A Complete Guide on Guidelines for Share recovery in India

SEBI has made it mandatory for all physical shareholders to submit their PAN, nomination (for all eligible folios), contact details, bank account details and specimen signature and if any of the documents are not accessible, RTA will freeze the folio on or after April 1, 2023. Recovering units in India has become the easiest and fastest procedure due to the latest guidelines from the Indian government and investor- friendly regulations; nowadays, one can easily access unclaimed IEPF unit funds.

It also states that the frozen accounts will be submitted to the administrative authorities under the Benami Transactions (Prohibitions) Act, 1988 and possibly the Prevention of Money Laundering Act, 2002 [1] if they remain frozen till December 31, 2025. Under the new legislation, it is critical that all holders of physical shares begin the process of amending their information in the Company's records and recovering their shares as soon as possible.


IEPF claim

Submission of unclaimed shares to recover shares of IEPF in India

A unit holder whose unclaimed dividends, debentures, shares or debenture stock, application money to be refunded and interest thereon, if any, money derived from fractional units, etc., is forwarded to IEPF may claim the units, etc., may IEPF claim the units in accordance with the procedure laid down in sub-section (6) of section 124 or may make an application under clause (a) of sub-section (3) of section 125.

Note: If the claimant is the legal heir, successor or agent of the registered shareholder, he/she must ensure that the Company completes the transfer procedure and issues a claim letter to the legal heirs before submitting the IEPF application to the authorities.

Procedure for reclaiming shares - Guidelines for reclaiming shares in India

A person wishing to reclaim shares must submit an IEPF Form-5 with the following information to MCA:

  1. Applicant's details;

  2. Details of the company;

  3. Details of the shares to be reclaimed;

  4. Amount of dividend to be claimed;

  5. If the applicant is an Indian citizen, the Aadhar number is required and if the applicant is a foreigner or an NRI, he/she must provide his/her passport or PIO card number;

  6. Once the online refund form is filled, the applicant must email it to the company's Nodal Officer along with the essential documents. The following documents must be attached:

  7. Copy of the receipt with the SRN;

  8. Original indemnity statement signed by the applicant;

  9. Original stamped advance receipt signed by the claimant and witnesses;

  10. Original certificates in the case of a matured deposit or bond that is being refunded;

  11. Proof of eligibility;

  12. Self-certified copy of the client master list of your DEMAT accounts;

  13. The relevant firm must prepare an audit report within 15 days of receipt of the application form and submit it to the authorities in the prescribed form;

  14. The Subscription and Disbursement Officer shall send an invoice to the Payment and Account Officer for payment based on the share recover policy after the completion of the verification of the claimants' claims;

  15. The Authority issues a refund notice with the approval of the competent authority if the claimant is entitled to shares;

  16. The shares shall be credited to the DEMAT account of the claimant or to the extent the claimant is entitled to them. If the shares are physical certificates, the duplicates shall be declared invalid and the shares shall be delivered to the applicant.

  17. The authorities shall have the applicant's refund request confirmed by the Company.

  18. The authorities must decide within 60 days or 2 months of receiving the verification report from the company concerned.

Conclusion

After discussing the guidelines for the confiscation of shares, it is concluded that the Ministry is seeking an amendment to the law to make it easier for companies to transfer their holdings to the state. The amendment, according to officials, will streamline the stock transfer process and solve the problem of unclaimed dividends. The MCA is pushing for an amendment to the Companies Act that would allow the GOI to take over the transfer of shares in companies.

 

Location: Delhi, India

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