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Prior to the advent of dematerialized trading, the allotment of securities was done in paper certificates. Now since such certificate exists in a physical form, they are likely to end up being misplaced, lost, and damaged. There have been circumstances where the shareholders passed away and the heirs failed to claim the said amount. According to some valid data, around Rs 18000 crores of unclaimed shares and Rs, 2300 crores of unclaimed dividends have been routed to the IEPF. Even after the advent of the Demat system, the materialization of securities has remained prominent for a long time.  But some of the aforesaid securities never came to digital form and still exist in the traditional format, i.e., physical paper. These securities could be compromised easily due to physical damage, loss, or death of the security holder.

In view of the above issues, the Indian Government underpinned a procedure where the investors can recoup their investments from the IEPF along with the bonus shares & dividends. The process of recouping such securities through the processes of transmission of shares, transfer of shares, retrieval of bonus issues, unclaimed dividends, and so on is known as Recovery of Shares.

What is the role of Investor Education and Protection Fund?

The Investor Protection and Education Fund (IEPF) is like a savings pool for unclaimed money. This money comes from dividends, deposits, shares, and more, that people haven’t collected for seven years. This fund is managed by SEBI and the Ministry of Corporate Affairs India. If you’re an investor and have unclaimed rewards, you can get them back from this fund. It’s a safety net for your money!

Procedure of refund of Shares

Step 1:  Apply to the IEPF Authority by submitting an online application in Form IEPF 5 available on the website www.iepf.gov.in or on www.mca.gov.in along with fee specified by the Authority.

Step 2:   Upon submission, Form IEPF-5 gets transmitted online to the Nodal Officer of the Company for verification of claim. The Claimant after making an application in Form IEPF-5 shall send original physical share certificate, original bond, deposit certificate, debenture certificate, as the case may be, along with Indemnity Bond, Advance Receipts, any other document as enumerated in Form No. IEPF-5, duly signed by him, to the Nodal Officer of the concerned Company at its registered office for verification of the claim.

Step 3:   The company shall, within thirty days from the date of receipt of claim, send an online verification report to the IEPF Authority after verification of details in Form IEPF-5 along with all the documents submitted by the claimant and shall attach the scanned copy of all the original documents submitted by the claimant in physical form duly certified by its Nodal Officer along with the e-verification report along with a scanned copy of both sides of original physical share certificate or original bond or deposit or debenture certificate/s duly cancelled and certified.

Step 4: An application received for refund of any claim under this rule duly verified by the concerned company shall be disposed off by the IEPF Authority within sixty days from the date of receipt of the verification report from the company, complete in all respects and any delay beyond sixty days shall be recorded in writing specifying the reasons for the delay and the same shall be communicated to the claimant in writing or by electronic means.

Documents required to be submitted to the Nodal officer

1. Copy of acknowledgement generated on online submission of e-Form IEPF – 5 bearing a unique serial number (SRN),
2. Indemnity Bond (original) with claimant signature,
3. Advance Stamped receipt (original) with revenue stamp and signature of claimant and witnesses,
4. Original matured deposit / debenture / share certificate (in case of securities held in physical form) or copy of transaction statement in case of securities held in Demat Form,
5. Self-attested copy of Aadhaar Card,
6. Proof of entitlement (certificate of share/Interest warrant Application No. etc.),
7. Cancelled Cheque leaf,
8. Copy of Passport, OCI and PIO card in case of foreigners and NRI.

Issues faced while reclaiming shares

• Change of Name: The name of the claimant as per the record available with the Company and as per the KYC documents (AADHAR / PAN / Voter ID / Driving License etc.) is different. In case of change of name of the claimant, an affidavit to of the claimant affirming change of name supported by documentary evidence of publication of change of name in Official Gazette is needed.

• Change of Address: The address of the claimant shareholder as per the record available with the Company and as per the address proof are different. In case of the change in address, an affidavit affirming the change of address along with self-attested address proof of the old address and the present address are needed.

• Loss of Original Share Certificate: The Form IEPF 5 requires the original share certificate to be attached but the same is lost. The claimant is not aware of his folio number, certificate number, distinctive numbers. In case of loss of original shares held in physical mode, the following documents to be submitted to IEPF Authority as required by Schedule III of the Rules are:

1. Notarised copy of FIR/ Police Compliant containing information of security holder, holding details, folio number and distinctive numbers of share certificate.
2. Surety Affidavit of value equal to market value that of shares as on date of execution along with his Proof of identity like Pan Card of sureties duly attested by Notary. The Surety should not be a relative of the Claimant.
3. Indemnity bond by security holder on a non-judicial stamp paper of requisite value duly attested by Notary Public by the person, in whose name the original share certificate is being issued that he has not sold / disposed off the involved shares or acted in any manner by which any interest of third party would have been created.
4. Copy of advertisement issued in at least one English language national daily newspaper having nationwide circulation and in one regional language daily newspaper published in the place of registered office of company, if the market value of the shares is greater than Rs 10,000.
5. In case of loss of original physical share certificate or proof of entitlement, the company and the claimant shall follow the procedure as laid down in the Companies (Share Capital and Debenture) Rules, 2014 , the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulation, guidelines, procedures and circulars issued from time to time and Schedule III of these rules and attach certified copies of all documents as may be required under the said rules or guidelines with the e-verification report.

• No Demat Account of the Claimant: The claimant is not having any Demat account as required for transfer of shares by IEPF Authority. The claimant is required to open Demat account and submit CML – Client Master Ledger duly attested by the depository.

• Transmission of Shares: The claimant is a legal heir or successor or administrator or nominee of the registered share holder. Also, the legal heir do not have any clue of the original share certificate. The requirement of documents for shares held in physical mode or demat mode having value up to Rs. Two Lakh or more than Rs. Two Lakh is different. The claimant also must ensure that the transmission procedure is completed by the company and an entitlement letter is issued to the legal heirs and then only file the IEPF Claim with the authority.

Documents Required for Shares Transmission

• Certified copy of death certificate.
• Request application for the transmission from legal heir(s) or representatives.
• Letter of Administration or Succession Certificate or Probate of Will.
• Specimen signature of the successor(s).