Software engineer Gautam Wadhwa is currently working with a multinational company in the US. His father, a former Government of India employee, passed away seven years ago while his mother is a homemaker.
This year when he came to visit his mother, Wadhwa came to know that his father had huge investments in equities. However, all the shares were in his name. The equity holding was deprived of all corporate benefits including dividend, bonus and rights as all of it remained unclaimed since his mother had shifted near their relative’s house after his father’s death and their family home was locked. He came to know about his father’s equity investments when they visited their family home.
Similar to the Wadhwas there are several such investors who invest their hard-earned money but do not keep their family members informed about them. Such unclaimed investments and corporate benefits then get transferred to Investment Protection & Education Fund (IEPF) after a period of seven years.
In the last 14 months, listed companies have transferred shares belonging to over 30 lakh investors to the IEPF.
The shares that are transferred to IEPF are valued at the current market price to the tune of `18,000 crore and the amount of unclaimed dividend is `2,300 crore. The shares that became dormant as the investors did not claim them for seven years or more, because their heirs were unaware of the inheritance or as share certificates were lost or got misplaced while some cases pertained to long- term investments.
The Ministry of Corporate Affairs (MCA) established the fund on September 7, 2016 under the provisions of section 125 of the Companies Act, 2013. The authority is mandated to promote investor’s education, awareness and protection and to make refunds of shares, unclaimed dividends, matured deposits and debentures that have been transferred to IEPF. In order to fund the IEPF, unclaimed dividend, refunded application money, matured company deposits and debentures, as well as the interest on them, is used and provided, if they are not claimed within seven years. To decide on what proportion of the money should get utilised as far as IEPF is concerned, it is monitored by a trust.
Redeeming the unclaimed money is easy. The IEPF website usually has all the details of unclaimed amounts. To make a claim, you can use IEPF-5 form.
In case an investor doesn’t want to go through the hassles and wants to outsource it to some agency then they can also avail that option.
Ankit Agarwal, MD, Alankit, a firm that helps investors to claim dividend payments stuck with IEPF Authority, said, many people were not able to claim dividend payments from companies because the share transfer was not effected after the demise of the original holder. There were instances of signature differ or mismatch in some cases. There were instances where the physical shares were lost or misplaced.
The cause in rising amount of unclaimed dividend and shares, according to experts, is also because of lack of awareness on the part of investors.
They said, a massive awareness drive should be carried out not only by MCA but the capital market regulator Sebi. After all, it is Sebi’s mandate that it protects investors’ rights and make them more aware of their investments.
Besides Alankit there are other players like Abhipra, who provide assistance to investors. In addition to these, investors who are facing problems of unclaimed dividends and shares can reach out to Registrar and Transfer Agents of the respective companies, where they can be guided in a proper way to retrieve their shares and dividend.
Agarwal said, “We at Alankit provide consultancy services to the investors to support in retrieving the unclaimed dividends and shares from the IEPF authority.”
“We educate the clients about IEPF, provide them assistance to fill up the form, guide them about the steps they need to follow to claim their shares and dividend back,” Agarwal further said.
Following the setting up of IEPF in 2016, the number of approximate shares retrieved from the authority is two crore, he claimed.
yagnesh@outlookindia.com