Do you think 1 share of a company can give you more than ₹ 10 Lakhs? Yes, you read it right! Infosys has done the impossible. If your father or grandpa had bought 10 shares of Infosys during its IPO, then today, the value of those shares would be more than ₹ 1 Crore.

Curious to know about it? Here, I am going to discuss how you could earn a fortune if you just came to know that you owned 10 shares of Infosys in 1993.

About the Company

Infosys is an Indian MNC that provides the services of business consultation, information technology, and outsourcing. It was incorporated in 1981 as a private company. In 1992, it converted into a public company. The very next year, it got listed on the stock exchanges. It is the 2^nd largest Indian IT company after TCS with a market capitalization of ₹2,73,214 Crores. It has been growing exponentially.

It continued to generate profits during the setback of the COVID-19 pandemic and provided dividends to its members. Infosys has provided 2 dividends, in 2020-2021, of ₹12 and ₹ 9.50, accumulating to ₹ 21.5 per share. This means that if you would have purchased 10 shares in 1993, then you could have received a dividend of ₹ 2, 20, 160 in this year alone. You must be wondering how 10 shares could yield the said amount with the dividend of only ₹ 21.5 per share. All thanks to the bonus shares, Infosys has issued from time to time. Below is the calculation that will provide you an explanation.

Calculation

• Imagine that you or any family member in your previous generation has bought 10 Infosys shares during its IPO in 1993.
• The share was issued at ₹ 95. Thus, you invested a total of ₹ 950 in these shares.
• The company, in 1994, issued its first bonus shares in the ratio of 1:1.

[Bonus Shares are issued by the company to its shareholders as fully paid up shares without any cost. In other words, the company by issuing bonus shares gives a gift 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 10 shares in the beginning, it has now become 20 shares.

• In 1997, the company again issued the bonus shares in the ratio of 1:1. Therefore, the 20 shares in your name have now become 40 shares.
• In 1999, the company again issued bonus shares at a 1:1 ratio. Now, your number of shares has increased from 40 to 80.
• The company, in the very next year, in 2000, due to an extreme rise in its share price, split up its stock in the ratio of 2:1.

[A company splits its stock when the share price of the share increases to a great extent and it becomes difficult for the retail investors or small investors to invest in the shares of such companies. 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 capital.]

The same thing happened with Infosys. Its stock price shot up to a great height. To reduce the share price, and to make it easier for the retail investors to buy the stock, the company split its stock into 2. This means that for every share, the shareholder got 2 shares, worth half of the original 1 share. In simpler words, earlier, if you had 10 shares of ₹ 100 each, then now you have 20 shares of ₹ 50 each. Thus, no change in the net value of the shares worth ₹ 1, 000.

Due to the stock split, now your shares increased from 80 to 160.

P.S.: Do not confuse it with Bonus Shares. Because unlike Stock Spilt, the price per share does not decrease while issuing Bonus Shares.

• After that, the company has issued bonus shares 5 times to date.
• In 2005, the company issued bonus shares at a 3:1 ratio. This means that for every share owned by a shareholder, the company will issue another 3 shares in his name. This means that if you had 160 shares in the beginning, it has now become 640 shares. (160 Original Shares + 480 Bonus Shares)
• In 2007, the company issued another round of bonus shares at the ratio of 1:1. Now your shares are doubled in the amount. Thus, it has increased to 1, 280 shares.
• After the 8 years, in 2015, the company again issued the bonus shares at the ratio of 1:1. The shareholding of every shareholder got doubled, thus, the shares increased from 1, 280 to 2, 560.
• The very next year, in 2016, the company again issued bonus shares at a 1:1 ratio. Now, your number of shares has increased to 5, 120.
• Infosys last issued the bonus shares in 2019 at the ratio of 1:1. Thus, today, the number of Infosys shares you should own is 10, 240.
• Now, the price of 1 share of Infosys, as of 3^rd December 2020, is ₹ 1, 125. Thus, the value of your shares as of date is,

₹ 1, 125 x 10, 240 shares = ₹ 1, 15, 20, 000 (One Crore Fifteen Lakhs Twenty Thousand)

• The above amount is only the price of the shares. We have not calculated the dividends that you have received so far.
• Infosys is known for sharing its profits with its investors. To date, the company has paid an aggregate dividend of ₹ 722.25 per share.

Source: https://trendlyne.com/equity/Dividend/INFY/630/infosys-ltd-dividend/

Now you can calculate your dividends accordingly.

As you could see, if you had 10 shares of Infosys registered under your name in 1993, then you would have become a Crorepati today. Now the issue is that you are not in the possession of the shares of Infosys though you know that you are the rightful owner of the same. As per the Government’s rule, these shares are now treated as forgotten or lost shares because no one has claimed dividends on them for 7 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 ‘long lost and forgotten shares’.

About Investor Education and Protection Fund

As stated above, the Government introduced the IEPF to address the ever-increasing problem of people forgetting their shareholdings in a company. The IEPF was launched to promote the protection of interest, and awareness of the investors. The unclaimed dividend and lost shares transferred to this account are taken care of by the Government on behalf of the rightful shareholders. The dividends on the shares remain unclaimed for years because people tend to forget that they own the shares in the first place. There are multiple reasons why people forget about their ownership in a company:

• No Nominee: Usually investors do not appoint a nominee/ heir to take care of the shares after their death. Therefore, the shares remain deserted because the heirs are clueless about their ownership of such shares.
• Small Investments: Generally, the investment is of small amounts due to which an investor forgets about the shares.
• Property Dispute: Shares get attached to the court because proceedings are pending in the courts regarding the property dispute. Thus, the shares remain ownerless till the court’s verdict.

There are many other reasons why an investor forgets about his/ her shareholding in a company. This is the reason why many companies have abundant shares with them with no sign of ownership.

Before the introduction of the IEPF, the companies were required to transfer the unclaimed dividends and unclaimed shares to the government funds. The Government could then use such funds for various public welfare schemes and various developmental works.  Since the problem of people forgetting their shareholdings in a company was increasing, the Government realized that it was causing huge losses for the investors. Therefore, the Government decided to set up the IEPF.  It is a one-stop solution that the government provides to the members of a company. Here, the members can approach the government and claim their dividends. Along with that, they can ask them to refund their long-forgotten shares. The IEPF was initiated while keeping in mind the interests of the shareholders. IEPF protected the investors’ funds while spreading awareness regarding the same.

The Government takes care of the unclaimed dividend and lost shares transferred to this account on behalf of the rightful shareholders. Thus, even after 7 years, investors can claim their dividends and shares from the fund manager by applying to the managing authority. People can claim their dividends and shares of different companies through one platform instead of going to each company individually, that is why IEPF is known as a one-stop solution.

Provisions Governing IEPF

The functioning of IEPF is governed by the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. Once a company declares a dividend on the shares, the shareholders get 30 days to claim the said dividend. After 30 days, if the dividends remain unclaimed by the shareholders, then the company, according to the above-stated laws, is obliged to transfer such dividends to a special account. This special account is opened in the name of the company, known as ‘Unpaid Dividend Account’.

After that, the company gets 90 days to publish a list of all the shareholders along with their unclaimed dividends on its website. In addition to this, the company can use any other mode of communication to tell its members about their unclaimed dividends kept with the company. If a shareholder wants to retrieve his unclaimed dividend from the ‘Unpaid Dividend Account’, then he has to file an application to the transfer agent of the company. Despite all these, if a shareholder, for any reason stated above, fails to claim the amount from the company for 7 years, then the company shall transfer such unclaimed dividend to the IEPF Account. The shares on which such dividend was declared will also get transferred to the IEPF for they are considered as forgotten shares. Thus, if the dividends remain unclaimed for 7 years, then the dividend and shares, both get transferred to the IEPF Account.

Unclaimed Dividend & Unclaimed Shares of Infosys

We can see the transfer status of the unclaimed dividend and unclaimed shares to the IEPF from the Annual Reports of a company.

Funds & Shares transferred to the IEPF

According to the Annual Report 2019-2020 of the company, Infosys has transferred the following unpaid dividend and unclaimed shares to the IEPF during the last 3 Fiscal Years:

Source: https://www.infosys.com/investors/reports-filings/annual-report/annual/documents/infosys-ar-20.pdf

The company, in the previous 3 financial years, has transferred Five Crores Thirty-Three Lakhs Fifteen Thousand Eight Hundred Eighty-Nine Rupees (₹ 5, 33, 15, 889/-) of the unclaimed dividend to the IEPF Account.

Along with it, Infosys in 2019 alone, has transferred 8, 424 shares in the IEPF which are worth almost a crore. This is the data for only one year. The IEPF holds 0.1% shares of Infosys which accumulates to 2, 84, 487 shares. It is a huge chunk of unclaimed shares. The shareholders are thus advised to look into their investment history, or the ownership of shares passed on from a deceased family member and claim their dividends and shares from IEPF.

Funds & Shares to be transferred to the IEPF

The Annual Report 2019-2020 also provides the dates by which an investor can approach the Company’s Registrar or the Transfer Agent to claim dividends declared by the company from time to time. It also provides the amount of outstanding unclaimed dividends. After the expiry of the stated dates, Infosys will be forced to transfer the outstanding amounts of dividends, along with the shares, to the IEPF. 

The following table provides the information regarding the amount of dividend issued and the last dates by which the shareholders can claim those dividends.

For shareholders of Infosys:

Source: https://www.infosys.com/investors/reports-filings/annual-report/annual/documents/infosys-ar-20.pdf

The table above provides the deadlines to the shareholders of Infosys, to claim their dividends by applying to the Company’s Registrar or the Transfer Agent. After the due dates, provided in the 4^th column, Infosys will be forced to transfer the dividend funds (provided in the 3^rd column) to the IEPF, along with the respective shares.

An investor can check the status of their lost shares of Infosys, from https://www.infosys.com/investors/shareholder-services/transfer-equity-shares.html

For more information, visit https://www.infosys.com/investors/reports-filings/annual-report/annual/documents/infosys-ar-20.pdf

Unclaimed Shares & Lost Dividend under IEPF

If a shareholder has unclaimed shares and lost dividends in the name of IEPF, then he can approach the IEPF fund manager to refund the amount and transfer back the shares in the name of the claimant. The shareholder does not lose his/ her right over the dividend and the shares. Despite the fact, Infosys still encourages its members to claim the dividends on time from the company itself, to avoid its transfer to the IEPF Account. Infosys does this to avoid its members to go through the tiresome procedure of recovering the money and shares from the IEPF Authority. The fund manager follows this rigorous procedure to ensure that the shares get transferred to the rightful owner only. When shares remain unclaimed for such long periods, i.e., 7 years or more, they become prone to someone fraudulent transactions. Due to this, the fund manager makes thorough investigations before initiating the transfer of the amount and the shares. This thorough investigation makes it a time-consuming procedure and it becomes hard for the members to get back their shares. Hence, Infosys advises its members to claim dividends as it is comparatively easier.

For this purpose, the Nodal Officer, appointed by the company under the rules of IEPF, is A. G. S. Manikantha, Company Secretary has been appointed as the Compliance Officer and the Nodal Officer. To contact the Nodal/ Deputy Nodal Officer of Infosys, write an email to Manikantha_AGS@infosys.com.

Why do You Need Legal Help?

As stated above, the application procedure to claim the refund of unclaimed dividends and lost shares is a difficult process. It requires a certain degree of expertise to file the application to the fund manager. Hiring a legal professional can help you to save yourself from this tedious task. Your legal expert will take care of all the work and formalities required to file the refund application. If there are mistakes in an application, the IEPF authority straight away rejects it, and the claimant has to repeat the whole procedure. Hiring a lawyer will ensure that there are no mistakes in your application so that the procedure goes on smoothly. From contacting the nodal officer to collecting the information to filing the application, the lawyer will take care of everything.

Hiring a lawyer will be extremely helpful if your shares are stuck in a family dispute. As mentioned, sometimes, the shareholder dies without any nominee, and he also forgets to put shares in his will. In such a case, all the family members of the deceased come to claim their right to the deceased’s property, i.e., Infosys Shares. Not hiring a legal expert can cost you a fortune that you are entitled to. Why will people leave shares worth crores? If you are without a lawyer, then the other party will easily take your advantage and you will end up with nothing. A lawyer with the command of the law can protect you from all the loopholes which might go against you and thus, can provide you with the best deal possible.

Conclusion…

As we have seen, Infosys is very generous in issuing bonus shares to its shareholders from time to time. This generosity increased your 10 shares, bought in 1993, to 10, 240 shares in number. The company is growing exponentially every year. Its share price has increased from ₹ 95 to ₹ 1, 125 since its IPO. Therefore, if you just came to know about the existence of Infosys shares in your name, then it is the best time to square your profits. It is advised that you check the tables provided above and find the expiry date by which you can claim the dividend from Infosys. If not already transferred into the IEPF, then apply to the Nodal Officer as soon as possible. However, if your dividend amount and shares are already transferred to the IEPF, then find a legal expert as soon as possible. The legal professional will make your job very easy. He will also come in handy in case you want to fight for the shares stuck in a legal dispute.

The post Recovery of Infosys’ Shares from the IEPF can make you Crorepati Over A Night! appeared first on MUDS.

Shares of Nestle India were floating at a price of more than ₹ 18, 000 per share in the market as of 27^th November 2020. How would you feel if you suddenly come to know that you own some shares of this company? Amazing, right? Even a small number of 6 shares will fetch you an amount of more than ₹ 1 lakh.

Excited to know, how? Here, I am going to discuss how you could earn a fortune if you just came to know that there exist shares of Nestle India Ltd. in your name. If there are long-forgotten shares of Nestle India in the name of IEPF Account, which were in your name, then this blog is for you. 

History of the Company

Nestle India Ltd. is an FMCG (“Fast Moving Consumer Goods”) company that was incorporated in 1959. It is a Large Cap company with a market capitalization of ₹1,72,477.59 Crore (One Lakh Seventy-Two Thousand Four Hundred Seventy-Seven Crores Fifty-Nine Lakh Rupees). As of 31^st December 2018, the company earned revenue of ₹ 11, 294.65 Crores. The key products/ revenue segments that contributed to this revenue are as follows:

Even during the setback of the COVID-19 pandemic, it continued to generate profits due to which its share price kept on increasing. During the pandemic itself, the stock price has increased by ₹ 3, 500. In the last quarter, i.e., the quarter ended 30^th September 2020, the company has reported sales of ₹ 3, 525.41 Crores in the stated quarter alone. This is a 15.91% increase from the previous quarter, i.e., the quarter ended 30^th June 2020. The company has earned a net profit of ₹ 587.09 Crores after the tax deduction in the last quarter only. As per the quarterly report, the company has a total of 9, 64, 15, 716 (Nine Crore Sixty-Four Lakhs Fifteen Thousand Seven Hundred Sixteen) shares outstanding at the end of the last quarter.

Nestle India is known for giving its shareholders handsome dividends. To date, the company has given a total of 60 dividends to its shareholders amounting to ₹ 1, 292.5 per share. And in this year alone, the company has declared a dividend of ₹ 196 per share.

P.S.: This information regarding the dividend is based on the data provided from 2001 onwards.)

If you have 600 shares of Nestle India registered under your name, then the value of those shares as of the day would be in crores. The dividend amount alone would be in lakhs.

Calculation

• Suppose you have 600 shares of Nestle India Ltd. registered under your name.
• Now, the price of 1 share of Nestle India Ltd., as of 27^th November 2020, is ₹ 18, 040. Thus, the value of your shares as of date is,

₹ 18, 040 x 600 shares = ₹ 1, 08, 24, 000 (One Crore Eight Lakhs Twenty-Four Thousand)

• The above amount is only the price of the shares. We have not calculated the dividends that you have received so far.
• The amount of Dividend received so far (from 2001) is,

₹ 1, 292.5 x 600 shares = ₹ 7, 75, 500

• The amount of Dividend received in this financial year is,

₹ 196 x 600 shares = ₹ 1, 17, 600

As you can see, the shareholders of Nestle India have received a huge amount of dividends from the company. From 2001 onwards, the shareholders, so far, would have received ₹ 7, 75, 500 while in this year itself, they would have received ₹1,17,600. [According to the Hypothetical above]

Source: https://trendlyne.com/equity/Dividend/NESTLEIND/930/nestle-india-ltd-dividend/

Now, you can calculate your total dividend accordingly.

As you could see, if you had 600 shares of Nestle India registered under your name, then you would have become a Crorepati today. Now, just imagine that you invested in this company a long time ago and then you forgot about the existence of its shares. Or you have inherited some shares from your deceased family member, but you did not know about them. Due to this reason you did not claim any dividend on these shares for 7 years straight. In such a scenario, these shares are not in your possession anymore because they had been transferred to the IEPF account of the Government. This does not mean that you are no longer the rightful owner of those shares. The only difference is that the Government, on your behalf, is keeping your shares and dividend amount safe with them. You can always claim your lost shares and unpaid dividend from the Government under IEPF. The Government introduced this scheme in 2016 to resolve the problem of such ‘long lost and forgotten shares’.

About Investor Education and Protection Fund

The government started this scheme to educate the investors and protect them from losing their rights over the funds and the shares. When the investors used to forget about their shares, they used to get transferred to the Government Funds along with the unclaimed dividend amount. They could then be utilized by the Government for public welfare. Since the problem of people forgetting their shareholdings in a company was increasing, the Government realized that it was causing huge losses for the investors. Therefore, the Government decided to set up the IEPF.  It is a one-stop solution that the government provides to the members of a company. Here, the members can approach the government and claim their dividends and ask them to refund their long-forgotten shares. The IEPF was initiated while keeping in mind the interests of the shareholders. IEPF protected the investors’ funds while spreading awareness regarding the same.

The Government takes care of the unclaimed dividend and lost shares transferred to this account on behalf of the rightful shareholders. Thus, even after 7 years, investors can claim their dividends and shares from the fund manager by applying to the managing authority. People can claim their dividends and shares of different companies through one platform instead of going to each company individually, that is why IEPF is known as a one-stop solution.

There are various reasons why an investor tends to forget about its investment in a company:

• No Nominee: Usually investors do not appoint a nominee/ heir to take care of the shares after their death. Therefore, the shares remain deserted because the heirs are clueless about their ownership of such shares.
• Small Investments: Generally, the investment is of small amounts due to which an investor forgets about the shares.
• Property Dispute: Shares get attached to the court because proceedings are pending in the courts regarding the property dispute. Thus, the shares remain ownerless till the court’s verdict.

These are amongst many other reasons why an investor forgets about his/ her investment in a company. Due to these reasons, the dividends on the shares remain unclaimed for years and the companies end up with abundant shares lying with them with no sign of ownership.

Provisions Governing IEPF

The functioning of IEPF is governed by the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. Once a company declares a dividend on the shares, the shareholders get 30 days to claim the said dividend. After 30 days, if the dividends remain unclaimed by the shareholders, then the company, according to the above-stated laws, is obliged to transfer such dividends to a special account. This special account is opened in the name of the company, known as ‘Unpaid Dividend Account’.

After that, the company gets 90 days to publish a list of all the shareholders along with their unclaimed dividends on its website. In addition to this, the company can use any other mode of communication to tell its members about their unclaimed dividends kept with the company. If a shareholder wants to retrieve his unclaimed dividend from the ‘Unpaid Dividend Account’, then he has to file an application to the transfer agent of the company. Despite all these, if a shareholder, for any reason stated above, fails to claim the amount from the company for 7 years, then the company shall transfer such unclaimed dividend to the IEPF Account. If the dividends are not claimed for 7 years, then the shares on which such dividend was declared were considered as forgotten shares. Therefore, they also get transferred in the name of the IEPF. Thus, if the dividends remain unclaimed for 7 years, then the dividend and shares, both get transferred to the IEPF Account.

Dividends and Shares of Nestle India Ltd. in IEPF

The Annual Reports of a company state the current status of the dividends and shares of the company which are transferred to the IEPF account. According to the Annual Report of Nestle India Ltd. of 2019-2020, all the unclaimed dividends up to the financial year 1995-1996 which remained unpaid and unclaimed with the company were transferred to the Central Government’s general revenue account. As mentioned above, before the introduction of the IEPF, the companies were supposed to transfer the funds directly to the Central Government.

All the unclaimed dividends, from the financial year 1996-1997 to 2012-2013, remaining deserted with the company, along with the shares, were transferred to the IEPF Account in the name of the Central Government. The unclaimed dividends and shares were transferred to the IEPF pursuant to Section 124, Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.

Unclaimed dividends declared by the company for the financial year 2012-2013 were recently transferred to the IEPF according to the Annual Report 2019-2020. The deadline to claim the dividends for the financial year of 2013-2014 will be given in the annual financial report of 2020-2021. In case a shareholder wants to claim his/ her dividends, then he/ she can approach the Company Registrar/ Transfer Agent of the Company with the required documents. The shareholders can reach out to the Company Registrar/ Transfer Agent of the Company at M/s Alankit Assignments Limited, Alankit House, 4E/2, Jhandewalan Extension, New Delhi, 110-055.

An investor can check the status of their unclaimed dividend, declared by Nestle, from https://www.alankit.com/searchmodule/search

For more information, visit https://www.nestle.in/sites/g/files/pydnoa451/files/2020-05/Nestle-India-Annual-Report-2019.pdf

Dividend transferred to the IEPF

According to the Annual Report 2019-2020 of the company, Nestle India has transferred the following unclaimed dividend to the IEPF during the Financial Year of 2019:

Source: https://www.nestle.in/sites/g/files/pydnoa451/files/2020-05/Nestle-India-Annual-Report-2019.pdf

In the previous financial year, Nestle India Ltd. has transferred an amount of Ninety-Eight Lakhs Twenty-Four Thousand One Hundred Seventy-Eight Rupees of unpaid and unclaimed dividend to the IEPF account of the Central Government. By looking at the amount of dividend, you can very well imagine the number of shares which lie unclaimed in the IEPF account. In the previous year itself, the company has transferred 4, 806 shares in the IEPF which amount to ₹ 8, 65, 08, 000. In total, the IEPF Account holds 0.1% of the total shareholding of Nestle India, i.e., 95, 575 shares. This amounts to ₹ 1, 72, 03, 50, 000. The shareholders, who forgot about their shares, are in loss of more than One Hundred Seventy-Two Crore Rupees.

P.S.: This amount is calculated by multiplying the shares transferred by the current price of the share.

95, 575 shares x ₹ 18, 000 = ₹ 1, 72, 03, 50, 000

As we can see, the amount of the unclaimed shares transferred to the IEPF account is more than a hundred crore. The company has a huge chunk of unclaimed shares in the IEPF. Thus, the shareholders are strongly advised to look into their investment history, or the ownership of shares passed on from a deceased family member and claim their dividends and shares from IEPF.

Unclaimed Shares & Lost Dividend Transferred to IEPF

Now, you might be wondering as to what happens to the shares and the dividend transferred to the IEPF. Do you still retain the right over the unclaimed dividend and the lost shares?

The short answer to that question is “Yes”. Yes, you do retain rights over the dividend and the lost shares, irrespective of the fact that the same has been transferred to the IEPF Account. As mentioned above, earlier it used to happen that the shareholder loses the rights over the dividend amount and the shares once they were transferred to the Government funds. But with the introduction of IEPF, a shareholder no longer loses his/ her right over the dividend amount as well as the shares. He/ She can apply to the fund manager to transfer the dividend amount accumulated and the shares back to the name of the original shareholder or the heirs of the same, as the case may be. Despite the fact, Nestle India still encourages its members to claim the dividends on time from the company itself, to avoid its transfer to the IEPF Account. The company sends individual letters, through posts and other modes of communication, to make their shareholders aware of their holdings in the company. Nestle India does this to prevent its members from going through the rigorous and tiresome procedure of recovering the money and shares from the IEPF Authority. The fund manager follows this rigorous procedure to ensure that the shares get transferred to the actual owner only. When shares remain unclaimed for a long period, i.e., 7 years or more, they become prone to someone fraudulently transferring them to his name. Thus, to avoid such fraudulent transfers, the fund manager makes thorough scrutinization of all the applications before initiating the transfer of the amount and the shares. Due to this thorough scrutinization, the procedure becomes time-consuming and it becomes hard for the members to get their shares back. That is why Nestle India recommends its shareholders to claim the dividends from the company from time to time as it takes less time and is an easy process. To claim the dividends, the shareholders have to apply to the Registrar or the Transfer Agent of the Company at the above-mentioned address. However, if your shares are already transferred to the IEPF, then you can approach the Nodal Officer, Balasubramaniam Murli, or the Deputy Nodal Officer, Pramod Kumar Rai, of the Company, appointed in this regard. To contact the Nodal/ Deputy Nodal Officer of Nestle India, write an email to Nodal.officer@IN.nestle.com.

The Necessity of Legal Help?

As stated above, the procedure to claim the refund of unclaimed dividends and lost shares from the IEPF Authority is a difficult and technical process. A certain degree of expertise is required to file the application to the fund manager. Hiring a legal professional can help you to save yourself from this tedious task. Your legal expert will take care of all the work and formalities required to file the refund application to the IEPF. If there are mistakes in an application, the IEPF authority straight away rejects it, and the claimant has to repeat the whole procedure. Your lawyer will ensure that there are no mistakes in your application so that the authority approves it without any objections. From contacting the nodal officer to collect information to filing the application with the authority, the lawyer will take care of everything.

Hiring a lawyer will be extremely helpful if your shares are stuck in a family dispute. As mentioned, sometimes, the shareholder dies without any nominee, and he also forgets to put shares in his will. In such a case, all the family members of the deceased come to claim their right to the deceased’s property, i.e., Nestle Shares in this case. Not hiring a legal expert can cost you a fortune that you are entitled to. Why will people leave shares worth crores? These disputes can take a long period of time to get settled. And if you are without a lawyer, then the other party will walk all over you and you will be left with nothing but pennies. A legal professional or a legal firm will represent you in all such disputes related to the ownership of the shares. A lawyer with the command of the law can protect you from all the loopholes which might go against you and thus, can provide you with the best deal possible.

Conclusion…

Nestle India is one of the largest and diverse FMCG companies with constant growth. Even this year, when everyone was struggling to cope up with the pandemic, the stock prices of this company managed to increase by ₹ 3, 500 per share. Due to this ever-increasing pace, the price of 1 share of Nestle India was floating at ₹ 18,000 per share. Therefore, it is the best time to sell some of your shares and secure a good profit. It might even help you to cope up with the financial difficulties, if any, that arose due to the pandemic. So, if you just came to know about the existence of any such shares in your name, which were left to you by your deceased family member, then it is the best time to claim them from the IEPF fund manager. In addition to your shares, you will also receive the dividend accumulated over time. I would advise you to check out the links mentioned above that will take you to the required section of the company’s website. Gather information regarding your dividends accumulated so far, along with your shareholding in the company, and file an application to claim your dividend from Nestle India Ltd. You will have to apply to the Nodal Officer of the Company, by contacting them at Nodal.officer@IN.nestle.com. If your dividend amount and shares are already transferred to the IEPF, even then you can claim the same by filing an application to the fund manager of the IEPF. For this, hire 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. A legal expert will also help you to fight for the shares stuck in a family dispute.

The post Recovery of Nestle India Shares from IEPF 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.

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