Understanding the Recovery of Shares from IEPF: A Comprehensive Guide for Investors

Understanding the Recovery of Shares from IEPF: A Comprehensive Guide for Investors

After investing money in shares, many people forget to reclaim it. As a result, the money remained unclaimed for several years. This is a serious problem which is too tough to handle. Intending to address this issue, the Government of India has established the Investor Education and Protection Fund(IEPF), which carries out the responsibility of protecting these unclaimed financial assets, such as shares, dividends, deposits, etc, so that they can be returned to the rightful owners.

Under section number 124, of the Companies Act, 2013, and the Investor Education and Protection Fund Authority, Rules, 2016, a company’s shareholder can get a refund of their shares, even if they are transferred to the IEPF, due to inactivity or unclaimed dividends. If you are an investor, it is necessary to understand the processes related to the recovery of Shares From IEPF, as it will help you regain control over your assets.

The Role of IEPF

IEPF was established to safeguard the unclaimed financial assets of the investors and to educate them in the correct way. To address the issues of unclaimed financial assets, such as shares, dividends, deposits, etc, it follows a structured and secured process, which ensures an easy process of return. The Ministry of Corporate Affairs directly handles this organization and therefore controls the process of transferring unclaimed assets to the IEPF, after a particular period, which is seven years.

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    The primary reasons behind these unclaimed assets are the change in address, mere oversight or death. Whatever the reason is, IEPF protects these financial assets from misuse or loss, and keeps them securely, until they are returned to the rightful owners.

    Why Are Shares Transferred To The IEPF?

    As we have already mentioned before, inactivity or the negligence of the investor is the primary reason for transferring shares to the IEPF. If an investor doesn’t claim dividends, update their records or manage their shares actively, for a prolonged period of time, then it is transferred to the IEPF.

    The Prime Causes That Are Responsible for Transferring Shares To The IEPF

    Unclaimed Dividends: This is one of the most vital reasons for transferring shares to IEPF.  If a company declare a share as unclaimed by the shareholder within seven years, then naturally, it is transferred to the IEPF.

    Inactive Account: Inactive management of accounts or inability to keep the records up to date, often leads to dormant accounts. In such cases, the unclaimed shares or dividends are also transferred to the IEPF. This happens due to a change in address, simple negligence to update accounts etc.

    Unpaid Application Money: Due to unpaid application money, that remains due for a refund, the shares or dividends can also be transferred to IEPF. The refund of application money for shares must be claimed by the investor within seven years. If it doesn’t happen, then the share is transferred to the IEPF.

    According to the Companies Act, 2023, under Section number 124(6), companies must send notice to shareholders, before their shares are transferred to the IEPF. But very often, due to outdated contact information or lack of awareness, this notice also remained as unnoticed.

    Can Anybody Apply To The IEPF For The Recovery Of Shares?

    Yes, any rightful owner, whose shares have been transferred to the IEPF can apply to IEPF for the recovery of shares. However, he or she can make only one consolidated claim regarding a company in a financial year. The accumulated claim must include the data of the various Folios from the same company. At first, the applicants must be the legal successor, nominee, or the heir of the registered shareholders. Secondly, he or she also makes sure that, before filing the IEPF claim with the authorities, the company has completed the shares transmission process and issued an entitlement letter.

    What Is the Process Of Reclaiming Shares? 

    The IEPF Recovery process is quite intricate yet structured, which needs special attention to understand. Understanding each step is crucial if you are looking to reclaim your assets. Here, we have provided a comprehensive guide, which will discuss the necessary steps that are required to be followed.

    1. Keeping all the essential documents organized

    Essential documents such as your original share certificate, dividend warrants, proof of address, proof of identity, and bank account details should be collected and kept in an organized manner.

    2. Filing the online form of claim

    On the official portal of IEPF, the online claim form is available. What you need to do, is to just fill out the form to claim your money. First, download the form IEPF-5, fill out the form with all the required details, upload the essential documents and, at the end, submit the form online.

    3. Submission of claim to the Company

    After the submission of the online claim form, the applicants will get a printout of the submitted form, along with the supporting documents which, need to be submitted to the Nodal Officer of the company, from which the share belongs.

    4. Verification and Approval

    After that, the company conduct a process of verification, which includes the checking of supporting documents, the authenticity of the claim, etc. If they are satisfied, they will forward the claim to the IEPF.

    5. Refund from IEPF Authority

    After receiving the claim from the company after verification, the IEPF authority itself also conducts a verification process. If they find everything fair, they approve the claim and the shares are transferred to the Demat account of the applicants.

    Wrapping Up

    Recovery of Shares From IEPF is a critical process which requires expert guidance. From this point of view, Infiny Solutions can be regarded as a trusted partner, who will help you to navigate through this complex process. We provide professional assistance in reclaiming shares, along with other essential services. Our customized support and professional expertise help investors to proceed confidently through the entire process of reclaiming. Tie a knot with us, and save your investment from permanent loss.

    RECOVER YOUR LOST WEALTH

    Helping you liquidate your lost shares, unclaimed investments and dividends

    UNLOCK YOUR WEALTH

    Fill out the form below to contact us






      By submitting this form you agree with our terms & conditions

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