The IEPF was established by the Ministry of Corporate Affairs to ensure that unclaimed shares can be transferred to and received by the rightful owners.
Transfer of Unclaimed Shares to IEPF: A company must transfer shares to the IEPF when the dividend has not been claimed or paid for more than seven years. The company is required to submit the details of such transfer to the IEPF Authority 3. Once the shares are transferred to the IEPF, they can be reclaimed by the shareholders by applying to the IEPF Authority. The IEPF Authority maintains the details of every account, allowing shareholders to reclaim their shares 3.
Who Can Apply for Recovery of Shares: Any shareholder whose unclaimed shares have been transferred to the IEPF can claim a refund by applying to the IEPF Authority. However, a claimant can make only one consolidated claim regarding a company in a financial year. The aggregated claim should include the data of the various folios from the same company. When the claimant is the legal heir, nominee, or successor of the registered shareholder, they should ensure that the share transmission procedure is completed and an entitlement letter is issued by the company before filing the IEPF claim with the authorities 3.
Process of Recovery of Shares from IEPF: The process of recovering shares from the IEPF involves multiple steps:
Step 1: Filing a Claim with the IEPF Authority: The claimant needs to submit Form IEPF-5 on the Ministry of Corporate Affairs (MCA) portal. This form requires the claimant to provide their personal information, company information from which the amount is due, details of the shares to be claimed, details of the dividend amount to be claimed, and other relevant information. Additionally, the claimant needs to provide their Aadhaar number (for Indian citizens) or passport/OCI/PIO card number (for NRIs and foreigners). The claimant should also provide details of the bank account linked to Aadhaar for the refund 3.
Step 2: Submitting the Claim to the Company: After submitting Form IEPF-5, the claimant should send a copy of the form, along with the required documents, to the company’s IEPF Nodal Officer/Registrar. The necessary documents include a printout of the filled form with the claimant’s signature, a copy of the acknowledgement with the SRN number, an original indemnity bond on a non-judicial stamp paper, an original advance stamped receipt, original share certificates (if shares are in physical form) or a copy of the transaction statement (if securities are in Demat form), and other relevant documents based on the claimant’s status as an Indian citizen, NRI, or foreigner 3.
Step 3: Submission of Claim from the Company to the IEPF Authority: The company must prepare a verification report within 15 days of receiving a claim form from a claimant and submit it to the IEPF Authority, along with the claimant’s documentation 3.
Step 4: Refund from IEPF Authority to the Claimant: The IEPF Authority must decide on the claimant’s reimbursement application within 60 days after obtaining the verification report from the relevant company. If the claimant is entitled to the shares, the IEPF Authority will issue a refund sanction order with the permission of the competent authority. The refund will be credited to the claimant’s Demat account 3.