IEPF Claims
What is IEPF?
Pursuant to the power conferred upon the Central Government under Section 125 of the Companies Act, 2013 (hereinafter referred to as "the Act"), an Investor Education and Protection Fund (hereinafter referred to as "IEPF") has been established. The Ministry of Corporate Affairs recently notified the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (hereinafter referred to as "the IEPF Rules") which have come into effect from September 7, 2016 for promotion and protection of the interests of investors.
Now, vide the IEPF Rules, the Companies registered under the Act are required to transfer all unclaimed Shares, unclaimed dividend, matured deposits, matured debentures, application money due for refund, or interest thereon, sale proceeds of fractional shares, redemption proceeds of preference shares, etc. in respect of the above mentioned securities which have remained unclaimed for the last seven years continuously to the IEPF suspense account. The last day to coordinate with companies is 31st may, 2017. Later it will be transferred to IEPF.
Whose shares are said to be unattended:
The shareholders who falls under the below mentioned categories:
- Address is changed 7 years ago and not informed to the companies which he/she hold the share certificates
- Shareholder/s is expired and not informed to the company.
- Don’t have information about bonus /split/merger/demerger so new certificates are not available.
Dematerialization of physical shares:
After 31st May, 2017, once the physical shares are transferred in the name of the IEPF Authority, the Authority shall dematerialise these shares and it shall keep only those shares in physical form, where dematerialisation of shares is not possible.
Can shareholders claim their shares from the Fund at a later date?
Yes. Any person, whose shares, unclaimed dividend, matured deposits, matured debentures, application money due for refund, or interest thereon, sale proceeds of fractional shares, redemption proceeds of preference shares, etc. has been transferred to the Fund, may claim the said shares by making an application in the prescribed Form IEPF- 5 available online on website along with prescribed fee, under his own signature. These applications will be verified by the concerned Company and thereby the shares will be disbursed or transferred to the demat account, in accordance with the applicant's request. It is going to be a lengthy procedure, so those who have physical share certificates please get in touch with company, Depository participants, consult with your investment advisor or broker and get it dematerialise or start the procedure before 31st may, 2017.
It is advisable to consult with broker or advisor as they are able to research for companies to know the status of company, any bonus/split/merger/demerger shares/debentures/refund are allotted/payable to you and habituated with the documentation part which are required from companies side. I am personally working on this for past 4-1/2 years. Based on my experience many of the shares had been there in family which were bought on someone else suggestion or came from upper generation. Now situation is like companies names are changed, new certificates are issued, bonus, split, merger, demerger, and they are not aware about it. Hence if you hold any certificates, it is advisable to consult with advisor or broker.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.