PROCEDURE TO CLAIM REFUND OF SHARES / DIVIDEND:

The procedure to prepare and file a claim of refund of shares and/or dividends is touted to be easy and simple. In fact, it is anything but, and a far cry from being simple. It is daunting for even an avid and tech-savvy investor to navigate the process, leave alone someone who is not good with paperwork and has not kept files properly. The procedure to file a claim is governed by and under the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, and here is an outline:

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/her, 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.

If the verification report along with documents is not received by the IEPF Authority after the expiry of sixty days from the date of filing of Form IEPF-5, the IEPF Authority may reject Form IEPF-5 filed by the claimant. Before rejecting the Form, IEPF Authority is required to send a communication to the claimant and the concerned company, on the e-mail address of the claimant and the company, to furnish an appropriate response within a period of fifteen days. In case of the failure to submit verification report of the claim in accordance with the rules, the company and its Nodal Officer shall be punishable as per the provisions of the Act.

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.

THE USUAL OBSTACLES THAT MAKE THE SIMPLE, NOT SO SIMPLE

The above procedure like any other standard procedure of registering a claim seems quite simple, however, it is very complex owing to the prescribed and specified documentation and the process.

The Schedule II and III of the Schedule II -IEPF (Accounting, Audit, Transfer and Refund) Rules, 2016 stipulates the documents required to address various scenarios and challenges / difficulties faced by the claimant. However, the documents required are such that for a layman it is cumbersome and usually disheartening.

The shares are either held in physical forms (as they were before the demat era) or in the Demat form. It is a fact that a vast majority of the shares transferred to IEPF are in fact in physical form. It is often the case that a claimant shareholder has lost or forgotten about the shares. Some of the common difficulties faced by the claimants are as under:

Name Mismatch: 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.) vary. In this case the entire procedure for effecting a correction in the name kicks in, which ordinarily an affidavit of the claimant affirming change of name supported by documentary evidence of publication of change of name in the Official Gazette.

Address Mismatch: The address of the claimant shareholder as per the record available with the Company and as per the actual address proof are at variance to each other. Here again, an affidavit affirming the change of address along with self-attested address proof of the old address and the present address is needed.

Loss of Original Share Certificate: The Form IEPF 5 requires the original share certificate to be attached but more often than not, it is usually lost or misplaced. The claimant is simply unaware of his folio number, certificate number, distinctive numbers and other necessary information. In case of loss of original shares held in physical mode, the following documents need to be submitted to IEPF Authority as required by Schedule III of the Rules:

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 are 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.

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.

Claimant Not Having Demat Account: The claimant from yesteryears usually does not have any Demat account as required for transfer of shares by IEPF Authority. In this case, the claimant is required to first open a 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 and usually does not have the first clue of the original share certificate or even the fact that such shareholdings exist. Here again, the documentation required for reclaim of shares held in physical mode or demat mode having a value of up to Rs. Two Lakh is different than in the case where the value is more than Rs. Two Lakh. The claimant also has to first ensure that the transmission procedure is completed by the company and an entitlement letter is issued to the legal heirs and only then proceed with filing a claim with the authority.

Documents to be submitted to the Authority to register transmission of securities held in physical mode – Where the shares are held singly and with a nomination:

Duly signed transmission request form by the nominee.

Original or copy of death certificate duly attested.

Self-attested copy of PAN card.

Original share certificate(s).

Any other government ID proof of the nominee.

B. Where the shares are held singly without nomination, the following documents in addition to the documents specified at paragraph A are required:

Affidavit from all the legal heirs made on appropriate non-judicial stamp paper- to the effect of identification and claim of legal ownership to the securities: Provided that in case the legal heir(s) or claimant(s) is named in the succession certificate or probate of will or Letter of Administration, an Affidavit from such legal heir(s) or claimant(s) alone would be sufficient.

For value of securities up to Rs. 2,00,000 (Rupees Two lakh only) per issuer company as on date of application, one or more of the following documents:

Succession certificate or probate of will or letter of administration or court decree, as may be applicable in terms of Indian Succession Act, 1925.

In the absence of the documents as mentioned at (a) above,

No objection certificate from all legal heir(s) executed by all the legal heirs of the deceased holder not objecting to such transmission (or) copy of Family Settlement Deed duly notarized and

An Indemnity bond made on appropriate non-judicial stamp paper – indemnifying the Share Transfer Agent (STA) or Issuer Company.

For value of securities more than Rs. 2,00,000 (Rupees Two lakh only) per issuer company as on date of application: Succession certificate or probate of will or letter of administration or court decree, as may be applicable in terms of Indian Succession Act, 1925.

C. Where the shares are held jointly with nomination:

Duly signed transmission request form by the nominee.

Original or copy of death certificate(s) of all the joint holders duly attested

Self-attested copy of PAN card.

Original share certificate(s).

Any other government ID proof of the nominee.

D. Where the shares are held jointly without nomination, the following documents in addition to the documents specified at paragraph C are required:

Affidavit from all the legal heirs made on appropriate non-judicial stamp paper- to the effect of identification and claim of legal ownership to the securities. Provided that in case the legal heir(s) or claimant(s) is named in the succession certificate or probate of will or Letter of Administration, an Affidavit from such legal heir(s) or claimant(s) alone would be sufficient.

For value of securities up to Rupees Two lakh per issuer company as on date of application, one or more of the following documents:

Succession certificate or probate of will or letter of administration or court decree, as may be applicable in terms of Indian Succession Act, 1925.

In the absence of the documents as mentioned at (a) above

No objection certificate from all legal heir(s) executed by all the legal heirs of the deceased holder(s) not objecting to such transmission (or) copy of Family Settlement Deed duly notarized and

An Indemnity bond made on appropriate non-judicial stamp paper – indemnifying the STA or Issuer Company.

For value of securities more than Rs. Two lakh per issuer company as on date of application: Succession certificate or probate of will or letter of administration or court decree, as may be applicable in terms of Indian Succession Act, 1925.

CLAIM APPROVAL:

Once the claim is approved, for a monetary refund (of dividend) , IEPF initiates e-payment as per the rules. If shares are reclaimed, the shares will be credited to the claimant’s Demat account by the Investor Education and Protection Fund.

As can be seen, it is just not simple.

For any assistance or guidance or query related to Transmission of Shares after the death of an original shareholder, Or for Transfer of physical shares, Recovery of lost shares and issue of duplicate shares, Claim of shares from IEPF, Claim of dividend from IEPF, write to us at office@unclaimedshares.com