Before knowing the process of claiming refunds from the IEPF, it is essential to know about IEPF. IEPF stands for Investor Education & Protection Fund. It was formed as per the Section 205C of the Companies Act, 1956. Recently, the IEPF has found a new place in Section 125 of the Companies Act, 2013. As the name states, IEPF is a fund that collects all unclaimed shares. The shares or dividends which are unclaimed for more than seven years are sent to IEPF. As per the act, all this money should be transferred to the IEPF. Through IEPF, the investors can now get a refund for the unclaimed rewards. The IEPF was formed by the Ministry of Corporate Affairs or MCA. IEPF aims to help investors in knowing ways of protecting the interests of the investors.
The basic idea of forming IEPF was to use the money of the investors for their benefits. The benefits include spreading knowledge about investor education and investor awareness program. The government made it compulsory to transfer the unclaimed funds to IEPF in 2016.
How To Know If I Have Unclaimed Amounts?
Before applying for a claim or refund, it is important to know whether you have any unclaimed amount or not. The unclaimed amounts can be in your name or anyone’s name from your family. The IEPF provides the service where you can find out the funds you can claim for a refund. To know whether you have any unclaimed funds or not, you need to click on this link:
After clicking on this link, you have to fill in the details like your name, date of birth, and other details. You need to put the combination of names using your grandfather’s name or your father’s name. After using all the possible combinations of names, you would get to know whether you have any unclaimed and liable funds for a refund.
How To Claim A Refund From IEPF?
There is a certain process that you need to follow to claim a refund from IEPF. The whole process is explained in a better way below.
1. Visit the official website of IEPF and select the option “IEPF form 5.” You would see a form on your screen which you need to fill out. After filling the form, upload it. After selecting the “upload” option, you would reach the Ministry of Corporate Affairs page. You have to upload your form here.
2. On this page, you need to login by using your ID and password. If you do not have any ID or password, you can click on the “register” option. Register yourself by providing the necessary details and then log in to your new account.
3. After you have logged in, you need to select on “normal upload” option.
4. Now, click on the “browse” option and then attach your form. After doing so, select the “Submit” option.
5. An SRN is now generated, and you have to make a payment. There are two options for payment: Pay Now or Pay Later. The payment fee is zero, so it will be better to select the “Pay Now” option for acknowledgment.
6. After selecting the “Pay Now” option, click on the “Finish” option. You would get to see this option after a zero-fee page appears on your screen.
Procedure After Applying For Refund
The above steps will help you to apply for a refund. After applying for a refund, there is a certain procedure that the investor needs to follow. The investor has to send the attachments or documents to the Nodal center. He/she has to do this so that the claim for refund becomes successful. You need to keep all the documents in an envelope, stating, “Claim for a refund from IEPF authority.” Send this envelope to the nodal center. Below are the mandatory documents.
i. A print out of the form IEPF 5 which is filled properly. Make sure that the form is signed by the claimant and any other account holders.
ii. A copy of the acknowledgment which you can get after uploading the claim form.
iii. The original copy of the indemnity bond. Make sure it is signed duly by the claimant (as per the format given in the Annexure-II):
- If the amount is more than INR 10,000, you have to sign on a non-judicial stamp paper. The value must be written under the Stamp Act. Make sure to enter the date, place, and signature of both claimants and the witness.
- Submit a plain paper with your signature if the amount is less than INR 10000
- If you are applying for a refund of shares, then submit a non-judicial stamp paper. The paper should have the value, as stated under the Stamp Act.
iv. Submit the original copy of the advance stamped receipt. This receipt should have the signature of the claimant and 2 witnesses. You can get the format in Annexure I.
v. If you are filing for a refund of matured deposits or debenture, provide the original certificate to the IEPF.
vi. A copy of the Aadhar card of the claimant. If there are any joint account holders, you also need to provide the Aadhar copy of each joint account holder.
vii. Proof of entitlement of the funds. Like a certificate of the shares, interest warrants, or similar documents.
viii. An original copy of a canceled cheque leaf. This cheque should be in the name of the claimant and must contain the same account number as in the IEPF form 5.
ix. A self-attested copy of the PAN card of the claimant.
x. A self-attested of the OCI and Passport. If the claimant is a foreigner, then he/she needs to provide a self-attested copy of the PIO card.
xi. You have to provide a self-attested copy of the Client master list of the De-mat account.
xii. If it’s a joint account and one of the account holders is dead, you have to provide a copy of the death certificate.
Note: The claimant can only claim the amount which is transferred with 7 years of maturity. The company should give the remaining unpaid shares.
Three More Steps To Confirm The IEPF-5 Form
1. Test the e- Form with the ‘Check button’
After filling the form, click on the “Check button.” This would check whether fields are properly entered or not. The corrections to solve the errors are also possible. On successful validation,” Form Level Pre-Scrutiny successful” gets appeared.
2. To make changes in the e- Form, click the Modify button
Modifications to the contents in the e-form are possible with this option.
3. To double-check, the contents click the Pre-Scrutiny
To check e- Form before submission, the Pre-Scrutiny option is used. After successful validation of the e-Form, save the e-Form. After submitting all the above-mentioned documents, the procedure of refunds will start. The company will take 15 days to send a verification report to the Authority. The nodal officer in the IEPF will then verify the documents. After that, he/she will either accept or reject the claim as per the conditions.
Note: Without including Acknowledgement, your Form might get be rejected.
Things To Check
- Print out of the e-Form with the claimant’s signature.
- Copy of Acknowledgement, which consists of SRN no.
- SRN No is a 24-digit unique number commonly used to reprint an individual’s Aadhar card.
If the claim amount is 10,000 or more, on a non-judicial Stamp Paper with the prescribed Stamp value, enter the date, place, and signature of the claimant and 2 witnesses. Also, dividend and share amounts are to be filled properly.
If it’s a Joint holding share,
- The signature of all holders should be included.
- If the claim amount is 10,000 or less,
- Use a separate plain paper with the dividend amount specified.
- Copy of Aadhar or PIO/OCI card.
- Entitlement Letter-from the RTA of the company.
- A canceled leaf from the same bank which is specified in IEPF-5.
- A copy of PAN Card.
- A copy of the Client Master list of De-mat A/C of the claimant.
- In a Joint share, if one of the holders dies, the “Death Certificate” must be submitted.
- The authorities list additional documents.
Revised Guidelines To Be Followed By The Companies
Generally, Investor Education and Protection Fund Authority (IEPF Authority) governs IEPF. It protects investors by giving awareness about dividends, shares, deposits.
1. Owing to Section 205C of the Companies Act, companies have to deposit shares to IEPF. They should nominate a nodal officer to be a medium between the company and the IEPF Authority. This is under Rules &(2A) of IEPF Rules, 2016.
2. The details about the nodal officer must be submitted through the company’s official mail ID to firstname.lastname@example.org in a week. The company must also publish the company’s policies on its website.
3. The Company must maintain a dedicated mail ID. Through this, the Authority can share information and, the claimant can raise doubts. It must be capable of holding large data as the attachments are more. Authority has nothing to do with the security of the mail account. Here, the company is held responsible.
4. The Company provides an access link to the refund webpage on its official website for an easy refund.
5. When the claimant files the claim, the company must confirm the document within 15 days.
6. The company should include:
- The Nodal Officer attaches challans.
- Year-wise detailed account details.
- Name of the claimant.
- Shares to be refunded.
- The date on which the company deposited the amount.
The inclusion of all these details by the company in the claim report is a must.
7. Any violation in the enlisted instructions of www.iepf.gov.in,would not be entertained by the authority.
8. If the claimant has lost his/her original documents, a duplicate copy of the documents must be attached.
9. The verified Form and required documents have to be submitted to the IEPF Authority, Parliament Street, New Delhi-110001.
10. The envelope must be marked with Claim for a refund from IEPF Authority.
Note: There is no other mode to reach the authority.
11. The company must submit the attachments in the specified order, with proper indexing.
12. The company has to submit a revised verification document if the form is reverted with re-submission. They should do this along with extra documents proofs from the claimant.
In the next submission, the company must ensure to tick the resubmitted claim option. Further, the resubmitted report must be attached with the extra attachments. These extra attachments are required under the resubmission option. But the documents should be specified by the Authority. All this must be accomplished within the next 15 days from the intervention of the Authority.
13. The company handles the legal dispute or discrepancies associated with the fund.
- Section 124
- Section 245
- Section 205C
- (2A) of IEPF Rules,2016
- Section 447
- Section 37
All the unpaid dividends and shares will transfer to a new account. Only the shares and dividends that are not declared for more than 30 days will transfer to a new account.
The company has to post about all the unclaimed shares and dividends within a period of 90 days. They have to post this on their official website.
Other than the claimed amount, all the unpaid amount gets transferred to the IEPF account. This is for the benefit of the shareholder, and it has a 12% interest.
When the claim sanctions, the company has to settle the unpaid dividend account. They have to settle this with the shareholder.
When the share is unclaimed for 7 years, the dividends get transferred to the IEPF account. The shares are under the shareholder’s name for any future reference.
The company will pay a fine or penalty of INR 5-25 lakhs if,
- fails to submit the documents
- found involved in the disgorged act
Even the officers will have to pay a fine amount of about 1 to 5 lakhs.
If the shareholders of the company get involved in any prejudicial act will face legal acts.
Different sources of deposit to the fund are listed in this section.
(2A) of IEPF Rules,2016
The law enforces companies to nominate a nodal officer. This nodal officer is to communicate with the IEPF Authority.
Any attempts to affect the company’s interests or shareholders or creditors in the trade by either wrongful gain or wrongful loss is liable to legal consequences.
It includes imprisonment for about 5 years or more. Along with that, a fine amount of 1% of the company’s turnover or profit of victimizer.
The law for the victims who had lost shares and profit by omission or unclear clauses in the agreement.
Flaws Occurred On Either Side Delaying The Claim Sanction
The company has to pay a fine of INR 50-2500 as a fine if it fails to submit the verification report within 30 days. The fine will increase if the delay period increases.
The company is liable to verify the documents and add a few proofs from the company’s side. Failing to finish this might put the nodal officer and the Company members behind bars.
2. Incomplete Form
When the Authority finds a flaw in the form, he intimates the Claimant about the defects through the mail. The claimant has to correct those within 15 days from the date of mail communication.
The claimant has to verify the corrected document with the nodal officer. Then the company submits the revised verification report to the authority. this must be done within 30 days.
If The Claimant Lost His Proof Of Share Ownership
In this case, you have to submit the below documents
- Copy of FIR/ Police complaint with a notarized signature,
- Details about security holder
- folio number, and code numbers of the share certificate.
- Surety Affidavit value which has the market value of the share
- PAN card surety and notarized sign.
- Indemnity bond signed between the Company and the Claimant.
- A proof document (to ensure that the share of the Claimant is still under his/her ownership no third-party intervention has taken place)
Finally, if the share’s market value is greater than 10,000, the claimant has to advertise about the lost document proof in any renowned English national publications. A copy of the newspaper advertisement has to be attached. The claimant can even use the regional language in the advertisement.
If the Claimant is found to do false play, that is pretending to be the legal owner of a share and claim refund. According to Section 57, 447, and 448 of the Companies act, the Claimant will get prosecuted.
Two Main Options To Know In IEPF
1. A Claimant With A Nominee
To Claim A Refund From IEPF, The Nominee Must Submit:
- Mutually signed transmission request.
- Original or photocopy of the death certificate of the shareowner.
- Photocopy of PAN card.
- Original Certificate of the share.
- Other Government IDs as proof of the Nominee.
2. A Claimant Without A Nominee
To Claim A Refund From IEPF, The Heirs Of The Shareholder Must Submit
An affidavit from the legal heirs can be proof of identification. They can use it for claiming the refund from the deceased shareholder’s IEPF amount.
The presence of heirs or other claimant’s names in the Succession list is enough to claim the refund. If there is no Succession Certificate, no one can claim the shares. In this case, neither the legal heir nor the claimant can claim the share. Here, the legal heirs must submit a NOC (No Objection Certificate) certificate. The claimants can also submit a NOC. The NOC will let the Government allow, to use the money for welfare schemes.
What Funds Are Transferred To The IEPF?
One of the most asked questions is, “what are the funds that are transferred to the IEPF?” Below are the funds that you would find in the IEPF. These funds are transferred only if they remain unclaimed for more than 7 years.
i. The dividends that the company had issued and which is still not claimed by the investor.
ii. The matured deposits which are still with the company, other than banking institutes.
iii. The application money which the company receives for any kind of security and did not refund it.
iv. The matured debentures which the company has not yet claimed.
v. The unclaimed shares which are present in the de-mat accounts for many years.
vi. The interest which is acquired on the above sources.
vii. Amount of the preference shares which the investor has not yet claimed.
These are the funds that are transferred to the IEPF. If any of these funds remain unclaimed for more than 7 years, the IEPF will take all these shares. Under section 124(5), The amount is given by the Central Government by way of grants made by Parliament.
Why Should The Money Be Transferred To The IEPF?
Now, the question here is, why should one transfer these funds to the IEPF? They can remain in the accounts without any problem. Here are the reasons which would help you in knowing why the funds are transferred to the IEPF.
- Most of the companies do not have the track records and physical copies of these sources. This would make it difficult for them in the future.
- Most of the certificates and documents of these investments are lost or are out of date.
- Many investment records are invalid due to name change due to marriage or divorce. This causes a mess up in the documents.
- The shares which are in the name of parents and grandparents.
- Most of the dividends in the company are not claimed for a long time.
By transferring the funds into the IEPF, the investors get a chance to get a refund and claim their shares.
Application Money And Call Money
Application money often refers to the allotment money. Paying this amount is the preliminary step to be a shareholder. Call money should be paid on the day which is allotted by the company. This makes you a valid shareholder.
Definitions Of Few Terms
i. Dividends: It refers to the amount paid to all its shareowners owing to its profit.
ii. Creditworthiness: A person or organization which is considered to pursue financial credit or benefit. Often this is granted with verification of their records.
iii. OCI: Overseas Citizen of India.
iv. PIO: Person of Indian Origin.
v. Affidavit: A written guarantee confirmed with a vow. It is accepted as evidence in court.
vi. Equity: It refers to shares allotted by the company to the shareholders.
vii. Tribunal: A group of people allocated by the government to solve certain cases.
viii. Wrongful gain: The profit earned in an illegal means of property is not entitled.
ix. Wrongful loss: The profit lost in an illegal means of property is entitled to claim.
x. Disgorgement Law: Funds that were received illegally or dishonestly. The Court asks the victimizer to repay the profits or gains earned to the victims. Disgorgement is not legal punishment but an edifying act.
xi. Debentures: It acts like a debit tool, which is not so secure. It has a period greater than 10 years. The government and organizations show more interest in providing debentures. They do so to increase the capital amount or fund. In IEPF, the terms interest, dividends, profit means the same.
1. What is the difference between IEPF-5 and IEPF-2 Forms?
ii. Into which shares or dividends get transferred with a maturity period of 7 years.
iii. IEPF-2 is for the Company/New bank, which includes all details about the candidate.
iv. The details about unpaid dividends or shares are discussed in the Annual General Meeting (AGM).
v. This Form is filed within 90 days from the date of AGM.
2. What is the De-Mat Account?
It holds financial securities (either equity or debt) in electronic format.
To start the De-mat account, there are zero charges. But, the annual maintenance is about 450 rupees
3. What is CIN?
1. One Person Company.
2. Limited Company.
3. Section 8 Company.
4. Nidhi Company.
5. Producer Company registered in India.
4. What is the Nominal amount?
5. What is RTA?
6. What is the Competent Authority?
7. What is Indemnity Bond?
8. Is PAN a necessary proof to submit?
9. Is guiding help available in the portal?
10. If a professional willing to help me fill my Responses, saying that the government appoints him/her, Can I believe them?
11. Why is Cancelled Leaf and CML required?
12. Is the De-mat account mandatory for claiming a refund?
1. Choose whichever bank you want.
2. Link your Aadhar number.
3. Create an account online.
13. How do I find that my shares are transferred to the IEPF account?
14. What is the DP ID?
I conclude by saying procuring shares and interests from the company within the specified period (7 years) could stop the shares from getting transferred to the IEPF account. If you are trying to claim a refund from the IEPF account, kindly follow the steps. A word to the wise, maintain proper records of all the documents. Never fall into the trap of fraud. Sharing your shares and investments with your legal heirs can be helpful.