Recovery Lost Shares of Larsen & Toubro
If you or your parents or your grandparents have been investor of Larsen and Toubro company and your shares are unclaimed, unpaid or transferred to IEPF, then do not loose hope reason being you are still eligible investor of the company and are also entitled to claim your hard-earned investments back.
The Larsen & Toubro & Ultratech Demerger
As part of a three-step demerger, L&T hived off the cement business into a separate company, Ultra Tech Cement Company, where it will hold 20%. The balance 80% stake will be held by existing L&T shareholders on a proportionate basis.
The share entitlement ratio for every member of L&T on the record date was that for two equity shares of Rs 10 each in Cement Company for every five shares of Rs 10 each fully paid-up.
In other words, a shareholder with 100 shares in L&T will, post-demerger, receive 50 shares (face value Rs 2) in the engineering company and 40 shares in the newly formed cement company with a face value of Rs 10 each.
The share exchange ratio (two cement shares for every five original shares) created 9.6 crore new shares of the cement company with a face value of Rs 10.
Recovery of Lost Shares
One of the major issues faced my many investors is loss of shares. Luckily, the ‘Investor Education and Protection Fund Authority’ (IEPFA) have come up with a solution for this issue. The body has established a digital process for easier and effective recovery of old dividends and shares.
Also Read: Claim Tata Steel shares from IEPF which are Lost, Forgotten or Mutilated
Traditionally, the Indian law on reclaiming dividends and other payouts including any underlying shares is biased. As per the old Companies Act, money left unclaimed for several years must be transferred by the company to the government. N case, no claimant shows up, the money goes to the government. Ideally, the law says that anyone can lay claim to that money!
The rules related to share recover stated:
“Where the claimant’s title to the aforesaid money has been established to the satisfaction of the Registrar of Companies, the Registrar may direct the claimant to execute an indemnity bond with or without surety,” etc.
This is very tough to understand or follow for a common man, who may believe that their parents had forgotten some shares. Individual or entities with access to legal and secretarial help rarely forget encashing their dividend cheques. They are also the last ones to lose trace of their equity holdings. Lastly, the money goes into the revenue account of the Government of India.
Change in the Law
The Companies Act of 2013 rule was modified slightly. As per the new law, dividends unclaimed for over 7 years would be transferred to the IEPFA. Furthermore, shares with unclaimed dividends for a period of 7 years consistently will be transferred to the ownership of this organization – a part of the Ministry of Corporate Affairs (MCA).
Digital Media
Finally, shareholders can benefit from a new digital process. Investors who forgot to claim dividends and whose dividends and shares were transferred to the IEPFA are eligible to register themselves on the www.iepf.gov.in.
The shareholders can visit this website to file an application with the details of their dividends and comprehensive proof of their identity. Lost assets are returned to them after verification of the details provided. Interestingly, Rs 200 crore has already been restored to the rightful claimants.
With awareness of the digital service of the IEPFA, people can easily enjoy claim and recover lost shares. The dividends for shares held in a account will be credited straight into investors’ bank accounts. With the passage of time, untrace ability of fresh investors will be eliminated and eventually good amount of old funds will get traced.
This issue has another aspect. It is the equivalent untrace ability of old mutual fund investments. Now this problem is not associated with the MCA or the IEPF. It must be handled by the mutual funds themselves. According to experts, the size of untraceable money in mutual funds is actually much larger as compared to the corporate dividends.
The major reason behind this is that mutual funds traditionally had a large number of investors. Many of these investors would invest a small amount in shares and then completely forget about it. Most people are not aware about this but over a year ago, there were Rs 44,000 crore of orphaned money alone in mutual funds! This amounts to about 1.75% of the total money in mutual funds!
Also read: A Guide to Claim and Recover Ultratech Cement Shares from IEPF
In case, all of this money is from individuals and not companies then the percentage would actually be more than double that! As per the KYC and PAN card norms, all of this is maybe fairly old money. Hence, the problem will reduce with time as investors of shares get traced.
Professional Help
If you need any assistance for recovering Larsen and Toubro shares from IEPF Authority then contact us today.
