Guidelines to claim shares and dividends from IEPF: Key issues to address

Investing in financial instruments like stocks, bonds, and mutual funds can yield substantial returns over time and provide passive income through dividends. However, some dividends may remain unpaid due to incorrect mailing addresses, lost cheques, or failure to encash dividend cheques. Additionally, shareholders may not receive dividend credit to their bank accounts due to changes in their account details or accounts becoming dormant.

Notably, investors must be cautious while investing. Unclaimed shares can arise from a shareholder’s forgetfulness, lack of clear instructions, or failure to update contact information, leading to missed dividends. In some cases, shareholders may not even know they own shares due to long passage of time since the investments were made. The company must hold unclaimed dividends in trust for the shareholder, which if remains unpaid for 7 years is then transferred to the Investor Education and Protection Fund (IEPF) account managed by the Ministry of Corporate Affairs (MCA).

Investor Education Protection Fund:
The IEPF Authority, established under the Companies Act 2013, aims to promote investor education and protect investor interests. By the end of 2022, it has a corpus of unclaimed dividends of listed companies worth Rs 5685 crores and approximately 117 crores of unclaimed shares. Companies must transfer unpaid dividends and shares to the IEPF Authority’s account, and shareholders can claim the shares and amounts by submitting the IEPF-5 Form for unclaimed dividends, matured debentures, matured deposits, shares, refundable application fees, interest on fractional share sale proceeds, and preference share redemption proceeds. The IEPF Authority’s significance is evident in its role in safeguarding investor interests.

The IEPF maintains a database of unclaimed dividends and shares, allowing investors to claim them through a prescribed process. The Finance Minister emphasized the need for an efficient process for investors to reclaim unclaimed shares and unpaid dividends in the Union Budget 2023 announcement. An integrated IT portal is expected to be established to make this process more convenient and user-friendly, allowing shareholders to claim their unpaid or unclaimed shares/dividend amount and to track the status of their claims.

Reclaiming money from IEPF:
To recover investments from the IEPF, investors should follow these steps:
• Visit the IEPF website and click on the ‘Claim Refund’ tab.
• Log in to the MCA Portal and click on “MCA Services” and then “IEPF-5”.
• Fill out the online form with your details and attach the necessary documents.
• Submit the form and send physical documents to the Nodal Officer.
• The company will file a Verification Report with approval from the Nodal Officer.
• The IEPF Authority will approve the claim and send an Approval email to the claimant’s registered email ID.
• The refund process will begin, and the amount will be credited to the bank account and shares to the Demat Account.
However, recovering unclaimed shares and unpaid dividends from the IEPF can be challenging for some shareholders, especially senior citizens, NRIs, and legal heirs of deceased shareholders. Professional advisors can assist with the process, simplifying it for shareholders in locating their unclaimed investments by providing financial and legal guidance.

The author is advocate and founder, Garg Law Chambers. Views are personal.