The Investor Education and Protection Fund (IEPF) is a fund set up by the government to protect investors and to promote investor education. When a company has unpaid dividends or unclaimed shares for seven years, these are transferred to the IEPF. The IEPF Authority manages the fund.
What goes into the IEPF
The IEPF receives:
- Unpaid dividends that have remained unclaimed for seven years
- Shares on which dividends have remained unclaimed for seven consecutive years
- Matured deposits, matured debentures and other amounts that have remained unclaimed
- Application money that has remained unclaimed
The recovery of shares
When shares are transferred to the IEPF, the IEPF Authority becomes the registered holder of the shares. The original shareholder can claim the shares back by filing Form IEPF-5 with the IEPF Authority. The claim must be supported by the proof of identity, the proof of shareholding and the proof of the bank account.
The company must verify the claim and send a verification report to the IEPF Authority. The IEPF Authority then processes the claim and transfers the shares back to the shareholder.
The recovery of dividend
A shareholder can claim the unpaid dividend from the IEPF by filing Form IEPF-5. The claim must be supported by the proof of identity, the proof of shareholding and the bank details. The company must verify the claim, and the IEPF Authority then refunds the amount.
The company's obligation
The company must:
- Transfer the unpaid dividend to the Unpaid Dividend Account
- Transfer the seven-year-old amounts and shares to the IEPF
- File Form IEPF-1 and Form IEPF-2 with the IEPF Authority
- Verify the claims filed by the shareholders
- Maintain the records of the transfers and the claims
The practical points
The IEPF claim process can take time. The shareholder should file the claim with the correct documents and follow up with the company for the verification. The company should maintain the records and respond to the IEPF Authority's queries within the prescribed time.
Call to Action: We advise companies and shareholders on IEPF transfers, claims and compliance. For an IEPF review, contact office@anujdesaiassociates.com, Ph No. 9619456656, Website https://anujdesaiassociates.com, LinkedIn linkedin.com/in/ca-anuj-desai-122547230.