The Securities and Exchange Board of India established simplified and standardised standards for investor service requests, including the creation of a framework for giving PAN, KYC data, bank details, signature, and other information by physical shareholders. SEBI has advised businesses and RTAs to carry out such requests using documents received through registered emails and e-signature. SEBI has required all physical shareholders to furnish their PAN, nomination, contact information, bank account information, and specimen signature.
If these documents are not accessible, the Registrar and Share Transfer Agents must freeze the folio by April 1, 2023. Furthermore, if the accounts are frozen until 2025, they will be submitted to the administering authorities under a number of statutes, including the Benami Transactions (Prohibitions) Act of 1988 and the PML Act of 2002. Let me now discuss how to reclaim shares in India from iepf unclaimed shares.
According to the IEPF Rules 2017, any sum deposited to the company’s unpaid dividend account that remains unpaid or unclaimed for more than 7 years from the date of declaration, dividend will be transferred to the IEPF together with interest. The corporation should provide the IEPF authority with a statement in the proper format outlining the specifics of the transfer. Furthermore, the authority shall issue a receipt as proof of transfer.
*find lost shares in India with MUDS Management.
A shareholder whose stocks, unclaimed dividends, matured deposits or debentures, application money to be reimbursed and interest on it, if any, money raised from fractional shares, etc. are transmitted to the IEPF[1] can claim the shares as per the procedure outlined in sub-section (6) of section 124 or apply under clause (a) of sub-section (3) of section 125.
It is vital to note that if the claimant is the registered shareholder’s legal heir, successor, or nominee, he or she must ensure that the business completes the transfer procedure and sends an entitlement letter to the legal heirs before submitting the IEPF Claim with the authorities.
Procedure for Recovery of shares in India from iepf unclaimed shares:
A person wishing to reclaim shares must submit an IEPF Form 5 to MCA, together with the following information:
- Applicant information; Company information
- Information on the shares that will be claimed;
- The amount of the dividend that will be claimed;
If the applicant is an Indian citizen, they must supply their Aadhaar number; if they are an NRI or a foreigner, they must provide their passport or PIO card number.
- After completing the online refund form, the claimant must send it to the company’s nodal officer along with the required documentation. The following documents must be attached:
- a copy of the acknowledgment together with the SRN;
- Original indemnity bond, signed by the claimant;
- Original advance stamped receipt, including claimants’ and witnesses’ signatures;
- Original certificates in the event of a returned matured deposit or debenture;
- Proof of eligibility;
- A self-attested copy of the client master list for your demat accounts.
- The responsible company must produce and submit a verification report to the authorities in the approved format within 15 days of receiving the claim form.
- After completing the claimants’ entitlement verification, the drawing and disbursing authority shall dispatch a bill to the pay and account officer for payment; the authority shall issue an order of refund sanction with the permission of the competent authority, if the claimant is entitled to shares.
- The shares would be credited to the claimant’s demat account or to the extent of his or her right. If the shares are physical certificates, the duplicate certificates are cancelled and the shares are given to the claimant.
- The authorities acquire the claimant’s reimbursement application, which has been confirmed by the corporation.
- The authorities must make a decision within 60 days of obtaining the verification report from the appropriate business.
How to Transfer a Deceased Family Member’s Physical Shares
If you have actual share certificates from a deceased family member, you should get the name changed on these certifications to become the legal owner. These physical shares held in the name of the deceased cannot be sold unless such shares are transferred into the name of the new legal owner.
If these shares were held in a joint account, they will be transferred in the name of the Joint Holder. If the shares were not owned jointly and in a single name, they will be transferred in the full title of the nominee.
If no nominee was registered, you must submit a probate of the will or a succession certificate, and the shares will be transferred to the person named in these papers.
To modify the name on the Share Certificates, you must submit an application to the Company. This application for a name change must be made to the Registrar and Transfer Agent or the Company’s Share Department.
Before beginning the process of transferring shares, you should also check to see whether the business’s legal status has changed, such as if it has been acquired/merged with another company, whether the company’s name has remained the same or has changed, or if there has been any other change.
Including the application for a name change, the accompanying documentation must be submitted:
- Share Certificates in Physical Form
- Death Certificate of the Deceased
- PAN Card of the Successor
- Transmission Request Form Attested
- Signatures by the Successor’s Banker
- Proof of Successor’s Address
- Any additional document requested by the Company
If these physical shares were owned jointly with another holder or if a nomination was registered, some of the preceding papers may not be necessary.
After receiving the application in its entirety, including all supporting documentation, the corporation will issue fresh certificates in the names of the new holders in physical form. However, in order to sell these shares, they must first be transformed into dematerialised form via a Demat Account.
To dematerialize these shares, the original physical shares in the new holder’s name must be delivered to the organisation with whom the new holder has a Demat Account. If the new holder does not already have a Demat Account, he or she must first open one in order to sell such physical shares.
In the event of death, SEBI considers the transfer of physical and demat shares to be equal
So far, whether an investor’s equity shares were inherited to their heirs after death has been determined by whether he or she left behind physical or dematerialized shares.
Transmission of shares (or transfer of shares upon the death of a shareholder) in the event of dematerialised shares currently requires the same procedure as transmission of shares in physical form.
The capital market regulator, the Securities and Exchange Board of India (SEBI), stated in a circular dated January 4, 2019, that it wished to harmonise the processes for dematerialized securities transmission with those for physical securities transmission. SEBI Listing Obligations and Disclosure Requirements (Sixth Amendment) Regulations, 2018 include the latter’s requirements.
As investors prepare to go totally dematerialized on April 1, 2019, let’s take a look at what this entails.
Until now, whether an investor left behind physical or dematerialized shares determined how his or her equity shares were transmitted to their heir after death. While the former was controlled by SEBI Listing Obligations and Disclosure Requirements (LODR), the latter was governed by the respective depositories’ Bye-laws and Business Rules (National Securities Depository, or NSDL, and Central Depository Services (India), or CDSL).
According to the SEBI LODR, if an investor dies and leaves behind physical shares held jointly, the shares transfer to the surviving joint holder. However, if the investor owned the shares alone, the method for transmission will be determined by whether the investor submitted a nomination and if there is a probate of will, succession certificate, or letter of administration.
If such shares have a nominee, the nominee must step forward and submit a transmission request form, together with a death certificate signed by a notary.
If the shareholder has not made a nomination, then the SEBI LODR needs a fully stamped affidavit from all legal heirs, or from the recognised legal heir if there is a probate of will, succession certificate, or letter of administration.
“A probate of will is a legal procedure in which the will is “proven” or confirmed as the authentic final will of the deceased by a competent court of law,” explains Ashok Sathyanathan, Partner, SNG & Partners.
What if there is no nominee and no will, and the shares are owned individually?
According to SEBI LODR, if the value of such shares per listed firm does not exceed Rs 2 lakh, a simple no-objection certificate from all legal heirs in support of the claimant to such shares is required, or a family settlement would suffice, together with an indemnity bond.
If the value of such shares exceeds Rs 2 lakh and there is no will or nominee, all legal heirs must sign a declaration affidavit and identify and register the lawful claimant to such shares.
The method for transmitting shares held in dematerialized form, as outlined in the business regulations of respective depositories, requires a probate of will, succession certificate, or letter of administration if there is no nominee.
If there is no nomination and there is no probate of will, succession certificate, or letter of administration, and the value of shares in the demat account does not exceed Rs 5 lakh, a family settlement deed or a no objection certificate from all legal heirs in favour of the claimant, along with a duly stamped affidavit, is required, in addition to an indemnity bond provider.
However, if the value of the shares in the demat account exceeds Rs 5 lakh, the claimant must provide probate of will, succession certificate, or letter of administration. “Under the SEBI LODR, all legal heirs are obliged to give a legally stamped affidavit to the effect of identity and claim of legal ownership of the shares in the absence of nomination and probate of will or succession certificate or letter of administration,” explains Sathyanathan.
So, what should you do now?
The judgement on January 4 brings the method for transmitting dematerialised shares on par with physical shares. The good news is that, with the necessary dematerialisation of shares in the event that their shareholders choose to transfer them, beginning April 1, the transmission of shares via demat mode was reinforced.
Not everyone is ecstatic. “Transmission of shares will now take months because the court process for getting probate of will or succession certificate takes around 6-15 months if it is not disputed.” Shares, dividends, and other advantages of a shareholder will be suspended until probate is established. This will be an ongoing tax on the average man, and corporations will gain,” argues Payal Parikh, managing partner at ANB Legal.
Conclusion
The procedure of recovering shares in India provides for the retrieval of securities and guarantees that they are returned to the security holder’s custody and ownership. To find lost shares in India, MUDS Management is the best option. MUDS Management has recovered more than 10 Crores from iepf unclaimed shares.
