Rajesh Kumar (name changed), 69, an ex-CEO, had settled in the UK with his family after retirement. Surprisingly, the couple had forgotten about their joint demat account, where they held shares from his former employer. They also forgot about the bank account linked to the Demat account, so they haven’t updated the know-your-customer (KYC) details. Consequently, the account became inactive, and they stopped tracking it. Because of the inactive status of their savings bank account, the dividends could not be credited into their account. Later, when he learnt about the unclaimed shares from GLC Wealth, a wealth recovery and IEPF claim advisor, he was pleasantly surprised and immediately started the recovery process with the firm’s help. Fortunately, he received his shares and the dividends, valued at around Rs 1.5 crore. Like Kumar, there are scores of people whose shares have been transferred to IEPF.

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Says Sanchit Garg, CEO & co-founder of GLC Wealth, “Approximately 117 crore shares (physical and demat combined) have been transferred to IEPF, shares estimated to be Rs 40,000-50,000 crores and dividends approximately Rs 5,700 crores. But only around 2.3 per cent of the total shares and 0.75 per cent of the total dividends have been released so far.”

Why Are Shares Transferred To IEPF?

According to Garg, there are many reasons for transferring shares to IEPF. Earlier, shares were in a physical form, and investors may have misplaced or lost them. Also, in some cases, their names have changed, or they relocated to other places within India or abroad, or died without informing about the shares to family members. So, when the demat or linked bank account becomes dormant for seven consecutive years, the shares and dividends get transferred to IEPF. Garg adds that the unclaimed shares and dividends mainly pertain to physical shares, which have not been dematerialized. Since shares are now traded only via demat accounts, issues related to physical shares and the number of unclaimed shares have stopped increasing.

Usually, investors are intimated before the share transfer, but due to inactive accounts or lack of KYC updation, the securities are transferred to IEPF. According to Section 124 of the Companies Act, 2013, “All shares in respect of which dividend has not been paid or claimed for seven consecutive years, or more shall be transferred by the company in the name of Investor Education and Protection Fund along with a statement containing such details as may be prescribed, provided any claimant of shares transferred shall be entitled to claim the transfer of shares from IEPF by procedure and on submission of documents prescribed.”

Like unclaimed bank deposits, for which the Reserve Bank of India (RBI) has launched the UDGAM portal, the investor can also track and claim back unclaimed shares.

How To Retrieve Unclaimed Shares?

The investor must contact the IEPF authority to retrieve their unclaimed shares. As per the rule, a company is required to transfer the shares to the IEPF along with interest if the dividends are not claimed by the investor for more than seven years. The company shares the details of such investors with the IEPF. So, if you have forgotten your investments in shares, you can check with the IEPF, as they maintain information on unclaimed securities.

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To reclaim the securities, they must submit Form IEPF-5, available on the IEPF website. The claimant must provide personal information like name, address, phone number, email ID, and company information, including the corporate identification number (CIN), registered office, and email ID of whose shares were bought. They must also provide details like the number of securities, amount, dividends, bank account details, Aadhaar, and demat account number.

Submit The Claim To The Company:

After submitting the IEPF Form-5, send a copy to the concerned company. Print out the filled form, attach the required documents, and submit them to the company. The documents include share certificates, transaction statements (if in demat form), bank details, Aadhaar and demat account details, indemnity bond, and passport.

Claim Verification By The Authority:

When Form-5, along with the document, is submitted to the company, the nodal officer of the company verifies the claim, prepares a report, and submits a report to the IEPF within 15 days of receiving such claim along with the documents given by the claimant.

Refund To The Claimant:

IEPF determines the completeness of the application and the documents transferred to it. The authority (IEPF) transfers the shares to the claimant’s demat account after satisfying itself of the claimant’s entitlement and refunds the amount directly to the claimant’s bank account.

What Happens If The Original Shareholder Passed Away?

The procedure is the same for the actual investor, nominee, or legal heir to claim the shares and the dividends, provided they submit the succession documents. Garg explains that the process of claiming investments of dеcеasеd investors involves obtaining legal documents like succession certificates or probates of wills or letters of administration to determine the rights of the investments. In some scenarios, this can be done through a legal heir or surviving member certificate, along with consent affidavits/NOCs from all legal heirs. Once the relevant court order or heir-ship documents are obtained, a process for share transmission is to be followed. If the share certificates are lost, the heirs/claimants have to do a process of duplicate shares & then finally claim it from the IEPF.