The unclaimed shares form an enormous part of the investor’s capital and hence of the capital that never gets accessed by its owner. Such accumulation of shares is mostly through a change of investor contact, overlooking, or even death, which would leave significant monetary trails with corporate entities and finally the IEPF. Formed by the Government of India, the IEPF is a safe and regulated channel through which investors, or their legal heirs, can reclaim unclaimed shares with all the benefits of dividends and interest associated with them. This would protect the rights of investors in their assets so that they can be retrieved when the rightful owner or heir comes forward.
What Are Unclaimed Shares?
Unclaimed shares are those that have not been claimed or accessed for a considerable number of years with the shareholder, whereby the funds have been retained well by the issuing company or transferred to the IEPF. If shares are lying dormant or untouched by the shareholder for seven years under Indian law, companies are obliged to transfer the shares along with any accrued benefits to the IEPF. As such, the IEPF acts as a custodian of these unclaimed assets; it holds them in trust for the original owners or their lawful heirs.
Difference Between “Unpaid Shares” and “Unclaimed Shares”
Although “unpaid shares” and “unclaimed shares” are similar in name, they are in different stages of shareholder entitlements. A shareholder ought to know the difference because each term carries different implications concerning the rights and status of ownership of the shares.
The term “unpaid shares” refers to shares where the shareholder failed to pay to acquire the share. In simple words, these shares are not fully owned by the shareholder, as they have yet to pay the full amount required by the issuing company. The term non-paid shares may also refer to partially paid shares or shares in default of payment. Unpaid shares have limited rights compared to fully paid shares and cannot enjoy dividends and other benefits until their payment has been settled.
Unclaimed shares are fully paid shares issued through legitimate issuance to a shareholder that has not been accessed or claimed over a long time. As opposed to unearned shares, unclaimed shares represent pure equity, and the shareholder is entitled to all the incidental rights, including dividends, bonus shares, and voting rights. Inactive shareholder accounts, wrong contact information, or just a lack of checking investment portfolios represent the most common reasons that might exist for unclaimed shares. These shares, in some cases, might go to IEPF due to being left unclaimed.
Why Are Shares Left Unclaimed?
There are many reasons, ranging from straightforward ignorance on the part of the shareholder to fundamental structural flaws in the investment and corporate framework. The most common is when shareholders fail to update their address telephone number or even bank account without informing the issuing company.
Another aspect is the transfer of shares to dematerialized accounts, or demat, where the shareholder may not be aware that dividends or benefits are credited directly into the demat account. Those who have many investments, distributed across several companies, tend to overlook tracking every investment or dividend.
Step-by-Step Guide to Reclaiming Unclaimed Shares through IEPF
Reclaiming unclaimed shares through the IEPF involves a defined process designed to verify the shareholder’s identity and ownership. By following these steps, rightful owners or their legal heirs can reclaim shares securely:
1. Identify Unclaimed Shares: The first step is to check if you have unclaimed shares by visiting the IEPF’s official website. This portal provides access to a list of unclaimed shares and other entitlements. Shareholders can search for their names or check against their company’s unclaimed list to identify any outstanding shares.
2. File IEPF-5 Form: Upon identifying unclaimed shares, the claimant must fill out Form IEPF-5, available on the IEPF website. This form serves as the official request for share recovery and requires detailed information, including the shareholder’s personal details, company name, and specifics of the unclaimed shares.
3. Gather Required Documentation: Supporting documentation is crucial in verifying the shareholder’s claim. This typically includes proof of identity, such as an Aadhaar card or passport, proof of address, and bank details. In cases where the claimant is the legal heir, additional documents such as a succession certificate or legal affidavit are required to establish rightful ownership.
4. Submit Physical Documents: Alongside the online form, shareholders are required to send physical copies of the application form and supporting documents to the company’s nodal officer. This is a critical step, as the nodal officer reviews and endorses the application before forwarding it to the IEPF for final approval.
5. Verification Process: After receiving the physical documents, the company’s nodal officer verifies the information and certifies the claim’s authenticity. The application is then submitted to the IEPF authority for further review and validation.
6. Claim Settlement: Once the IEPF authority completes the verification, they approve the claim, and the unclaimed shares, along with any accrued benefits, are transferred to the claimant’s demat account or other specified account.
Conclusion
Unclaimed shares constitute an important financial asset that shareholders or their heirs have a rightful claim to. The IEPF procedure through structured recovery therefore presents shareholders with the opportunity to regain control over their investments, including associated dividends and benefits. For a shareholder, knowledge of this process and proactive monitoring and claiming of entitlements are imperative. By following the guidelines of IEPF and maintaining up-to-date records, investors can prevent their shares from becoming unclaimed and ensure protection for their financial interests. Shareholders should, therefore, not worry about the complexities involved in recovery with the aid of specialists like Shares Recover, ensuring that the claimable assets are acquired, thus making investments work towards creating returns contributing to financial growth.
FAQs
1. What Happens if Multiple Claims Are Made for the Same Unclaimed Shares?
The IEPF will carry out a proper investigation and decide and announce the actual claimant. This may include further documentation, legal proceedings, or even mediation in a few cases.
2. Can I Claim Unclaimed Shares on behalf of a Deceased Relative?
Yes, you can claim the shares on behalf of a deceased relative. All that you have to do is submit adequate documentation to prove your connection with the deceased and right over the shares. Such documents would be a death certificate, succession certificate, or legal heir certificate.
3. Is There a Time Limit for Claiming Unclaimed Shares?
Yes, there is a period for claiming unclaimed shares. The IEPF usually keeps the unclaimed shares for some time. After that period, the shares would be transferred to the Government of India. It would be better to claim the unclaimed shares you have at the earliest point in time to avoid any probable loss.
4. Can I Claim Unclaimed Shares Held in Joint Names?
Yes, you can lay claim to those shares held in joint names. However, all the joint holders may have to establish their rights in such shares by furnishing necessary documents. In the event of the death of a joint holder, the surviving joint holder(s) would be free to go ahead with claiming such shares.
5. What Happens if I Cannot Provide All the Required Documents for Claiming Unclaimed Shares?
You may still be eligible to claim your shares even if you are not able to produce all the documents as mandated. Nevertheless, IEPF may request further information or verification. In certain cases, IEPF may grant a relaxation of time to furnish the documents that are missing. It would be prudent to approach IEPF or a legal practitioner to seek proper advice in such scenarios.
