How To Recover Shares From IEPF

IEPF, also known as the Investor Education and Protection Fund, was initially established as a fund under Section 205C of the Companies Act of 1956. It is now organized in accordance with Section 125 of the 2013 Companies Act. It is a fund created to combine all Asset Management Companies' dividends, matured deposits, share application interests or money, debentures, interests, etc. that have been left unclaimed for seven years. The IEPF must receive a transfer of the entire amount of money received from these sources. The Investor Protection and Education Fund (IEPF) now offers investors the opportunity to request a reimbursement for any unclaimed prizes. Under the direction of SEBI and the Ministry of Corporate Affairs India (MCA), the fund was established.

It is crucial to have full financial literacy, including knowledge of how to invest, where to invest, how much to invest, etc., whether you are a part-time or active investor. Understanding investing enables investors to fully appreciate opportunities and associated risks, make educated decisions, comprehend the complexities of financial markets (which refers to an understanding of the financial market in a very complex or detailed form), and actively contribute to the economic development of the nation by turning savings into investments. In order to increase investor knowledge and safeguard them, the Ministry of Corporate Affairs, Government of India, established the Investor Education and Protection Fund (IEPF) under Section 205C of the Companies Act, (1956). The final stage of asserting offers from the IEPF Authority is the IEPF. However, each organization and registrar first communicates with the financial authorities to record the IEPF and transmit a corresponding document to them. By attempting address changes and updating the dating signatures of copy sharing conventions in the organization's records, we assist with fulfilling all requirements to enable a financial backer to fill out the IEPF. The financial supporter needs to understand why not guaranteeing dividends for a continuous period of seven years is necessary.

WHY WAS IEPF INTRODUCED?

The original intent of the IEPF share recovery concept was to use investor funds for things like investor education and investor awareness campaigns. Later in 2016, the government mandated the transfer of underlying shares for which no dividends had been paid for the previous seven years. All the stakeholders were confused about how to send the money to the government, among other things, as a result of this. As a result, this was changed by the MCA numerous times, most recently on August 14, 2019, when the procedure was made simpler.

Purpose of IEPF

The purpose of the Investor Education and Protection Fund (IEPF) is to advance investor education and safeguard investor interests. The IEPF keeps track of unclaimed dividends, deposits that have matured, debentures that have matured, and money from share applications that corporations pass to the government if they stay unclaimed for seven years. The money from the fund will be used to safeguard investors and advance knowledge and awareness of investors. A committee that oversees the IEPF is made up of the secretary for company affairs, officials from the RBI and SEBI, and experts in investor protection.

How is IEPF generated under Company law

Step1 : Dividend Declared by the company at AGM

The corporation declares a dividend during the AGM, or annual general meeting. The corporation must submit e-FormIEPF-2 together with a statement or information about unclaimed and underpaid dividends within 60 days of the AGM after the dividend is declared in the AJM. Each of the prior seven financial years' statements must be filed individually.

Step 2: Payment made to shareholders

Within five days following the AGM, the firm must transfer the dividend it has declared to its separate dividend bank account. The dividend must then be transmitted to the shareholders or paid to them within thirty days of the AJM.

Step 3: Unpaid dividend Transfer to account

Furthermore, the payout must be moved within 7 days to a different unpaid dividend account if it is still underpaid and unclaimed. The date when the unclaimed dividend is transferred would then serve as the starting point for figuring out when the unclaimed dividend and its underlying shares must be transferred to the IEPF in the future.

Step 4: Due Date

This step calculates the transfer deadline for the IEPF Share Recovery . As stated in step 3, the corporation must calculate 7 years from the day it transferred the unpaid payout to the unclaimed dividend account. The deadline for transferring unclaimed dividends and underlying shares is the date we arrive at after adding seven years. This complies with rule 6 of the IEPF authority regulations from 2016 as revised and section 124 of the Companies Act of 203/read together. At least three months before the required date for the transfer of shares, the corporation must notify the concerned shareholder at their most recent address. Additionally, the business must concurrently issue a notice in a respected publication.

Step 5: Transfer of unclaimed dividend

The transfer must be completed within 30 days after that. The procedures for transferring unclaimed dividends and the underlying shares are slightly different. The corporation must submit an e-FormIEPF-1 on the MCA site for unclaimed dividends, together with an excel sheet listing the shareholders whose dividends are to be transferred and its confirmation. The unpaid dividend account balance as of the due date must be included in the e-FormIEPF-1, and the unpaid dividend balance must then be transferred from the pay miscellaneous area on the MCA portal to the IEPF authority PNB account. In order to transfer the underlying IEPF Shares Reacovery as of the due date to the IPF, the corporation must first have the depository's NSDL and CDSL's signatures.

Step 6: End of Financial year

Finally, the company must report any shares that are eligible for transfers but have not yet been transferred to the IEPF because of a specific order from a court, tribunal, or statutory authority, or because the shares have been pledged or hypothecated, which prevents the transfer of shares and the payment of dividends. You must submit this report using the e-FormIEPF-3.

Procedure of IEPF

STEP 1: Filing to Authority by Claimant

A claimant should submit the Form IEPF-5 on the MCA site if they want a refund or to obtain their shares back in their name. On the form, the claimant must fill out the following details:

• The claimants information
• Details of the shares and amount of the dividend to be claimed
• Company’s information from which the amount is due along with CIN number
• Aadhaar Number in the case of an Indian citizen.
• Passport, OCI, PIO card number when the claimant is NRI or foreigner.
• Demat account number
• Bank details to which the claim would be refunded.

STEP 2: Submitting the Claim to the Company

After filing the Form IEPF-5, the claimant should send a copy of the form along with the following supporting documentation to the company IEPF Nodal Officer/Registrar in an envelope marked Claim for refund from IEPF Authority:

• Printout of the filled form IEPF-5 with the claimant’s signature.
• Copy of the acknowledgement With SRN number.
• Original indemnity bond with the claimant’s signature on a non-judicial stamp paper of the amount stated under the Stamp Act.
• Original share certificate (if shares are in Physical form) or copy of transaction statement (if securities are in Demat form)
• Aadhaar card
• Proof of entitlement, i.e. certificate of share, interest warrant application number etc.
• Canceled cheque
• Copy of Demat account’s clients master list
• Passport, overseas citizen of India (OCI), OR Person of Indian origin (PIO) card in case of NRIs and Foreigners.
• Original advance stamped receipt with signature of the claimant and witnesses.

STEP 3: Submission of Claim from the Company to the IEPF Authority

After receiving a claim form from a claimant, the employer has 15 days to compile a verification report and send it to the IEPF Authorities with the claimant supporting paperwork.

STEP 4: Refund from IEPF Authority to the Claimant

Within 60 days of receiving the verification report from the pertinent business that has approved the claimant application; the IEPF Authority must make a decision on the claimant reimbursement request. When the claimant is entitled to the shares with the competent authority approval, the IEPF Authority will issue a refund sanction order. After confirming the claimant eligibility, the IEPF Authority and the authority Drawing and Disbursing Officer will send a bill to the Pay and Accounts Officer for payment. The claimant Demat account will be credited with the shares or the full amount of their entitlement.

Amendments in IEPF provision

• For reporting dividends that have already been transferred but were not reported until IEPF authorities were notified, a new concept known as e-Form IEPF-1 has been established.
• For the first time, nodal officer details must be updated by September 4; subsequently, within 7 days of any change in nodal officer, along with the board resolution.
• With the aid of nodal authorities, shareholders can request a return of their shares and an IPF authority dividend using the e-Form IEPF-5.

Reasons for Unclaimed dividend

• Lost count of the money you owe me.
• Because contact and bank information changes over time but isn't updated with the firm, it's possible that the company or financial institution was unable to identify shareholders for dividend distribution.
• You were not aware of your parents' investments, nor did you have access to their full records.
• If a person passes away without leaving a will, it is frequently the case that nominees and legal heirs will fail to assert a claim if they are unaware of such assets.

When does the money go into the IEPF?

Any funds transferred to a company's Unpaid Dividend Account in accordance with section 124(5) that are not paid out or claimed after seven years (7 years and 37 days from the date of the dividend declaration) have passed since the date of the transfer must be transferred to the IEPF by the company, along with any interest that may have accrued.