2024-04-09 15:13:17
New Delhi: Market regulator Securities and Exchange Board of India (SEBI) said that more than 70 percent of demat accounts with single ownership have no nominee. Experts say that it is a big challenge for the legal beneficiaries to claim such shares and dividends. According to industry estimates, shares and dividends worth about Rs 55,700 crore have been transferred to the government’s Investor Education and Protection Fund (IPEF). The reason for this is that they have no claimant. According to the report of Economic Times, these amounts have been lying unclaimed in demat accounts for many years. In such a situation, the question arises that how can you get these unclaimed investments back.
What are unclaimed shares and dividends?
According to the rules, shares, dividends and matured debentures which have not been claimed for seven years are kept in the category of unclaimed.
What happens to these shares and dividends?
These are transferred to the government-run IEPF. Investors/legal heirs will have to claim them from the government to acquire it.
After all, what is the reason?
Sanchit Garg, co-founder, GLC Wealth, says the main reason is that people forget about such investments or are unaware of them. They do not share information about their investments with the family nor do they pass the information on to the next generation. Garg says that some investors still hold shares in physical form. In many cases, what happens is that documents are lost, investors change addresses, their accounts are inactive, they have moved abroad or even they have passed away. Industry estimates suggest that shares worth Rs 1.5 lakh crore to Rs 2 lakh crore have not been dematerialized.
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What are the recovery procedures?
Garg says the entire process takes about one to three years. The firm helps in locating and recovering lost or forgotten investments. The first step is to collect all the information like physical share certificates or records like dividends, allotment letters, income tax returns, past records or investment notes made by the investor or family member.
The next step is to update KYC, signature, bank and demat account details in the company records. If a share certificate is lost an application has to be made for issue of duplicate shares.
What is the procedure after the death of shareholders?
Sanchit Garg says that if the shareholder has died then in such cases the process of transfer should be done by the legal heirs. This also includes court proceedings based on the value of the investment. After the entitlement letter is issued by the company, the legal heir has to file the claim using IEPF Form 5 on the MCA portal.
The physical documents need to be sent to the company, which will file its verification report. After this the claim is approved. The shares are then transferred to the demat account of the legal heir.