The procedure for recovery of shares & unclaimed Dividends in India

1. The procedure for recovery of shares & unclaimed Dividends in India Many people invest their money in stocks and forget to claim it, or many expire before claiming it. In such cases, the money goes unclaimed for many years. The Ministry of Corporate Affairs (MCA) has therefore established the Investor Education and Protection Fund (IEPF) to ensure that unclaimed shares can be transferred and received by the right person. The shareholders of the Company may receive a refund of their unclaimed shares transferred by the Company to the IEPF in accordance with the provisions of Section 124 of the Companies Act, 2013 and the Investor Education and Protection Authority (Accounting, Audit, Transfer, and Refund) Rules, 2016. Let us discuss the procedure for the recovery of shares in India. What does recovery of shares mean? Even after the Demat system is implemented, the materialization of securities remains an issue for a long time. However, some of the securities mentioned above never made it to digital form and still exist in the traditional format, i.e. physical paper. These securities can easily be compromised by physical damage, loss, or death of the security holder. Therefore, the process of recovering such securities through the processes of transferring shares, acquiring bonus issues, unclaimed dividends, etc. is referred to as recovering shares. Submission of unclaimed shares for recovery of shares of IEPF in India A shareholder whose unclaimed dividends, debentures, shares or debentures, redemption claims, and interest thereon, if any, money from fractional shares, etc., are transferred to IEPF may be transferred shares, etc., to IEPF. The IEPF may claim shares in accordance with the procedure set forth in subsection (6) of Section 124 or make a claim in accordance with clause (a) of subsection (3) of Section 125. Note: If the claimant is the legal heir, successor, or assignee of a registered shareholder, he/she must ensure that the company completes the transfer process and issues a power of attorney to the legal heirs before filing an IPF application with the authorities. Transfer of unclaimed shares to the IEPF The company must transfer shares for which no dividend has been claimed or paid for more than seven years, together with accrued interest, to the IEPF. The Company must provide the details of such transfer to the IEPF. A shareholder may recover his shares transferred by the Company to the IEPF by contacting the IEPF office that manages the details of each account.

2. Who can apply to the IEPF for the return of shares? Any shareholder whose unclaimed dividend shares have been transferred to IEPF may request the return of those shares by applying to the IEPF office. However, an applicant may only submit a collective application for one company in one accounting year. The collective application should contain data from different sides of the same company. If the applicant is the legal heir, legal successor or successor of a registered shareholder, he should first ensure that the company completes the share transfer procedure and issues an approval letter before submitting the IFFF application to the authorities. physical shares certificate Procedure for withdrawing shares from the IEPF Step 1: Submission of the Application by the Applicant to the Authority An applicant seeking compensation or recovery of units on its behalf should submit Form IEPF-5 on the MCA Portal. The applicant should provide the following information on the form: ● Data of the applicant (claimant). ● Information about the company from which the amount is owed, including the CIN number

3. ● Details of the shares to be claimed ● Information on the amount of dividend to be claimed ● Aadhaar number if the applicant is an Indian citizen or passport/OCI/PIO card number if the applicant is an NRI or a foreign national. ● Details of the Aadhaar-linked bank account to which the refund is to be made ● Demat account number Step 2: Submitting a claim to the company After submission of IEPF Form-5, the applicant should send a copy of the form in an envelope marked "Refund Application from IEPF" along with the following documents to the Nodal Officer/Registrar of IEPF of the company: ● A copy of the completed IEPF-5 form with the applicant's signature ● A copy of the confirmation with the SRN number ● The original of the surety certificate with the applicant's signature on a non-jurisdictional stamp paper in the amount specified under the Stamp Act ● The original pre-stamped receipt with the signature of the applicant and witnesses ● Original shares (if they are physical shares certificate) or copy of the transaction statement (if they are Demat securities) ● Aadhaar card ● Proof of power of attorney, i.e. share certificate, interest order number, etc. ● Passport, OCI card (Overseas Citizen of India), or PIO card (Person of Indian Origin) in case of NRIs and foreigners ● Canceled check ● Copy of Master List of Demat Account Clients Step 3: Submission of a company application to the IEPF The company has to prepare a verification report and submit the same along with the applicant's documents to the IPF authorities within 15 days of receipt of the application form from the applicant.

4. Step 4: Reimbursement from IEPF to the Applicant The IFFP authorities must make a decision on the applicant's reimbursement request within 60 days of receiving the verification report from the relevant company confirming the applicant's request. The IFFP Office shall issue an order for a refund of the penalty as soon as the applicant is entitled to the shares with the approval of the relevant authority. The PSI Office and the Collections and Disbursements Officer will send the invoice to the Payments and Invoices Officer after verifying the claimant's eligibility. The shares or the amount of the claimant's entitlement will be credited to the claimant's Demat account. Final words The ability for legitimate shareholders to get their money back through the Investor Education and Protection Fund is, in our opinion, a very positive effort by MCA and SEBI. In addition, it is SEBI's responsibility to educate investors and security holders. It takes a lot of skill and experience to ensure that the recovery of shares process goes well and that legitimate shareholders get their securities back.