Many people invest their money into shares and forget to claim them, or many of them expiry before claiming them. In such cases, the money remains unclaimed for many years. Thus, the Ministry of Corporate Affairs (MCA) introduced the Investor Education and Protection Fund (IEPF) to ensure that the unclaimed shares can be transferred to and received by the right person.
Investor Education and Protection Fund (IEPF) has been established under provision of the Companies Act, 2013. The amounts such as dividends, applications money, matured deposits etc, which have remained unpaid or unclaimed for a period of 7 years are required to be transferred to the IEPF. The company must submit the details of such transfer to the IEPF Authority. A shareholder can reclaim his/her unclaimed shares transferred to the IEPF by the company by applying to the IEPF Authority as it maintains the details of every account.
A company’s shareholders can get a refund of their unclaimed shares transferred to the IEPF by a company as per the provisions of Section 124 of the Companies Act, 2013 and the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.
Who Can Apply to IEPF Authority for Recovery of Shares?
Any shareholder whose unclaimed shares have been transmitted to the IEPF can claim the refund of such shares by applying to the IEPF Authority. A claimant can make only one consolidated claim regarding a company in a financial year. The aggregated claim should include the data of the various Folios from the same company.
Process of Recovery of Share From IEPF
Step 1: Filing to Authority by Claimant
The claimant should submit Form IEPF-5 to get a refund or recover the shares back in his/her name on the MCA portal. The following information is to be provided:
- The applicant’s (claimant’s) information.
- The company information from which the amount is due, including CIN number.
- Details of the shares to be claimed.
- Details of the amount of the dividend to be claimed.
- Aadhaar number, when the claimant is an Indian citizen or passport/OCI/PIO card number, when the claimant is an NRI or foreigner.
- Details of the bank account linked to Aadhaar to which the claim would be refunded.
- Demat account number.
Step 2: Submitting the Claim to the Company
After submitting the Form IEPF-5, the claimant should send the copy of the form in an envelope labelled ‘Claim for refund from IEPF Authority’ to the company’s IEPF Nodal Officer/Registrar with the following documents:
- Printout of the filled Form IEPF-5 with the claimant’s signature
- Copy of the acknowledgement with the SRN number
- Original indemnity bond with the claimant’s signature on a non-judicial stamp paper of the amount stated under the Stamp Act
- Original advance stamped receipt with signature of the claimant and witnesses
- Original share certificates (if shares are in physical form) or copy of transaction statement (if securities are in Demat form)
- Aadhaar card
- Proof of entitlement, i.e. certificate of share, interest warrant application number, etc.
- Passport, Overseas Citizen of India (OCI), or Person of Indian Origin (PIO) card in case of NRIs and foreigners
- Cancelled cheque
- Copy of Demat account’s client master list
Step 3: Submission of Claim from the Company to the IEPF Authority
The company must prepare a verification report within 15 days of receiving a claim form from a claimant and submit it to the IEPF Authorities along with the claimant’s documentation.
Step 4: Refund from IEPF Authority to the Claimant
The IEPF Authority must decide on the claimant’s reimbursement application within 60 days after obtaining the verification report from the relevant company that has validated the claimant’s application.
The IEPF Authority will issue a refund sanction order when the claimant is entitled to the shares with the permission of the competent authority. The IEPF Authority and the Drawing and Disbursing Officer of the authority will send a bill to the Pay and Accounts Officer for payment after verifying the claimant’s entitlement. The shares or the extent of the claimant’s entitlement will be credited to the Demat account of the claimant.