Personal Finance

Reclaiming forgotten investments not an uphill task

Keerthi Sanagasetti | Updated on July 05, 2020 Published on July 05, 2020

You can recover unclaimed securities from a company within seven years of investment, and after that, from IEPF

Even as companies are busy announcing annual results for 2019-20 and scheduling shareholder meetings (AGMs), notices are being put out on transfer of certain shares to the Investor Education and Protection Fund (IEPF).

The IEPF was set up for the purpose of educating and spreading awareness among investors. The Companies Act, 1956, mandated the transfer of all unclaimed dividends to the IEPF if they have been lying unclaimed for seven years or more. As per the new Companies (Amendment) Act, 2013, the underlying shares, dividends for which have been unclaimed for a consecutive period of seven years, must also be credited to the IEPF.

Even matured debentures or deposits (except in the case of deposits held by banks which are exempt under the Companies Act, 2013) and interest accrued on them must be transferred to the IEPF once the said period of seven years has lapsed.

The same applies to application money (for allotment of securities) which is due for refund but has been unclaimed for seven years or more.

The unclaimed redemption amount on preference shares has also been added to the list.

Lack of your updated bank account details or address/communication details with the company could be among the common reasons for such transfers to the IEPF.

On your part, you could have also forgotten about these investments if you hadn’t kept a tab on them.

Reclaim from company

Usually, apart from putting out advertisements in newspapers, companies communicate by e-mail to investors before the transfer of unclaimed sums to the IEPF.

If you have received any such mail from them recently, the procedure to claim your dividends, shares, matured debentures or deposits from the company before the transfer to the IEPF is simple.

You must submit the original copies of share certificates or dividend warrant, deposit receipt, etc, to the company and make a claim, along with a proper proof of identification.

The details of unclaimed shares, dividends, debentures or deposits lying with the company will be listed on the company’s website.

Every company, within 90 days of holding its annual general meeting should upload the details of the unclaimed amounts on their website — such as amount due, name and last known address of the investor — till the completion of seven years.

So, if you are reminded of any sums that you may have invested and then forgotten, you can claim it from the company any time before the completion of seven years.

Claim from the IEPF

With ample time on your hands to clean your closets during the lockdown, you could have unearthed quite a few old documents, for instance, physical share certificates.

Physical certificates are valid, except that you have to compulsorily demat it if you intend to transfer it.

However, your long-forgotten share certificates could have been cancelled and moved to IEPF as companies are allowed to issue duplicate certificates in lieu of the original for the sake of the transfer to IEPF.

You can check for investor-wise unclaimed and unpaid amounts in the IEPF website (www.iepf.gov.in) by keying in your folio number or DP/Client ID.

In such a case, the good news is that all is not lost.

You can make the claim to the IEPF Authority in a prescribed form — IEPF-5, available on the IEPF website.

The form must be duly filed and uploaded on the IEPF website, post which an acknowledgement would be generated.

A copy of the uploaded form, coupled with the acknowledgement receipt, original certificates of the securities or dividend warrants, and a few other documents should also be mailed to Nodal Officer (IEPF) of the company at the registered office for verification.

The documents required to be submitted include an indemnity bond, an advance stamped receipt, copy of Aadhaar, PAN and an original cancelled cheque leaf. The indemnity bond shall be on a non-judicial stamp paper if the amount claimed is ₹10,000 or more.

Else, the bond shall be on a plain paper. Companies are required to e-verify the claim within a period of 30 days to avoid penalties. Post this, the Investor Education and Protection Fund authority has to process the claim and intimate the approval, rejection, resubmission or discrepancies, if any, to the investor, within 60 days of receiving the verification report.

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Published on July 05, 2020
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