MCA and IEPFA Further Simplifies IEPFA Claim Settlement Process

The Ministry of Corporate Affairs (MCA) issued a notification on 12 November 2021 for simplifying the Investor Education and Protection Fund Authority (‘IEPFA’) claim settlement process through rationalisation of several requirements under the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. The MCA and the IEPFA simplified the Investor Education and Protection Fund (‘IEPF’) claim settlement process with the vision and mission of the Government of India’s ease of doing business and ease of living.

What is IEPFA?

The Investor Education and Protection Fund Authority (IEPFA) is established under Section 125 of the Companies Act, 2013 (‘Act’) for the administration of the IEPF. The IEPFA promotes investor protection, education and awareness. 

The Act and Rules provide that the companies must transfer all the dues of the shareholders that are unclaimed or unpaid for seven years to the IEPF. The shareholders can seek a refund of their dues from the IEPF. The IEPFA refunds unclaimed dividends, shares and other amounts transferred to the IEPF to the rightful claimants.

The MCA notification simplifying the IEPFA claim settlement process envisages a trust-based model for faster turnaround time and citizen-centric services. It will make the refund process easier for shareholders and their legal heirs claiming their unclaimed or unpaid dividends, shares or other dues.

IEPFA Claim Settlement Process

The company shareholders whose unclaimed or unpaid amounts are transferred to the IEPF can claim refunds of such amounts from the IEPFA by applying form IEPF-5. The claimant can also be a legal heir of a shareholder and can apply to register transmission of the shareholders’ unclaimed or unpaid shares transferred to the IEPF. 

The claimants must fill the form IEPF-5, upload it on the IEPF website, and submit the necessary documents to the respective company’s Nodal Officer (IEPF) at its registered office. The respective company will verify the form IEPF-5 and the submitted documents. The IEPFA will release the refund based on the company’s verification report in favour of claimants’ Aadhaar linked bank account through electronic transfer.

IEPFA Simplified Claim Settlement Process

The MCA notification provides the following exemptions and simplifies the IEPFA claim settlement process:

Exemptions for Claimants

• There is a waiver of the requirement of advance receipt.
• There is a relaxation in the requirement of probate of the will, succession certificate and will for the claim of up to Rs.5,00,000 shares, both for Demat and physical shares.
• The notarisation of documents is replaced with self-attestation. 
• The requirements of surety and affidavits have been eased.

Exemptions for Companies

• The requirement to attach documents or proof related to the unclaimed suspense account has been eased.
• The companies are given flexibility for accepting transmission-related documents, such as wills, succession certificates, etc., according to their internal approved procedures.
• The requirement of a newspaper advertisement in case of loss of physical share certificate is waived off for up to Rs.5,00,000 shares.

The goal of the MCA and IEPFA is to make the IEPFA claim settlement process faster and easier for claimants. With the above modifications, it is expected that many more claimants will come forward to claim their dividends, shares and other dues from the IEPFA. The IEPFA has authorised over 20,000 claims till November 2021, totalling over 1.29 crore shares. The IEPFA has reimbursed shares with a market value of more than Rs.1,011 crore, dividends and other payments of over Rs.20 crore till November 2021.

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