Overview

Reliance Industries Ltd. (RIL) is one of the largest and most successful companies in the world, and its growth has been staggering. In just four decades, it has gone from a small company to a global industry leader. The impressive growth of the company is reflected in its stock price. For instance, an investment of Rs. 1000 in RIL stocks in 1977 is now worth Rs. 16,54,503, an increase of over 1,600 times. This kind of return on investment is significant and can make investors who held on to their shares from the early days of the company very wealthy.

Recovery of shares involves various processes through which the securities are retrieved and transferred to the rightful owner. This can include processes such as the transmission of shares, transfer of shares, retrieval of unclaimed dividends, and bonus issues, among others. The main objective of the recovery of shares is to ensure that the securities are returned to their rightful owners and that they are able to exercise their ownership rights and enjoy the benefits of holding these securities.

The importance of this process has been recognized by the Indian government, as evidenced by the recent Union Budget 2023 proposals to facilitate the reclaiming of unclaimed shares and dividends for enhanced investor protection. The government has addressed the issue of unclaimed shares by transferring them to the Investor Education and Protection Fund (IEPF) and implementing a procedure for claiming these assets. Recovering shares and related assets can be a complex and time-consuming process, and investors may require professional assistance in navigating the various procedures involved.

Provisions of Investor Education and Protection Fund (IEPF)

In 2017, the Ministry of Corporate Affairs published the IEPF regulations. According to the guidelines, any funds that have been in the company's unpaid dividend account for seven years and have had no claimants for that particular account during that time must be transferred to the IEPF. The funds with interest for the same time must receive the amount. The sum, once transferred, may only be recovered by a claimant after making an IEPF application. As a result, investors could now file a claim for lost shares at the IEPF. It made the procedure of getting lost share refunds easier and gave investors a chance to get their long-lost shares back.

The Status of Reliance India Limited's Unclaimed Shares

Reliance Industries Limited is one of India's largest firms, and according to a recent MCA study, it also has the most amount in unclaimed dividends. RIL has almost 113 crores in unclaimed dividends from investors as of 2016. The website of Reliance Industry Limited has all the information on unclaimed dividends. It has also asked the majority of its shareholders to claim their dividends and get share recovery or refunds before RIL is obliged to transfer the funds to IEPF.

Key Amendments in the IEPF Rules

The (IEPF) Rules have undergone significant amendments by the Ministry of Corporate Affairs. Below mentioned are the key changes introduced:

1. Transfer of shares restricted: The amendment clarifies that shares held in a DEMAT account cannot be transferred or dealt with in any way, except for transferring them back to the claimant when they approach the Authority or as per the sub-rules.
2. Receipt of purchase application: If the Authority receives a purchase application through the company, it may receive the entitled amount on behalf of the minority shareholders of the company following the procedures mentioned in Section 236.
3. Separate ledger account: A separate ledger account will be maintained to credit the amount.
4. Verification by Authority: The Authority is responsible for verifying whether the conditions provided under the relevant section of the Act and rules framed have been complied with. It will also seek a report from the company on the fulfilment of the requirements of section 236 by the acquirer of shares.
5. Liability of Company and Authority: The Authority shall not be liable to indemnify the Company, minority shareholder or any other person for any liability arising from any litigation or complaint, however the Authority shall be indemnified by the Company in the event of any dispute or lawsuit that may arise.
6. Entitlement to the amount received: Under Section 124(6) claimants shall be entitledto the amount received by the Authority on behalf of the minority shareholder without any interest in the event of transfer of such shares from the Authority.
7. Remittance of amount: For any amount needed to be transferred  by the companies to the Fund shall be remitted into the IEPF Authority's specified account maintained in the Punjab National Bank. The details must be provided to the Authority in Form No. IEPF-7 within thirty days from the date of remittance

Common Issues Preventing Recovery of Shares

The following factors limit the claimant's recovery of shares:

1. Physical Share Certificates are damaged.

The introduction of dematerialization has encouraged the concept of securing share certificates in electronic form; however, prior to the introduction of this concept, share certificates were held in physical form by shareholders for a very long period of time, resulting in such share certificates being damaged over time.

2. Share Certificates are misplaced.

Apart from the damage to share certificates, another issue in the recovery of shares is the misplacement of the same, which poses a significant risk to shareholders and restricts the recovery of shares. 

3. Failure to Submit the Transfer Deed

A transfer necessary paper certifies the legal impact of a share transfer, and failure to submit such a transfer deed to the competent body may raise suspicions of unlawful, improper, or no share transfer, which may be troublesome for the shareholder.

4. Mismatched signature of the Transferor

The parties' signatures are one of the most important factors of the authenticity of necessary papers, certifying the validity of share transfers. Any discrepancy in the parties' signatures might jeopardize the transfer's legitimacy, so the shareholders must guarantee that there is no mismatched signature in any of the necessary papers.

Services Offered By Enterslice

1.Recovery of Shares from IEPF

The Recovery of Shares from IEPF intends to claim the unclaimed quantity of shares that have been transferred to IEPF and can be claimed only after completing the MCA and IEPF procedures. Our team can provide

• End-to-end assistance from filing the application to receiving reimbursement from the IEPF
• Including Paper works assistance
• Application form filing, necessary paper submission
• Regular follow-up with the IEPF on the progress of the application.

We make an effort to make it as simple as possible for our clients to seek reimbursement for the unclaimed amount. Enterslice offers a team of skilled individuals that can advise you on the whole process of recovering shares. In this regard, we provide the following services.

2.Transmission of shares

The process of transferring ownership of shares from the original shareholder to the claimant or legal heir due to death, insolvency, insanity, marriage, or any other statutory reason is known as the transmission of shares. An application from the legal heir requesting the transfer of shares, a certified copy of the original shareholder's death certificate, a letter of administration, a probate of the will, a certificate of succession, a specimen of the legal heir's or successor's signature, and a self-attested copy of the PAN are all required necessary papers.

3. Transfer of shares

The original shareholder willingly transfers the shares to the transferee for consideration. When shares are transferred, the transferor's or the original shareholder's responsibility ceases to exist and is transferred to the transferee. The transfer deed is used to transfer the shares.

4. IEPF Dividend Recovery

A dividend is a portion of a company's profit that it distributes to its shareholders in the form of cash, stock, or any other form determined by the board of directors.

The payment is issued annually, and if it goes unclaimed for 7 years, it is transferred to the IEPF as an unclaimed dividend.

Several investors have failed to claim their assets for the following reasons:

• Improper execution of a share transfer or transmission:
• Incorrect Shareholder Records: Bonus shares that have not been claimed

Our staff offers professional support in assisting our clients in recovering the dividend from IEFP without any legal complications.

Procedure for Recovering Reliance Shares from IEPF

A claim for any shares, unclaimed dividend, matured deposits, matured debentures, application money due for refund, or interest thereon, sale proceeds of fractional shares, redemption proceeds of preference shares, or other property has been transferred to the Fund under the section 124(6) or apply for a refund under section 125(3)(a), as the case may be,

For the recovery of Reliance shares from IEPF, the following procedure must be performed.

1. Completing the application form

Any person whose shares, unclaimed dividend, matured deposits, matured debentures, application money due for refund, or interest thereon, sale proceeds of fractional shares, redemption proceeds of preference shares, etc. has been transferred to the Fund may claim the shares under proviso to sub-section (6) of section 124 or apply for refund under clause (a) of sub-section (3) of section 125, as the case may be, The Claimant includes the following information in the e-form:

• Particulars of Applicant
• Details of Shares to be claimed
• Particulars of the Company
• Year-wise details of securities/deposits
• Aaadhar Number or Passport/OCI/PIO Card No. (In the case of NRI/ foreigners)
• Details of the amount claimed
• Details of Bank account (Aadhar linked, in case of the applicant is not NRI/foreigner) in which refund of claim is to be made.

After completing the form, the applicant must send it, along with the Paper works mentioned above, to the Nodal Officer /Registrar of the corporation that owed the money.

2. Submitting the Claim to the Company

The Claim for a refund from the IEPF Authority should be submitted to the company’s IEPF Nodal Officer/Registrar with the following necessary papers:

• Printout of the filled Form IEPF-5 with the claimant’s signature
• Aadhaar card, proof of entitlement
• Copy of the acknowledgement with the SRN number
• Original share certificates
• Advance stamped receipt with signature of the claimant and witnesses
• Original indemnity bond with the claimant’s signature
• Copy of Demat account’s client master list.
• Passport, Overseas Citizen of India (OCI)or Person of Indian Origin (PIO) card, cancelled cheque

3. Claim submission by company to IEPF authority

Companies have 15 days from the time they receive a claim form from a claimant to put together a verification report and deliver it along with the claimant's supporting Paper works to the IEPF Authorities.

4.Refund to the claimant by the IEPF Authority

Once the IEPF Authority has the verification report from the pertinent business that has approved the claimant's application, it has 60 days to make a decision on the claimant's reimbursement request.

Once the claimant has been granted access to the shares with the appropriate authority's approval, the IEPF Authority will issue a refund sanction order. After confirming the claimant's eligibility, the IEPF Authority and the authority's drawing and disbursing officer will submit a bill to the pay and accounts officer for payment. The claimant will have credit added to their Demat account for the shares or the full amount of their rights.