed by the rightful owners for an extended period. This happens when investors or their heirs are unaware of the ownership of these shares, often due to reasons like change of address, incorrect personal details, lost share certificates, or even the death of the shareholder without proper succession planning.

In India, these unclaimed shares eventually get transferred to the Investor Education and Protection Fund (IEPF), a statutory body under the Ministry of Corporate Affairs, to safeguard shareholders’ rights and protect their interests. Once transferred to IEPF, the shareholder or their legal heir must go through a specific procedure to claim these shares back.

Why Do Shares Remain Unclaimed?

Several reasons contribute to shares becoming unclaimed, including:

1. Change of Address: Investors may forget to update their address in their Demat or shareholding records. This leads to failure in communication regarding dividends or other corporate actions.
2. Inactive Accounts: Shareholders who haven’t actively tracked their investments may overlook dividends and other entitlements.
3. Loss of Share Certificates: Physical share certificates, once lost or misplaced, make it difficult for investors to keep track of their holdings.
4. Death of the Shareholder: If a shareholder passes away without informing their heirs or updating records, the shares may remain dormant.
5. Unclaimed Dividends: Sometimes, the dividend checks sent by companies are not cashed, leading to accumulation of unpaid dividends in the company’s accounts.

If such shares or dividends remain unclaimed for more than seven years, they are transferred to the IEPF under the unclaimed shares transfer to IEPF rule.

What is the IEPF (Investor Education and Protection Fund)?

The Investor Education and Protection Fund (IEPF) was established by the Government of India to manage the unclaimed dividends, shares, and other such funds. Its main objective is to educate investors and ensure that they do not lose out on their rightful claims due to lack of knowledge or administrative issues.

The IEPF authority is responsible for:

• Safeguarding unclaimed shares and dividends: These are transferred to the IEPF after seven years of inactivity.
• Providing a platform for shareholders to reclaim their investments: Investors or their legal heirs can apply to retrieve their unclaimed shares or dividends.
• Educating investors: The IEPF also works to raise awareness about investor rights, promoting informed decision-making.

How Do Shares and Dividends Get Transferred to IEPF?

According to Section 124 and 125 of the Companies Act, 2013, any dividend that has been unclaimed for seven consecutive years is required to be transferred to the IEPF. Similarly, any shares in respect of which the dividend has not been claimed for seven consecutive years must also be transferred to the IEPF. This is where the unclaimed shares transfer to IEPF rule comes into play.

The company is required to notify shareholders before transferring their dividends and shares to the IEPF. If no response is received from the shareholder, the shares are transferred in dematerialized form to the IEPF’s account.

How to Claim Unclaimed Shares from IEPF?

One of the most pressing concerns for investors is how to claim unclaimed shares that have been transferred to the IEPF. The process may seem daunting, but it is structured and can be navigated with the right information. Below is a step-by-step guide on how to claim unclaimed shares from IEPF:

Step 1: Gather Necessary Documents

Before initiating the claim, it’s essential to have the following documents in place:

• Original Share Certificates (if available)
• Proof of Identity: This can be your PAN card, Aadhar card, voter ID, or passport.
• Proof of Address: Recent utility bills, bank statements, or Aadhar card.
• Client Master List (CML) of your Demat Account: This is crucial if your shares are in Demat form.
• Original Dividend Warrants (if available): If you’re also claiming dividends.
• Death Certificate and Succession Certificate: In case of a deceased shareholder.

Step 2: File a Claim Online

The IEPF has simplified the process by allowing claimants to apply online. Follow these steps:

1. Visit the IEPF website (https://www.iepf.gov.in).
2. Fill Form IEPF-5: This form is available for download from the IEPF portal. It’s designed to gather all necessary details regarding your unclaimed shares or dividends.
3. Upload Supporting Documents: You will be required to attach scanned copies of the necessary documents to your application.

Step 3: Submission to the Company

After submitting Form IEPF-5 online, you need to send the hard copy of the form along with the original documents to the Nodal Officer of the company. The Nodal Officer verifies the claims and forwards the same to the IEPF authority.

Step 4: Claim Processing

Once the Nodal Officer forwards your claim, the IEPF authorities will review the details and approve the transfer of the shares and any unpaid dividends back to your account. The process can take several months, depending on the complexity of the claim.

Step 5: Receive Shares and Dividends

If everything is in order, the IEPF will release the unclaimed shares into your Demat account and transfer the unclaimed dividend into your bank account.

How to Claim Unclaimed Dividends?

In many cases, shareholders also have unclaimed dividends that they are entitled to. The process of claiming IEPF unclaimed dividends is similar to that of claiming unclaimed shares:

1. Check with the company: Contact the company’s Registrar and Transfer Agent (RTA) to verify if any unclaimed dividends are due.
2. Submit Form IEPF-5: File a claim for the dividend with the IEPF authority.
3. Follow the Claim Process: Similar to the unclaimed shares process, you’ll need to provide supporting documents and undergo verification.

Common Mistakes to Avoid When Claiming Unclaimed Shares

While the process to recover unclaimed shares in India has been made more accessible, several common mistakes can delay or complicate claims. Here are some key points to keep in mind:

1. Incorrect or incomplete documentation: Ensure that you have all the required documents in the right format. Missing documents can delay the process.
2. Filing the claim in the wrong name: If the shares are held in a joint account, both account holders need to be part of the claim process. Similarly, if the shareholder is deceased, the legal heir must provide a succession certificate.
3. Not following up: While the IEPF claims process is well-structured, it can take time. Regular follow-ups with the company and IEPF authorities are crucial to expedite the process.

Preventing Shares and Dividends from Becoming Unclaimed

It is always better to take preventive measures to ensure that your investments don’t end up as unclaimed shares or IEPF unclaimed dividends. Here are some tips:

1. Keep Contact Information Updated: Always ensure that your address, phone number, and email address are up to date in all your investment records.
2. Dematerialize Physical Shares: If you still hold physical share certificates, it is advisable to convert them into Demat form, as this ensures that all records are centralized.
3. Track Your Investments Regularly: Periodically check your Demat account and ensure that your dividends are being credited to your bank account.
4. Nominate Legal Heirs: Nominate a trusted person as your legal heir in your Demat account to prevent complications in the event of your death.
5. Maintain Proper Records: Keep a record of all share certificates, dividends received, and other important documents.

Legal Aspects of Unclaimed Shares

There are several legal provisions surrounding unclaimed shares in India, especially concerning the transfer of these shares to the IEPF. As per the Companies Act, companies are obligated to:

• Transfer dividends and shares that remain unclaimed for more than seven years to the IEPF.
• Provide shareholders with ample notice before the transfer.
• Maintain a comprehensive database of unclaimed shares and dividends for easy access by the shareholders or their heirs.

The legal process for claiming these shares and dividends can be complicated, especially when dealing with the estate of a deceased person. In such cases, it is advisable to seek legal assistance to ensure a smooth claim process.

Frequently Asked Questions (FAQs)

To further enhance your understanding of unclaimed shares and IEPF unclaimed dividends, this section covers some frequently asked questions. These questions address common concerns and provide more clarity on how to recover unclaimed shares, the process for claiming dividends, and much more.

1. What Are Unclaimed Shares?

Unclaimed shares are shares that belong to a shareholder but have remained inactive or untouched for an extended period. These shares could have been forgotten, lost due to untraceable addresses, or overlooked by the legal heirs of a deceased shareholder. If dividends for such shares have not been claimed for seven consecutive years, the shares, along with the unclaimed dividends, are transferred to the Investor Education and Protection Fund (IEPF).

2. How Can I Find Out If I Have Unclaimed Shares?

To check if you have any unclaimed shares in India, follow these steps:

• Check with the company: Contact the company’s Registrar and Transfer Agent (RTA) or the company’s investor relations department to inquire if any shares or dividends are unclaimed in your name.
• Demat Account Review: Regularly review your Demat account. Any inactive shares or dividends may show up in your account statement.
• Online Platforms: Some companies and stock exchanges offer online services where you can check for unclaimed shares or dividends.

You can also use the IEPF website to search for unclaimed shares transferred to the IEPF in your name.

3. What Is the Role of the IEPF in Unclaimed Shares?

The Investor Education and Protection Fund (IEPF) was established by the Government of India to manage unclaimed shares, dividends, and other unclaimed assets. The IEPF holds these assets on behalf of the shareholders, and the rightful owners or their legal heirs can claim them back through a well-structured process. The IEPF also promotes investor education and awareness to prevent shares and dividends from becoming unclaimed.

4. How Long Do I Have to Claim My Shares Before They Are Transferred to IEPF?

You have up to seven years to claim your shares or dividends before they are transferred to the IEPF. If the dividends on your shares remain unclaimed for seven consecutive years, both the dividends and the shares themselves will be transferred to the IEPF.

5. How to Claim Unclaimed Shares from IEPF?

To recover your unclaimed shares from IEPF, you need to follow these steps:

1. Gather Documents: Collect all necessary documents like share certificates, identity proof, address proof, and the Demat account’s Client Master List (CML). If you’re claiming on behalf of a deceased shareholder, additional documents like a death certificate and a succession certificate are required.
2. File Form IEPF-5: Visit the IEPF website and fill out Form IEPF-5 with all relevant details.
3. Submit the Claim: After submitting the form online, print it and send the hard copy along with the required documents to the Nodal Officer of the concerned company.
4. Verification and Approval: The company verifies your claim and forwards it to the IEPF. Once approved, the unclaimed shares will be transferred back to your Demat account.

6. How Do I Claim Unclaimed Dividends from IEPF?

The process for recovering unclaimed dividends is similar to the process for unclaimed shares:

1. Check the status of dividends: Reach out to the company’s RTA or check your Demat account to identify any unclaimed dividends.
2. File Form IEPF-5: File a claim for the dividends through the IEPF portal by filling Form IEPF-5, providing details like your bank account, PAN, and shareholding information.
3. Submit the Claim: Submit a hard copy of the form along with the necessary documents to the company.

Receive the Dividend: Once verified and approved, the IEPF will release the dividend amount into your registered bank account.

7. What Documents Are Required to Claim Unclaimed Shares?

The documents required for claiming unclaimed shares from IEPF include:

• Identity Proof: PAN Card, Aadhaar Card, Passport, etc.
• Address Proof: Utility bills, bank statements, or Aadhaar card.
• Original Share Certificates (for physical shares).
• Client Master List (CML) of your Demat account (for Demat shares).
• Dividend Warrants (if claiming dividends).
• Death Certificate and Succession Certificate (for deceased shareholders).

Ensure all documents are attested and in the correct format to avoid delays in processing.

8. What Happens If a Shareholder Passes Away and There Are Unclaimed Shares?

If a shareholder passes away and has unclaimed shares or dividends, the legal heirs can claim these shares. Here’s what they need to do:

1. Obtain Legal Documents: The heirs will need the death certificate of the shareholder and a legal heir/succession certificate to establish their right to claim the shares.
2. Notify the Company: Inform the company and its RTA about the demise of the shareholder and provide the required legal documents.
3. Claim via IEPF: If the shares have already been transferred to IEPF, the legal heir must follow the IEPF claim process, filing Form IEPF-5 and submitting the necessary documents to claim the shares and dividends.

9. What Should I Do If I Have Lost My Share Certificates?

If you’ve lost your physical share certificates, follow these steps:

1. Notify the Company: Inform the issuing company and its RTA about the loss of the share certificate.
2. Issue of Duplicate Share Certificates: The company will guide you through the process of issuing duplicate share certificates. You will be required to submit an affidavit, indemnity bond, and a surety form.
3. Claim via IEPF: If the shares have been transferred to IEPF, you can still claim them by following the IEPF process and submitting proof that you are the rightful owner of the shares.

10. Can I Claim Unclaimed Shares for a Joint Shareholding?

Yes, you can claim unclaimed shares for a joint shareholding. In such cases, both shareholders need to submit the claim, or if one of the joint shareholders is deceased, the surviving shareholder can claim the shares after providing the necessary documents (death certificate, etc.).

Conclusion

While the prospect of unclaimed shares and IEPF unclaimed dividends may seem daunting, the process to reclaim these investments has been streamlined in recent years. By understanding the steps involved and taking proactive measures, investors can recover their rightful assets. 

The post Unclaimed Shares: What You Need to Know to Recover Your Investments appeared first on MUDS.

How would you feel if you find ₹ 1,000 in your jeans that you forgot about? Happy, right?

Now imagine if you find 1,000 shares of TCS bought during its IPO. Congratulations! You have hit a jackpot of 1 Crore Rupees.

How Did This Happen?

Tata Consultancy Service Ltd. (“TCS”) is India’s No. 1 multinational company specializing in Information Technology (“IT”) and Consultancy Services. It has expanded manifolds since its establishment. In April 2018, it became the first IT company to cross the milestone of $100 Billion in terms of market capitalization. TCS became the second Indian company to reach this milestone after Reliance Industries Ltd. (“RIL”). TCS has been consistent in its over-arching performance. Even in the times of Covid-19, it did not fail to impress with its numbers. In March 2020, TCS, again became the most valued Indian firm with the market capitalization of ₹ 6,82,408.68 crores, beating RIL by ₹ 6,959.73 crores. In September this year, it became the first IT company and the second Indian company after Reliance Industries Limited to reach the milestone of ₹ 9 trillion in terms of market capitalization. In October, it became the world’s most valuable IT company surpassing Accenture.

When everyone was recovering from the setback of COVID-19 pandemic, it continued to generate profit and dividends for its investors. For the first two quarters of the year 2020-21, the shares of TCS provided an aggregated dividend of ₹17 per share to its shareholders. So, if you or your deceased relative had bought 1,000 shares in 2004, i.e., during its IPO, then you could have received a dividend of ₹ 68,000 in the first two quarters of this year alone.

Now, you must be wondering, that how come a dividend of ₹ 17 per share for 1,000 shares yielded an income of ₹ 68,000. It should have yielded an income of only ₹ 17,000. The following calculation will clear your confusion and help you to understand how the 1,000 shares bought in 2004 are worth more than ₹ 1Crore today.

Calculation

• Suppose you bought 1,000 shares of TCS in 2004.
• On 28^th July 2006, the company issued bonus shares in the ratio of 1:1.

[Bonus Shares are the shares issued by the company to its shareholders as fully paid up shares without any cost. In simpler words, these shares are a gift from the company to its shareholders].

Issuing bonus shares at a 1:1 ratio means, that for every share owned by a shareholder, the company will issue another share in his name. This means that if you had 1,000 shares, it has now become 2,000 shares.

• On 16^th June 2009, the company again issued the bonus shares in the ratio of 1:1. This means that your 2,000 shares have become 4,000 shares.
• Since,

Dividend Received x No. of Shares = Total Dividend

Therefore,

₹ 17 x 4,000 shares = ₹ 68,000

• Now, the price of 1 TCS share, as of 17^th November 2020, is ₹ 2,673. Thus, the value of your shares as of date is,

₹ 2,673 x 4,000 shares = ₹ 1,06,92,000 (One Crore Six Lakhs Ninety-Two Thousand)

• The above amount is only the price of the shares. We have not calculated the dividends that you have received so far.
• TCS is known for paying its investors handsomely. Till date, the company has paid an aggregate dividend of ₹ 518.5 per share.

Now you can calculate your dividends accordingly.

So, if you had invested in 1,000 shares of TCS in 2004, then you would have become a Crorepati today. Now the real issue is, you know that you are the rightful owner of the TCS shares, but you are not in the possession of the same because they are held by the Government of India. This happens because of the Government’s rule that if a dividend remains unclaimed for seven years or more, then it has to be transferred to the Investor Education and Protection Fund (“IEPF”). The government introduced the concept of IEPF in 2016 to address the issue of such ‘forgotten shares’.

Investor Education and Protection Fund

You might find it hard to believe but it is very common for people to forget about their shareholdings in companies. There could be many reasons for the same, such as:

• Sometimes, an individual invests a very small amount in a company and forgets about it.
• Sometimes, people buy shares in a company without assigning a nominee. When they die, the shares remain unclaimed as the heirs of the deceased do not even know about the existence of such shares.
• Sometimes, the heirs of the deceased person do know about the shares. But due to a family dispute regarding the share in the property, the company’s shares become part of the dispute, and hence, remain unclaimed.

There could also be some other reasons that could lead to investors forgetting about them. Due to this, in almost every company they have these dormant shares without anyone showing ownership.

Earlier, the companies were obligated to transfer such unclaimed dividends to the government funds. The government would use such funds under various public policies for welfare schemes and developmental works. However, when the government saw that later, people are coming to claim their dividends, it decided to set up IEPF. It acts as a platform, where people can approach and claim their shares in various companies by filing an application. It acts as a one-stop solution, as people do not have to go to different companies one by one to claim their shares and dividends earned on the said shares. In order to claim the recovery of shares and to claim the refund of the unclaimed dividends from the IEPF, an individual has to apply for the same to the managing authority of the fund manager.

Provisions Governing IEPF

IEPF is governed by the Companies Act, 2013 and Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. Under these laws, once a company declares the dividend, then it has to be claimed by the shareholder within 30 days of such declaration. If the dividend remains unclaimed, then the company shall transfer such unclaimed dividend to a special account, opened by the company, called ‘Unpaid Dividend Account’.

After transferring the amount to the ‘Unpaid Dividend Account’, the company, within 90 days, has to publish a list of all the shareholders along with their unclaimed dividend on their website. After that, if a person wants to claim the dividend, then he has to apply to the company for the payment of the unclaimed dividend.

If a person fails to claim the dividend for a consecutive period of 7 years, then the company is obliged to transfer the unclaimed dividend to the IEPF. Along with the amount, the company is also obliged to transfer such shares in the name of the IEPF.

Note: The shares transferred in the name of the IEPF are the shares on which the dividend has been declared by the company, but the shareholder has failed to claim the same for a consecutive period of 7 years.

Unclaimed Dividend & Unclaimed Shares of TCS

From the Annual Reports of a company, we can see the transfer status of the unclaimed dividend and unclaimed shares to the IEPF.

Funds & Shares transferred to the IEPF

According to the Annual Report 2019-2020 of the company, TCS has transferred the following unpaid dividend and unclaimed shares to the IEPF during the Financial Year of 2020:

Source: https://www.tcs.com/content/dam/tcs/investor-relations/financial-statements/2019-20/ar/annual-report-2019-2020.pdf

The company in the previous financial year has transferred Two Crores Forty-Six Lakhs Seventy Thousand Rupees (₹ 2,46,70,000/-) of the unclaimed dividend, along with Fifty-Four Thousand Seven Hundred Eighty-Six (54,786) shares in the IEPF. From the above table, it can be deduced that the company has a huge chunk of unclaimed dividends and unclaimed shares in the IEPF. The shareholders must look into their investment history to look for such unclaimed shares and claim their dividends from IEPF.

Funds & Shares to be transferred to the IEPF

The Annual Report 2019-2020 also provides the outstanding unclaimed dividend and the dates by which an investor can approach the Company’s Registrar or the Transfer Agent to claim the funds. After the expiry of the stated dates, TCS will be forced to transfer such dividends, along with the shares, to the IEPF.

The following tables provide the information regarding the date of declaration of dividends and the last date by which the shareholders can claim the dividends.

1. For shareholders of Tata Consultancy Service Limited (TCS):

The above table provides the deadlines for the shareholders of the TCS, to claim their dividends by applying to the Company’s Registrar or the Transfer Agent. After the due dates, provided in the 3^rd column, TCS will be forced to transfer the funds to the IEPF, along with the respective shares.

• For shareholders of erstwhile TCS e-Service Ltd. which has merged with the company:

TCS e-Service Ltd. was merged with TCS Ltd. The shares of such shareholders are treated differently. Therefore, the above table provides the deadlines for the shareholders of the erstwhile TCS e-Service Ltd., to claim their dividends by applying to the Company’s Registrar or the Transfer Agent. After the due date, provided in the 3^rd column, TCS will be forced to transfer the funds to the IEPF, along with the respective shares.

• For shareholders of erstwhile CMC Ltd. which has merged with the company:

CMC Ltd. was merged with TCS Ltd. The shares of such shareholders are treated differently. Therefore, the above table provides the deadlines for the shareholders of the erstwhile CMC Ltd., to claim their dividends by applying to the Company’s Registrar or the Transfer Agent. After the due dates, provided in the 3^rd column, TCS will be forced to transfer the funds to the IEPF, along with the respective shares.

An investor can check the status of their unclaimed dividend, declared by TCS, from https://www.tcs.com/unclaimed-dividend-details-from-february-10-2014-to-january-31-2020

For more information, visit https://www.tcs.com/content/dam/tcs/investor-relations/financial-statements/2019-20/ar/annual-report-2019-2020.pdf

Unclaimed Shares & Lost Dividend under IEPF

If the shares are not claimed within the 7 years, does it mean you will lose all your dividend income along with your shares?

As stated above, earlier, it used to happen that the government would utilize such funds for the public welfare, and the investor loses the rights over such income as well as shares. Therefore, the companies used to advise the investors to claim their dividend to prevent the loss of the dividend income and the shares. But now, with the introduction of IEPF, an investor does not lose his/ her right over the dividend and the shares. Then what is the reason for the companies advising you to claim dividends before the shares go into IEPF?

The reason why the companies still advise the investors to claim their dividend from the company by applying to the Company’s Registrar or the Transfer Agent, rather than claiming the refund of shares and the dividend amount from the IEPF, is that the process of claiming the refund of dividend and the shares from IEPF is tedious and cumbersome. IEPF takes time to refund the money and the shares to the rightful owner. The reason this is that the authority wants to ensure that the shares are transferred to the rightful owner. Thus, the claim applications go through heavy scrutiny before approval from IEPF authority.

Procedure to Claim Dividend and TCS Shares from IEPF Authority

TCS shareholders, whose shares and the unclaimed dividend has been transferred to the IEPF for they did not claim their dividend for the consecutive period of 7 years, as provided under Section 124 of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, can claim their shares or unclaimed dividend amount from IEPF Authority.

Step 1: Contact TSR Darashaw Ltd.

The shareholder has to contact TSR Darashaw Ltd., which is the Company Registrar/ Transfer Agent of TCS. The shareholder has to obtain all the information like the year wise dividend entitlement, and all the shares transferred to the IEPF Authority.

Step 2: Download IEPF 5

The shareholder then has to visit the website of the IEPF Authority, http://www.iepf.gov.in/IEPF/refund.html, and download the Form IEPF 5. Then he has to fill in the form and upload it back on the website. This will be the online application filed by the shareholder.

Note: An individual can file one form in one financial year. However, he can make multiple claims in a single form. Thus, remember to put all the claims in one form.

Step 3: Physical Application

The shareholder then has to take a printout of the online form and send it to the Nodal Officer at the Registered Office of TCS, Mumbai. The application should be sent along with the required documents, which are self-attested (including the witnesses).

The required documents need to be attached are:

• Original Indemnity Bond: Duly signed by the claimant, joint holder, and two witnesses:
  • Amount less than 10,000: On a plain paper
  • Amount more than 10,000: On a non-judicial stamp paper of the value prescribed under the Stamp Act.
• Original Advance Stamp Receipt: Duly signed by the claimant, joint holder, and two witnesses.
• Proof of Entitlement
• Copy of Client Master List
• Copy of Aadhar Card
• Copy of PAN Card
• Copy of Passport, in case of NRIs
• Original Cancelled Cheque Leaf
• In case any joint holder is deceased, a notarized copy of the death certificate to be attached
• Other optional documents, (if any)

Note: All the above documents are required to be self-attested by the claimant and the joint holder (if any).

Step 4: Verification by TCS

TCS will then verify the details of the application, along with the claim and the various documents attached. It will then make a Verification Report and file it, along with the original documents and physical application filed by the claimant, with the IEPF Authority.

Step 5: Comment by the IEPF Authority

The IEPF Authority, based on the application, documents attached, and the report submitted, will give its decision. It can do either of the three things:

• Approve the claim and initiate the refund.
• Ask the shareholder to resubmit the required documents, in case of any discrepancy or any document not being legible
• Reject the claim

Step 6: What to do next?

• If the IEPF Authority asks the shareholder to resubmit the documents, then the shareholder has to send the said documents to the Nodal Officer at the Registered Office of TCS, Mumbai. The Nodal Officer will then forward the documents to the IEPF Authority.
• If the IEPF Authority rejects the claim, then the shareholder will have to repeat all the steps from starting and keep in mind the mistakes he had made while filing the first application.

For more information, visit https://www.tcs.com/content/dam/tcs/pdf/discover-tcs/investor-relations/faq/steps-to-claim-dividend-shares-iepf.pdf

Why do You Need Legal Help?

As seen above, filing an application for the refund of unclaimed dividends and lost shares to the IEPF Authority could be a tricky and tedious task. To ease out the process and ensure that there is no mistake in the application, one requires the help of a legal professional. Filing the application requires a certain degree of technical knowledge. Hiring a legal professional will suit you the best as he will do all the tasks; from collecting the information from the company about the dividend and shares to filing the said application.

If the shares are involved in the family dispute, then you definitely require legal help. Shares get involved in the family dispute when a shareholder, as stated above, dies without assigning a nominee or does not include the shares in his will. Now, every one of his kin would want a right over such shares, especially when the value of those shares is huge. No family member of a deceased person will want to let go of the shares of TCS that were bought by him in 2004. Therefore, a claimant needs to hire a legal professional or approach a legal firm to manage all the disputes related to ownership of the shares. A lawyer knows all the laws regarding the partition of the family assets, and he can provide you with the best deal.

To Conclude….

So, we have seen how the shares of TCS have increased in value over the period. If you just came to know that some TCS shares exist in your name, then it is the best time to redeem them, along with the dividend accumulated over time. Who knows, maybe you will become the next millionaire. It is also advised that you go through the tables provided above and find the expiry date by which you can claim the dividend. After identifying the date, apply for the dividend claim as soon as possible with the Company Registrar/ Transfer Agent, i.e., TSR Darashaw Ltd. Thus, avoiding the shares to be transferred to the IEPF. However, if your shares are already transferred to the IEPF, 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.

The post Recovery of Lost Shares of TCS from IEPF Can Make You a Multimillionaire! appeared first on MUDS.

(1) Related Parties

(2) Who are Relatives

1. Member of HUF
2. Father/Step-father
3. Mother/Step-Mother
4. Son/Step-son
5. Son’s Wife
6. Sister/Step-sister
7. Daughter
8. Daughter Husband

(3) Required of Related Party Disclosure/Approval Section 188(1) of the Companies Act, 2013

Except with the consent of the Board of Directors given by a resolution at a meeting of the Board and subject to such conditions as may be prescribed, no company shall enter into any contract or arrangement
with a related party with respect to —

1. sale, purchase or supply of any goods or materials;
2. selling or otherwise disposing of, or buying, property of any kind;
3. leasing of property of any kind
4. availing or rendering of any services;
5. appointment of any agent for above purpose
6. such related party’s appointment to any office or place of profit in the company, its subsidiary company or associate company; and
7. underwriting the subscription of any securities or derivatives thereof, of the company:

Provided that nothing in this sub-section shall apply to any transactions entered into by the company in its ordinary course of business other than transactions which are not on an arm’s length basis

Explanation

Such transactions may be prejudicial to the interest of Company or its stakeholders and hence require scrutiny. Even a related party relationship could have an effect on the financial position and operating results of a Company

1. office or place of profit” means any office or place—
   1. if the director is holding it then he receives from the company anything by way of remuneration over and above the remuneration to which he is entitled as director, by way of salary, fee, commission, perquisites, any rent-free accommodation, or otherwise;
   2. where such office or place is held by an individual other than a director or by any firm, private company or other body corporate, if the holder receives from the company anything by way of remuneration, salary, fee, commission, perquisites, any rent-free accommodation, or otherwise;
2. the expression “arm’s length transaction” means a transaction between two related parties that is conducted as if they were unrelated, so that there is no conflict of interest. Provided that no contract or arrangement, in the case of a company having a paid-up share capital of not less than such amount, or transactions not exceeding such sums, as may be prescribed, shall be entered into except with the prior approval of the company by a resolution:[Expl. 2 of Rule 15 of Companies (Meetings of Board and its Powers) Rules, 2014 – In case of wholly owned subsidiary, the resolution passed by the holding company shall be sufficient for the purpose of entering into the transactions between WOS and holding company.]Provided further that no member of the company shall vote on such resolution, to approve any contract or arrangement which may be entered into by the company, if such member is a related party: [Exempt for Pvt. Ltd. Cos. – MCA Notification dated June 5, 2015]

(4) Register of Contract:

Register(s) to be maintained in form MBP-4

To be placed before the next meeting of the Board and signed by all the directors present at that meeting. To be kept at the regd. office and shall be open for inspection during business hours and extracts may be taken therefrom, and copies thereof may be furnished to any member. The register to be produced at the commencement of every AGM and shall remain open and accessible during the continuance of the meeting.

No entry required to be made in Form MBP-4:

(a) for the sale, purchase or supply of any goods, materials or services if the value of such goods and materials or the cost of such services does not exceed five lakh rupees in the aggregate in any year; or
(b) by a banking company for the collection of bills in the ordinary course of its business.

(5) Internal Control of Related Party transactions:

1. Duties of Independent Director: pay sufficient attention and ensure that adequate deliberations are held before approving related party transactions and assure themselves that the same are in the interest of the company
2. 177(4) Every Audit Committee shall act in accordance with the terms of reference specified in writing by the Board which shall, inter alia, include approval or any subsequent modification of transactions of the company with related parties
3. Certification in form MGT-8 by a practicing Company Secretary
4. PCS to certify that with respect to the contracts / arrangements with related parties as specified in section 188 of the Act during the financial year, the Company has complied with provisions of the Act & Rules made there under.

(6) Related Party and Secretarial Standards

Secretarial Standard-1 (SS-1): Related Party transactions to be carried out in physical meetings of the Board only and NOT by circulation.

Secretarial Standard-2 (SS-2):A Member who is not entitled to vote on any particular item of business being a related party, if present, shall be counted for the purpose of Quorum.

(7) Proposed Change in Related Party Transaction

1. If 90% or more members, in number, are relatives of promoters or are related parties, they can vote on resolutions concerning related party transactions in General Meetings.
2. in sub-section (3), for the words “shall be voidable at the option of the Board”, the words “shall be voidable at the option of the Board or, as the case may be, of the shareholders” shall be substituted

(8) Related Party Transaction: Prior Approval

Rule 15(2) Where any director is interested in any contract or arrangement with a related party, such director shall not be present at the meeting during discussions on the subject matter of the resolution relating to such contract or arrangement.

A contract or arrangement entered into by a director or any other employee, without obtaining the consent of the Board or approval by a resolution in the general meeting under sub-section (1) may be ratified by the Board or, as the case may be, by the shareholders at a meeting within three months from the date on which such contract or arrangement was entered into.

Prior Approval by way of resolution is required.

*If consent is not obtained or such contract or arrangement is not ratified within 3 months, such contract or arrangement shall be voidable at the option of the Board and if the contract or arrangement is with a related party to any director, or is authorized by any other director, the directors concerned shall indemnify the company against any loss incurred by it.

*Without prejudice to anything contained in sub-section (3), it shall be open to the company to proceed against a director or any other employee who had entered into such contract or arrangement in contravention of the provisions of this section for recovery of any loss sustained by it as a result of such contract or arrangement. [Section 188(4)]

(9) Penalties

On a director or any other employee of a company, who had entered into or authorized the contract or arrangement in violation of section 188 —

1. in case of listed company – imprisonment upto one year or fine of 25,000/- to 5,00,000/- or with both; and
2. in case of any other company – fine of 25,000/- to 5,00,000/-
   A person convicted for offence under section 188 stands disqualified from holding office of Director for a period of 5 years [Section 164(1)(g)

It was rightly said by Ralph Waldo Emerson– “Every Wall is a Door”
Thus, take a step forward to open the door for the new FDI norms.

Shweta Gupta from MUDS is recognized amongst the most-respected, knowledgeable and yes, pocket-friendly as well.

Why not give them a call right now at +91 9599653306 and start a conversation immediately.

The post Related Party Transactions appeared first on MUDS.