An Overview of Recovery of Shares and Affiliated Services

The need and importance of Recovery of Shares has been well recognised in the Union Budget 2023 wherein the Finance Minister set out proposals for  reclaiming unclaimed shares and dividends  for facilitating a convenient and efficient means for investors to retrieve their unclaimed assets, enhancing investor protection.

Recovery of Shares refers to retrieving these securities and bringing them back within the rightful possession and ownership of the security holder through the processes of transmission of shares, transfer of shares, retrieval of unclaimed dividends, bonus issues etc.

In order to curb the problem of unclaimed shares, the government transferred the unclaimed shares to the IEPF, which is an acronym for Investor Education and Protection Fund and prescribed a procedure for claiming the unclaimed shares, dividends and bonus shares.

Table of Contents

Key Amendments in the IEPF Rules

The Ministry of Corporate Affairs has notified certain amendments in the IEPF Rules, which are discussed below -

• The amendment states that the shares held in the DEMAT account won't be transferred or dealt with in any manner except for the purposes of transferring the shares back to the claimant as and when he approaches the Authority or in accordance with the sub-rules.
• In case of receipt of an application for purchase through the company, the Authority may receive the amount entitled on behalf of the minority shareholders from the company as per procedures of Section 236.
• A separate ledger account shall be maintained for crediting the amount.
• The authority is responsible for the verification with regard to the compliance of the conditions provided under the relevant section of the Act and rules framed thereunder and shall also call a report from the company upon the fulfilment of requirements of section 236, by the acquirer of shares if shares have been valued in accordance with the provisions of section 236 (2) and any other relevant information as required.
• The Company shall be liable to indemnify the Authority in case of any dispute or lawsuit that may be initiated. The Authority shall not be liable to indemnify the minority shareholder or the Company or any other person for any liability arising, leading to any litigation or complaint arising.
• Any claimant entitled to claim the transfer of such shares from the Authority under Section 124(6) shall only be entitled to the amount received by the Authority on behalf of the minority shareholder without any interest.
• Any amount required to be credited by the companies to the Fund shall be remitted into the specified account of the IEPF Authority maintained in the Punjab National Bank. The details thereof shall be furnished to the Authority in Form No. IEPF-7 within thirty days from the date of remittance

Common Issues That Hamper the Recovery of Shares

The claimant faces the below-mentioned issues that hamper the recovery of shares-

Damage of Physical Share Certificates 

The introduction of dematerialisation has encouraged the concept of securing the share certificates in the electronic form, but prior to the introduction of this concept, the share certificates were held in the physical form by the shareholders for really long durations, which resulted in such share certificated being damaged, over the course of time.

Misplacement of Share Certificates

Another issue in the recovery of shares apart from the damage of share certificates is the misplacement of the same posing a huge risk om the shareholders, thereby hampering the recovery of shares.  

Failure the Submission of the Transfer Deed

A transfer deed confirms the legal effect of the share transfer, and the non-submission of such transfer deed to the relevant authority can lead to the suspicion of illegal, improper or no share transfer, which can be problematic for the shareholder.

Mismatched signature of the Transferor

The signature of the parties is one of the most important determinants of the genuineness of documents, confirming the legality of share transfers. Any mismatch in the signatures of the parties can jeopardise the authenticity of such a transfer; therefore, the shareholders must ensure that there is no mismatched signature in any of the document.

Services Offered by Enterslice 

Enterslice offers the following service to its customers under the Recover of Shares and Affiliated Services.

Recovery of Shares from IEPF

The Recovery of Shares aims to claim the unclaimed amount of the shares. The unclaimed amount is transferred to IEPF, which can be claimed only after following the procedure prescribed by MCA and IEPF.

Our team can provide end-to-end assistance straight from filing the application to obtaining the refund from the IEPF in the following ways –

• Assistance in Documentation
• Filing of Application Form 
• Submission of Documents 
• Regular Follow Up with the IEPF about the status of the Application 

We aim to help our clients obtain a refund for the unclaimed amount with ease by providing proper guidance about the whole procedure of IEPF. 

Essential Information and Documents required to be submitted for the Recovery of Shares from IEPF 

The applicant should submit the following information and documents to initiate the process of recovery of shares.

Details required for filing the Form 

• Details of the claimant along with the Aadhar Card or OCI /PIO Number 
• CIN Number and other relevant details of the Company from which the amount is due 
• Demat Account Number 
• Details of Bank account where the unclaimed amount will be refunded 
• Details of the share to be claimed 
• Details of the dividend to be claimed 

 Essential Documents to be attached with the Form   

• Original Indemnity Bond with the claimant's signature on a non-judicial stamp paper according to the Stamps Act
• Original advance stamped receipt with signature of the claimant and witnesses.
• Original share certificates (if the shares are in physical form) or copy of transaction statement (if the securities are in Demat form)
• Aadhaar card
• Proof of entitlement, i.e. interest warrant application number, certificate of share, etc.
• Overseas Citizen of India (OCI), Passport or PIO card in case of NRIs and foreigners 
• Copy of Demat account’s client master list 
• Cancelled cheque 

Procedure for Recovery of Shares from IEPF

The following procedure needs to be followed for the recovery of shares from IEPF.

Filling out the Application Form

 The applicant needs to fill out the application in the prescribed form and mention the details discussed above in the application form.

Submitting the Application form along with the Documents 

After filling up the form, the applicant needs to submit the form along with the documents discussed above to the Nodal Officer /Registrar of the company from which the amount is due. 

Verification of Application and Documents by the Company and Authority 

 The company shall prepare a verification report within 15 days and submit the same to the authority for final verification. The IEPF Authority shall verify the application and documents in order to confirm the correctness of the submission made by the applicant.

Obtaining a Refund from the Authority

After being satisfied with the scrutinisation of the application and documents, the authority shall process the refund within 60 days of the application's receipt.

Recovery of Shares can become complex and time-consuming without proper guidance about the whole process and its legalities. Therefore there is essential to obtain proper advice about the entire process of Recovery of Shares.

Enterslice has a team of experienced professionals to provide advice about the whole process of recovery of shares. We offer the following services in this regard. 

Transmission of shares

It refers to the process of handing over the shares from the original shareholder to the claimant or legal heir by the operation of law due to the reasons such as death, insolvency, lunacy, marriage or any other statutory reason except for natural transfer. Upon the successful transmission of shares, the claimant or the legal heir becomes the rightful holder of the shares and is entitled to the rights that come along with them. Following are the documents that are required for the transmission of shares:

• Application from the legal heir requesting transmission of shares
• Certified copy of the Death certificate of the original shareholder
• Letter of Administration or Probate of Will or Succession certificate
• Specimen of the signature of the legal heir or successor
• Self-attested copy of the PAN

Transfer of shares

Here the shares are voluntarily handed over by the original shareholder to the transferee for consideration. At the time of the transfer of shares, the liability of the transferor or the original shareholder ceases to exist and gets transferred to the transferee. The shares are transferred through the transfer deed.

Dividend Recovery from IEPF 

A dividend can be defined as a part of the company's profit, which the company distributes to its shareholders in the form of cash stocks or any other form at the board of directors' discretion.

The dividend is declared annually, and in case the dividend remains unclaimed for 7 years, it is transferred to the IEPF in the form of an unclaimed dividend.

A number of investors have not claimed their securities because of the following reasons:

• Improper execution of the Transfer or Transmission of shares:
• Improper Records of the shareholders: Unclaimed Bonus shares 

Our team provides professional assistance in helping our clients recover the dividend from IEFP without any legal hassle or complexities.

Recovery of Mutual Funds

Even Mutual Funds fall in the same league. This is because many people invested their money in mutual funds and then forgot about them. However, the catch here is that these investments cannot be traced from the IEPF or Ministry of Corporate Affairs but from the Mutual Fund itself.

The mutual fund can be recovered following the same procedure as the Recovery of Shares.

Enterslice can give you overall advisory and assistance in the recovery of mutual funds as we are a team of highly skilled & dedicated professionals. We specialise in providing legal consultancy services.

Issue of Duplicate Shares from IEPF

Issue of Duplicate Shares can be done by issuing a certificate for the same, which can be done by applying with the concerned company. Enterslice has a team of professionals to provide professional support throughout the process.

Name Deletion/Updation in Shares 

The name deletion/updation occurs in case of death or abscondment of one of the joint shareholders. The surviving shareholder needs to apply for deletion/ updation of the name in such circumstances by applying with the company / RTA.

We can provide professional support to our clients in the process of name deletion/ updation in the shares. 

Issue of Succession Certificate 

A succession certificate is a document provided to the successor of the deceased person in the absence of a will which acts as proof of authenticity of the successor and provides the authority over the shares and debt of the deceased person. The district judge of the relevant jurisdiction issued the certificate after filing the petition for the same in the district court. Our team of experienced advocates and lawyers can assist in drafting and filing the petition together with representation before the relevant court.

Conversion shares from Physical to DEMAT

Dematerialisation of shares is extremely important to prevent the shares certificates from being destroyed. Our professionals can assist our clients straight from the creation of a Demat account to the conversion of shares. 

Recover Matured EPF from IEPF

Our services aim to provide end-to-end assistance to our clients to recover matured EPF from IEPF without hassle.

Recovery of Provident Fund 

A provident fund can be defined as an investment fund established voluntarily by employers and employees as a long-term saving for retirement. We have a team of experts to assist our clients in recovering provident funds.

Disputed Share Transfer via NCLT

In case the company rejects the application for the transfer of shares by the shareholder, the aggrieved shareholder can approach NCLT to obtain an order for the transfer of shares by the company by filing a claim for the same.

Our curated services will help the end-to-end settlement of all the pending litigation before the NCLT, filing any litigation and representing the shareholders before the tribunal.

Recovery of Insurance Claims 

An insurance claim refers to a formal request made by the policyholder to the insurance company for compensation or coverage of the loss. Enterslice has a team of experts to guide our clients straight from submitting the request to recovering insurance claims.

Recovery of Debentures 

The recovery of debentures can be completed by filling out the application and submission of relevant documents to the IEPF and the Company / RTA. We have a dedicated team to provide assistance in the recovery of debentures. 

Issue of Duplicate Share Certificate by Private Limited Company 

A private company is an entity which is not listed on the stock exchange. The issue of Duplicate Shares by a private company can be complex, but our team has a team of professionals to guide our clients throughout the process.

Issue of Duplicate Share Certificate by Listed Company

A listed company issues a duplicate share certificate in case the shareholder misplaces the original share certificate. Our experts provide end-to-end assistance in the issue of duplicate shares straight from documentation to the issue of the duplicate certificate.