What is Process of Unclaimed Share Recovery & Dividends?

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Before the times when trading was dematerialized, the security allotment used to be done in the form of a paper certificate. But since the security allotment is being done in the form of the paper certificate, there were chances of them ending up lost/ damaged or misplaced. In fact, there were also situations when the shareholders died & their heirs for not able to claim the money, and the shares were left unclaimed. According to the Research Report, 18000+ crores of the shares that are unclaimed as well as INR 23000 crores of the unclaimed dividends are already being rooted to IEPF. Even when the system of Demat was introduced, the materialization of security has already gained prominence for an extended time.

Looking at all these challenges that shareholders & their heirs faced, in share recovery the government authorities streamlined the system and came up with the process for allowing the investors to recoup the investments from IEPF/ bonus shares as well as the dividends.

Read also this -: All You Need to Know for Recovery of Shares from IEPF

What is the meaning of share recovery?

Looking at the meaning of what share recovery is, let’s have an overview of it in detail.:

The need and importance of the Recovery of Shares have been well recognized in the Union Budget 2023 wherein the Finance Minister set out proposals for reclaiming unclaimed shares and profits for working with a helpful and proficient method for financial backers to recover their unclaimed resources, upgrading financial backer insurance. Recuperation of Offers alludes to recovering these protections and bringing them back inside the legitimate belonging and responsibility for security holder through the cycles of transmission of offers, move of offers, recovery of unclaimed profits, extra issues, and so on.

To eradicate the problem of unclaimed shares, the government came out with an idea to transfer the unclaimed shares to the IEPF or Investor Education and Protection Fund, and suggested a procedure for claiming the unclaimed shares, dividends, and bonus shares.

The requirement as well as the relevance of the recovery of shares along with its recognition within the union budget in the year 2023 came under the administration of the finance minister who was responsible for coming up with the proposal of reclaiming as well as uncalming shares as well as the dividend. This is meant to allow an easy and effective method for the investor so that they will be able to retrieve all their unclaimed assets and this is leading to the improvement in protection towards investors.

Which authority transfers unclaimed shares?

In simple terms, the share recovery process refers to the retrieval of the securities, along with bringing them back within the appropriate position as well as the ownership of the security holder. This is done through the procedure of share transmission, transferring, unclaimed dividend retrieval as well as the issuing of the bonus, and much more. This is actually done to curb the issue of unclaimed shares, the government authorities have taken the step of transferring all the unclaimed shares to the IEPF( Investor Education and Protection Fund) along with prescribing the process of recovery of unclaimed shares, dividends as well as the bonus shares.

Amendments introduce in IEPF( Investor Education and Protection Fund) in 2021- revision of form IEPF-4 & IEPF-7

The Ministry of Corporate Affairs has already brought notification of the amendments in the regulation of IEPF & here is the mention of all changes that have been introduced:

The amendment in IEPF will state that all the shares that are actually held within the DEMAT account will not be transferred or dealt in the manner in exception to the chances of share transfer back towards the claimant when they will be approach the authority as per the regulations.

Under the condition when the application is received for the purpose of being purchased by the company, the concerned authorities will be receiving the money that has been entitled on behalf of the minority shareholders from the organization according to the regulations and processes that have been laid under section 236.

The concerned authority Will Be Held responsible for verifying according to the compliance of the conditions under the defined section of the act as well as the regulations, which have been framed and their will also be a call for reporting from the organization when section 236, requirements have been met by the person who is acquiring the shares. Under the condition when the shares are valued as per section 236(2), as well as the other element information which is needed.

The company will be holding the liability for indemnifying the authorities under the condition of any type of dispute/ or lawsuit that has been initiated. The authorities shall not be holding the liability for indemnifying the minor shareholder/ company/ or any other individual in case any liability arises/ under the condition of litigation or when there is a complaint.

How share recovery service helps?

The share recovery service entails the procedure to recoup this type of security through the procedure of share transmission, their transferring, retrieval of bonus issues, and unclaimed dividends and this is a reason why it is known as the share recovery.

What are common issues that hampered the recovery of unclaimed shares?

The share claimant may be facing the issues that are mentioned below and this is acting as a roadblock in the process of the recovery of shares.

Physical share damage

This is one of the most common pitfalls and it has led to the dematerialization of the concept to secure the share certifications in electronic format. However before the de-materialization concept was introduced, the share certificate you to be held in paper form by the shareholders, and this is done for a very long time. This has actually led to the damage of the paper share certificate with time.

Misplacement of share certification

This is another challenge that has led to the recovery of the share process. As not only the damage to the paper certificate was done but there was also the risk of misplacement of the share from shareholders and this has hampered the process of the recovery of shares.

Failure to submit the transfer deed

As far as the transfer deed is concerned, this is one of the crucial determinants of the documentation genuineness, confirming the legality of the share transfer. In case of any mismatch existing between the share of the involved parties, then this will also jeopardize, the authenticity of such kind of the transferring. Thus for share recovery, the shareholder must be in a position of ensuring that there is no mismatch of the signature taking place in any of the paperwork.

Failure in summitting transfer deed

The transfer deed will provide confirmation about the legal impact of the share transfer. Also, there can be known formation of this type of transfer deed to the respective of the authority and it will lead to suspicion with regard to the illegal/ improper/ or no share transferring and this can pose a problem to the shareholder.

Mismatching transferor signature

The parties signature is also very crucial as it determines whether the paperwork is genuine or not. So this will confirm the legality of the transferring of shares. In case of any mismatch in the signature on documents presented by the party, it can jeopardize of the authenticity of this kind of transfer, and thus, it is important for the shareholders to ensure that there is no mismatch in the signature in any of the paperwork which is submitted.

Recovery of unclaimed shares from IEPF

The recovery of the share is aimed for claiming the unclaimed money of the share. The unclaimed of money will be transferred to the IEPF and it is liable to be claimed once the process which is being prescribed by the MCA as well as the IEPF agency has been followed.

Essential information and paperwork which needs to be submitted for recovery of shares from IEPF

There is a need to present the requisite information, as well as paper work for initiating the procedure of the recovery of shares.

What all details are needed to fill form?

The claimant’s details as well as the copy of Aadhar card/OCI/PIO number

CIN number as well as other relevant company information for which the money is due

Demat account number

Bank account details where unclaimed funds need to be refunded

Share details that are required to be claimed

Dividend details that are required to be claimed

Original indemnity bond having the signature of claimant upon non-judicial stamp paper as per the Stamp Act

Original advanced receipt stamped having claimant’s as well as the witness’s signature

Original share certificate, when the shares are in physical form/ transaction statement details(this is under condition when security exists in Demat form?

Aadhar card

Entitlement proof

OCI(overseas citizen of India)/ passport/PIO card under the condition of NRI as well as foreigners

Demat account copy master list of client

One canceled cheque

What is procedure of recovery of shares from IEPF?

Here is the process that needs to be undertaken to recover shares from IEPF:

Application form filling

The applicant is required to fill out the form within the prescribed format along with mentioning all the details that have been already mentioned in the website.

Submitting applications & documents

You can undertake this process on your own or can take the help of the shared recovery service provider. Make sure to mention all the details that have already been cited in the application form and also the paperwork that has been already mentioned above. Everything is required to be submitted to the Nodal Officer/ company register from wherever the money is due

Application & documentation verification by concerned authorities

The company will be preparing the verification report and this is done within the period of 15 days. Then it will be submitted to the authorities for final verification. The IEPF agency will be verifying the application, and documentation for confirming the appropriateness of the submission which is rendered by the applicant.

Seeking refund from concerned authorities

Once the officials scrutinize the application as well as the paperwork, the authorities will process the refund within the duration of 60 days of receiving the application. The process of recovery of unclaimed shares is complicated as well as time-consuming without the proper and thorough guidance about the whole of process along with all the implications and legalities that are involved. Thus, it is important to seek the proper guidance and advice from the recovery of share experts online.

Read also this -: Detailed Procedure for Recovery of Shares From IEPF

Our company is leading provider of share recovery service in India

Are you looking for ways to recover unclaimed shares? Are you finding the process very complicated? If yes then get ready to take the assistance of Legal Raasta, a leading provider of share recovery service in India. Our organization is assisting clients in the recovery of unclaimed shares, untraceable ones as well as dividends. The recovery of share service provided by our leading tax and legal consultants can help you with:

De materialization

Share transmission

Signature miss matching

IEPF Claim

Share transferring

Misplacing share certificate

Change in Name

Recovery of mutual funds

Our share recovery consultants will be assisting you in feeling all the gap, whether it is about the missing of the paperwork or forgotten of the shareholding. Our expert will be searching all the required details on the website of the company as well as other data basis. After the recovery of the needed details, our professionals will approach the concerned authorities on your behalf to secure the approval of the shares. Our professionals are here to provide you with thorough and end-to-end assistance in recovering all the unclaimed funding from the lost/ damaged share certificates!

Simply contact our customer support team today for further discussion!