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What is an IEPF Claim?

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Synopsis:

When you own a share, debenture, bond, or other securities but do not claim them for a long period, then such securities can be transferred to the Investor Education and Protection Fund (IEPF) under the Ministry of Corporate Affairs (MCA). The IEPF acts as a repository for all unclaimed dividends, shares, bonds, and other securities. It keeps all the unclaimed securities safe. The original owners of such securities, their legal heirs, or their nominees can claim them back by following a process and providing the required documents.

What is an IEPF Claim? A Comprehensive Guide

When a shareholder, debenture-holder, or bondholder does not claim the securities he owns for a long period, then the company in which he had made the investment transfers them to the Investor Education and Protection Fund (IEPF). To claim these securities, the shareholder, his legal heirs, or his nominee has to file a claim with the IEPF, which is known as an IEPF claim. Let us delve deeper into this topic to know all about IEPF claims.

What is the Investor Education and Protection Fund (IEPF)?

The Investor Education and Protection Fund (IEPF) comes under the Ministry of Corporate Affairs (MCA) and is a government initiative. It is a repository for all unclaimed dividends and matured deposits. When people do not claim their shares, dividends, or any other kind of financial asset for a stipulated time, they are transferred to the IEPF. With IEPF, such instruments remain absolutely safe and hence the interests of security-holders are safeguarded. 

Understanding all about the Investor Education and Protection Fund (IEPF)

The IEPF was introduced by the Central Government to protect the interests of investors. It was set up under Section 125 of the Companies Act of 2013. The IEPF authority administers this fund. It comprises a chairperson and a chief executive officer. It also includes other members (not more than 7), which are appointed by the government.

The IEPF is tightly governed so that the funds belonging to investors are utilised properly. For example, the IEPF is authorised to utilise the funds only for the objectives written in the act. Besides, its accounts are audited by the Comptroller and Auditor General of India (CAG), which ensures the highest standards of transparency.

The IEPF authority has to send its audited accounts with the audit report to the government every year. Moreover, the authority has to prepare an annual report every year. In that report, it must provide a summary of its activities and send its copy to the government.

Then, the government submits the authority’s annual report and its audit report as given by the CAG before the Lok Sabha and the Rajya Sabha.

Why Do You Need to Claim from the IEPF Authority?

The transfer to the IEPF happens in many cases. For example, when a shareholder does not claim his unclaimed dividend for seven years straight, the company transfers his dividends to the IEPF. Similarly, when a shareholder does not claim his shares or any kind of rights for seven years straight, the company transfers the same to the IEPF. If a shareholder's account is inactive for seven years, and the company is not able to contact either him or his nominee, those shares will be transferred to the IEPF. Now, the question is why a shareholder should claim from the IEPF.

In case, he does not claim from the IEPF, his dividends, shares, or rights will remain with the IEPF. That said, his securities will remain safe with the IEPF.

Eligibility Criteria for IEPF Claims

If you are wondering who can file for a claim with the IEPF, please find below the eligibility criteria:

  1. Shareholders: If a shareholder's dividends or shares have been transferred to the IEPF because he did not claim them for seven years in a row, then he can claim them from the IEPF.  

  2. Legal Heirs/Successors/Nominee: If a shareholder has expired, his legal heirs/nominees/successors can claim the shares or dividends if the same have been transferred to the IEPF.  

  3. Debenture-holders or bondholders: When individuals hold bonds or debentures and they are transferred to the IEPF, they can claim such investments from the IEPF.

  4. Depositors: If an investor has unclaimed fixed deposits, recurring deposits, or any other kind of similar deposits and they have been transferred to the IEPF, then the investor can claim such deposits.

Step-by-Step Process to File an IEPF Claim

The detailed process to file an IEPF claim is explained below:

  1. Step 1: If you have an unclaimed share/dividend/or anything else, you should visit this link - https://www.mca.gov.in/content/mca/global/en/foportal/fo-user-registration.html. Then, you should register yourself as a "Registered User."

  2. Step 2: Having registered, you must go to the MCA’s website - https://www.mca.gov.in/content/mca/global/en/home.html. Then, you should click on "Investor Services" and click on the “IEPF-5” form. Post that, you should provide the required information. Then, you should submit the form. After you submit the form, an "SRN" number will be generated.

  3. Step 3: In case you want to read the instructions to fill out the IEPF-5 form, you should go here: https://www.iepf.gov.in/IEPF/refund.html. Here, you will be able to see an option called Web Form IEPF-5 Instruction Kit. Please download it and then you can read the instructions.

Required Documents for IEPF Claim Submission

a) IEPF-5 form (filled) and acknowledgment: Once you file for a claim, the MCA will generate an acknowledgment, which will have a unique serial number needed to track your claim's status. You also need this number for all future correspondence with regard to your claim.

b) Original indemnity bond: You have to sign an original indemnity bond on a stamp paper (non-judicial) of sufficient value according to the Stamp Duty law. The format for this bond is available in the e-form IEPF-5, which you can access on the IEPF's website.

c) Documents pertaining to shares or debentures held: If you hold these securities in physical form, you need to provide an original matured debenture or share certificate as required. But, if you hold them in demat form, you need to submit a transaction statement. 

d) Proof of Entitlement: You need to submit any document that can establish your entitlement to the security you want to claim. The document can be a dividend warrant, a share certificate, etc.

e) Self-attested copy of PAN card and Aadhar card: A self-attested copy of PAN card and Aadhaar card is required.

f)  Proof of Identity: You can provide a copy of your Aadhar card, Passport, or Driving License if you are an Indian citizen. However, if you are a foreigner or an NRI, you need to provide a copy of the OCI and PIO card. 

g) Cancelled cheque leaf: This leaf should be in your name and it should show the bank account number to which the refund of the dividend amount has to be sent.

h) Client Master List (CML): You will have to get this document from your depository participant/stockbroker. It should have the details of your demat account. 

i)   Original Death Certificate and Notarized Affidavit: If the original shareholder has passed away and a legal heir or nominee is making the claim, then he needs to submit an original death certificate and a notarised affidavit, which should explain his relationship with the deceased shareholder.

j)   Duly Executed Transmission Request Form (TRF): This form is required if shares need to be transmitted from the account of a deceased shareholder to that of his legal heir or nominee.

Common Mistakes to Avoid When Filing an IEPF Claim Form

While filing such an IEPF claim, you should avoid making these mistakes:

a)     The name of the applicant does not match the name in the PAN’s database.

b)     The applicant’s date of birth does not match with the one in the PAN’s database.

c)     Incorrect Aadhard Card number is provided in the form.

d)     Wrong details of the Passport or Driving License are provided.

e)     Incorrect details of the original shareholder or his beneficiary are mentioned.

f)      Incorrect details of the dividends that have been transferred to the IEPF are provided.

g)     Incorrect details of the bank account or the demat account are provided. You should provide the details of the bank account, which is linked to the demat account.

Conclusion

When the owner of a security, like a share, dividend, debenture, bond, etc. does not claim it for a long period (typically, seven consecutive years), then such securities are transferred to the IEPF. The IEPF is a government initiative and hence the money remains absolutely safe there. That said, investors should track their investments regularly so that they do not have to claim them from the IEPF. In case, their securities are transferred to the IEPF, they need to follow due process to claim them back from the IEPF.

Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.

This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.

For All Disclaimers Click Here: https://bit.ly/3Tcsfuc

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Frequently Asked Questions

What is the IEPF?

Answer Field

IEPF stands for the Investor Education and Protection Fund. It comes under the MCA. When a dividend, share, debenture, etc. is unclaimed by its owners, it is transferred to the IEPF.

What is the meaning of an IEPF Claim?

Answer Field

When you claim your shares, dividends, or debentures that have been transferred to the IEPF, it is called an IEPF claim.

Why are my shares transferred to the IEPF?

Answer Field

If you have not claimed your dividends for seven consecutive years or you have not claimed your shares for seven straight years, then such shares or dividends are transferred to the IEPF.

How do I get my shares back from the IEPF?

Answer Field

You have to go to the Ministry of Corporate Affairs’ (MCA) website and provide the necessary documents to get your shares back from the IEPF.

What is the IEPF used for?

Answer Field

The IEPF is used as a repository for unclaimed dividends, shares, debentures, and other securities. This fund is supposed to keep all the unclaimed securities safe so that when their original owners or their heirs claim them back, the same can be transferred to them.

What documents are required for an IEPF claim?

Answer Field

These documents are required: IEPF-5 form (filled) and acknowledgment, Original indemnity bond, Documents pertaining to shares or debentures held, Proof of Entitlement, Self-attested copy of PAN card and Aadhar card, Proof of Identity, Cancelled cheque leaf, Client Master List (CML), Original Death Certificate and Notarized Affidavit, & Duly Executed Transmission Request Form (TRF).

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