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The Securities and Exchange Board of India issued simplified and standardised guidelines for investor service requests including the establishment of a framework for providing PAN, KYC details, details of bank, signature and other information by physical shares holder. SEBI has urged corporations and RTAs to execute such requests through papers obtained from registered emails and e-signature. SEBI has mandated all physical shareholders to provide their PAN, nomination, contact details, bank account details and specimen signature. In case where these documents are not accessible, then the Registrar and Share Transfer Agents shall freeze the folio on or after 1st April 2023. Further, the frozen accounts will be submitted to the administering authorities under multiple enactments like Benami Transactions (Prohibitions) Act 1988 and also PML Act 2002 if they are frozen until 2025. Let’s discuss recovery of shares in India from IEPF unclaimed shares.
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The IEPF Rules 2017 states that any amount that is transferred to the company’s unpaid dividend account, which remains unpaid or unclaimed for more than 7 years from the date of declaration, dividend will be transferred to the IEPF along with interest. The corporation should submit a statement to the IEPF authority providing the details of the transfer in the appropriate format. Further, the authority should also provide a receipt for verification of transfer.
A shareholder whose stocks, unclaimed dividends, matured deposits or debentures, application money to be reimbursed and interest on it, if any, money raised of fractional shares, etc. is transmitted to the IEPF[1] can claim the shares as per the procedure laid down in sub-section (6) of section 124 or can apply under clause (a) of sub-section (3) of section 125.
Here it is important to note that if the claimant is the legal heir, successor, or nominee of the registered shareholder, then he/she must guarantee that the firm completes the process of transmission and issues an entitlement letter to the legal heirs before filing the IEPF Claim with the authorities.
The process of recovery of shares in India allows retrieving of the securities and ensures that it comes to the possession and ownership of the security holder.
Read our article:SEBI’s Restrictions on usage of IPO funds
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