Rs 50,000 crore unclaimed shares stuck with IEPF: Sanchit Garg of GLC Wealth Advisor LLP

Shareholders of a company can claim a refund for their unclaimed shares that have been transferred to the Investor Education and Protection Fund or IEPF, which was established by the Government of India under the Companies Act, 2013. During a conversation with Sakshi Batra, anchor and associate editor at BTTV, Sanchit Garg, Co-founder and CEO of GLC Wealth Advisor LLP, elaborates on the process of claiming unclaimed shares.

BT: What is the estimated amount of money stuck in unclaimed shares with IEPF?

Sanchit Garg: As per recent data, there are 117 crore shares that have been transferred to IEPF. As per our estimate, these would be worth Rs 50,000 crores in value terms. Similarly, dividends worth Rs 5,700 crores have been transferred to IEPF.

BT: What is the entire process of claiming your shares from IEPF?

Sanchit Garg: One should take following steps to claim shares from IEPF

Collate all information of your investments that have been transferred to IEPF like Folio no., share certificates etc.

Get your KYC, signatures, bank  & demat account details updated in the company’s records

If any share certificates are lost then comply with the documents for issue of duplicate shares

Once the entitlement letter is issued by the company, file your claim by filing IEPF Form 5 on the MCA portal

Send the physical documents to Nodal officer of the company

The company will file its verification report 

The claim will be approved & shares will be transferred to your demat account

BT: Can the new IT portal make tracking of such shares easier for public?

Sanchit Garg: IEPF website, already has a facility to search for shares and dividends that have been transferred to the IEPF, however the database is not very comprehensive and updated. Also, there are multiple scenarios where issues of name mismatch are there due to change of name, abbreviations, typing / clerical errors. Hence it is not completely possible to trace such shares from the existing portal. 

The move announced by the government to set up an integrated IT portal will further ease the process of reclaiming unclaimed shares and unpaid dividends. Shareholders who have not claimed their dividends or shares for the last seven years can check the IEPF IT portal to see if their unclaimed dividends or shares have been transferred to the IEPF. They can then claim their shares or dividends directly through the portal by following the prescribed procedure. It will also enable investors to check the status of their claim real time and the companies to comply with any discrepancies raised by the government. Further, there is a likelihood that claims below a certain value will be approved on a straight through process. 

However,  to see the effectiveness of such a portal for the public we will only have to wait and watch as many of the investors are senior citizens, super senior citizens, NRIs or investors from Tier 2 & 3 cities who might not be well versed with the digital systems.

BT: What are some of the key causes of share disputes?

Sanchit Garg: Unregistered transfer deeds where the buyer has not got the transfer deed registered in his/her name. Since, transfer of physical shares has been banned by the Sebi, several genuine investors who purchased physical shares when trading of physical shares was allowed but could not get the shares transferred to their names in the company’s records are struggling to reclaim such investments. There are disputes arising in such cases due to lack of clarity of ownership in such cases where the name of old shareholders is recorded in the company’s records but the share certificates along with transfer deeds are lying with the buyer who could not get them transferred in his/her name due to several reasons like signature mismatch etc.

In case of death of shareholders without any nomination or will, there is a possibility of dispute to arise between the legal heirs about the rights over such investments

There are issues related to name mismatch due to change of name, marriage, etc.

In some cases, investors have lost the share certificates & do not have any old records (like dividends / allotments letters / postal ballots or old address proof) to prove the genuineness of their claims for such investments and hence struggle to reclaim their investments.

BT: If someone has settled abroad and is a NRI now, how can they claim their investments stuck with IEPF? Does he/she have to come to India to claim their investments?

Sanchit Garg: For claiming back their investments an NRI needs to have a PAN card in India, NRE/NRO bank account and demat account, OCI/PIO card in case of foreign nationals. They need not have to be physically present in India for this process. They can execute all the documents abroad along with the relevant attestations/notarizations required by the company/ government and send the documents to India.

BT: What are the complications related to investments of deceased investors stuck in IEPF?

Sanchit Garg: If the value of the physical investments is below Rs 5 lakhs, the claimant can get transmission done in their favour by providing the transmission forms along with a legal heir certificate or its equivalent and NOCs,  indemnities from other legal heirs. But if the value of physical investments is above Rs 5 lakhs, a succession certificate / probate of will / letter of administration from the courts of competent jurisdiction is required to determine the rights of the legal heirs based on which transmission of such investments can be done to the name of the claimants.