Process to claim refunds for unpaid dividends and shares transferred to Investor Education and Protection Fund (IEPF)

The Investor Education and Protection Fund (IEPF) was established by the Government of India under Section 205C of the Companies Act, 1956 (erstwhile Act) to promote investor awareness about understanding financial matters and protect the interests of investors. ?

The company has to transfer the following amounts along with interest accrued, if any, to the IEPF which were unclaimed for a period of seven years from the date they became due for payment are credited to the Fund:

i.Amounts in the unpaid dividend accounts of the companies. ii.The application money received by companies for allotment of any securities and due for refund. iii.Matured deposits with companies iv.Matured debentures with companies v.The interest accrued on the amounts referred to in clauses (i) to (iv) vi.Grants and donations given to the fund by the Central Government, State Governments, companies or any other institutions for the purposes of the Fund; vii.And, the interest or other income received out of the investments made from the fund.

Relevant Provision: Section 125 of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.??

The unpaid dividends and shares transferred to IEPF can be claimed as refund by following the process as mentioned below:?

1. Relevant Form – IEPF Form 5
2. Source of form –https://www.mca.gov.in/mcafoportal/iepf5Service.do
3. Eligible persons – Shareholders, Legal heirs and Successors.

Shareholders: Shareholders of a company whose unclaimed or unpaid amounts (such as dividends, shares, matured deposits, debentures, etc.,) have been transferred to the IEPF can claim refunds using Form IEPF-5.

Successor or legal representative:?

IEPF Form 5?allows not only the person in respect of whom any amount is transferred to the?Investor Education and Protection Fund (IEPF)?to make an application, but also permits?legal representatives of deceased persons?to file a claim.?If you are a successor or legal representative, you can submit Form IEPF-5 to the IEPF Authority, which will further process your application.?

Claimants: Any person whose unclaimed or unpaid amount has been transferred by the company to the IEPF may also claim their refunds to the IEPF Authority using Form IEPF-5

Required documents

1. Aadhaar Card of the claimant and if joint holders are there, copy of Aadhaar card of all joint holders- Mandatory
2. Client Master List of De-mat A/c of the claimant – Mandatory
3. Proof of entitlement (Bonds/Debentures/Fixed Deposit receipts/Certificate of share/Interest warrant/Dividend warrant, Application No./Statement of transaction etc.) – Mandatory
4. Notarised copy of death certificate.??
5. Notarised succession certificate/Probate/Will
6. Indemnity Bond for Transmission, duly notarized
7. Affidavit in the form of surety
8. Required value of the stamp paper

In case of a refund of dividend amount of Rs. 10,000 or more and/or market value of shares, non-judicial stamp paper of appropriate value as prescribed under Stamp Act according to state is required. For claim of only amount of Rs. 10,000 or less, an indemnity bond can be executed on a plain paper.?

1. KYC Documents

In case of Indian Citizen – to prove the identity of the claimant self-certified copy of Pan Card and Aadhar Card are required to be submitted.?

1. Documentary requirements in case claimant is a,

(i) In case of legal heir – the claimant is required to register transmission with the company by providing requisite documents as per Schedule II of the rules. According to these, for registering transmission, company may require copy of death certificate, Affidavit from legal heirs, Indemnity Bond, Succession Certificate or probate of will or letter of administration etc. for share with market value greater than 2 lac, NOC from other legal heirs and relinquishment deed in favour of claimant.??

(ii) In case of death of any of the holder in joint holding of securities, but not covered in the family hierarchy – the claimant is required to get the name of the deceased holder of security deleted from the register of the members/other records, if any, in the company immediately after the death of a joint security holder before filing claim application. The claimant is also required to obtain NOC from other holders of securities, if any, and submit the same along with claim application. SEBI Guidelines may also be seen before filing claim application. Company is required to issue entitlement letter under rule 7(9) of IEPF Rules in favour of claimant and send a scanned copy of it with its e- verification report.?

1. In case of Change in Name:

if the name on original certificates is not matching with the PAN or address on the Proof of Identity is not matching with company’ records.?

In such case as per SEBI Guidelines, an affidavit explaining the above deviation needs to be submitted. In case of mismatch in name, proof of name as on share certificate or change of name viz. marriage certificate, gazette notification etc. needs to be submitted. In case of mismatch in address, new address needs to be updated with the company.?

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Procedure after filing the FORM

• After filing the form, Download the filled form and send it to the Nodal officer of the company along with aforesaid attachments and SRN Letter (which will generate after filing the form)
• The nodal officer will check the applied shares details with physical shares details in the company and accord approval to the IEPF Authority (within 15-30 days). After approval then IEPF Authority will transfer shares or amount to the claimant account (D-MAT or Bank A/C within 30-60 days).
• Timelines for e-verification by companies: The company shall be required to E-Verify the claim as soon as it receives original documents from the claimant but not later than 30 days from the filing of claim.The company can reject such claims due to non-receipt of original documents from the claimant.
• Timelines for processing of the application: The authority shall process and intimate approval, rejection, resubmission, or discrepancies in FIFO order within a period not exceeding 60 days from receipt of verification report.

Conclusion: The main theme and objective of setting up of IEPF by Government of India (GOI) is to safeguard and protect investors interest in the Indian financial markets. Moreover, GOI utilizes the unclaimed funds for Investor education, Investor awareness and Investor protection. The creation of this fund by the GOI is enabling the Investors interest and the economy at large.