Discrimination by cos towards IEPF claimants

Sebi’s dematerialization drive since December 2018 has been a fantastic step in direction of digitization, with a meagre 2% plus shareholders now holding bodily shares in listed corporations. Sebi’s latest tips of three November and 14 December 2021 have elevated investor servicing exercise with the registrar and switch brokers (RTAs)/corporations in search of KYC (know your buyer) and different compliances.

As per the Companies Act 2013, if dividend is said and stays unpaid or unclaimed by shareholders, then inside 30 days from the date of the declaration, the corporate has to switch the quantity to the unpaid dividend account. A dividend warrant will be returned on non-delivery on account of a number of causes comparable to change in deal with, non-existence of an deal with or the absence of a shareholder on account of his demise with no heirs or relations conscious of the funding, and many others. 

Shareholders, if alive, or by means of their heirs, if deceased, can strategy the corporate involved for claiming their entitlement. The firm is sure to pay it after diligence on the legitimacy and validity of the declare. It is sure to switch the unpaid or unclaimed dividends for a interval of seven years from the date of preliminary switch together with corresponding shares (if in bodily type) together with curiosity accrued to the investor schooling and safety fund (IEPF).  Shareholders want to assert the shares in addition to unpaid dividends to the extent transferred to the IEPF by following a well-documented course of by filling in commonplace varieties with information and knowledge backed by needed documentary proof. This needs to be uploaded on the IEPF portal. The shareholder additionally has to submit a replica of the uploaded varieties to the corporate’s designated nodal officer for verification. The firm with the assistance of the RTA put up diligence additionally uploads the identical on the portal. 

Apart from this, the shareholder can strategy the RTA/firm with its declare for unpaid dividends (for a interval lower than 7 years) for which the sum has been mendacity with the corporate. Highly reputed corporations have taken a stand and communicated that this might be paid to the shareholder solely after IEPF credit the shares and dividends to the claimant’s demat and checking account.  Claimants are going through such high-handed behaviour by the hands of the RTA/firm. Though every of those actions and processes are unbiased and distinct, the RTA/firm appears to membership the outcomes for unknown causes with no tips, notifications or supporting statutes. This is sheer harassment of shareholders.

Unclaimed and unpaid dividends are an organization’s legal responsibility and therefore should be given to the professional or rightful claimant. 

Abhimaan Reporter, a pathologist, and his spouse Kalyani Reporter, a college trainer, settled of their hometown Sihor in Gujarat after their retirement. An IPO investor buff until the mid-Nineteen Eighties, Abhimaan’s funding portfolio comprised small a lot of 50 to 100 shares of numerous corporations and that too in bodily certificates. Post-retirement, whereas their joint pension was ample for sustenance in a small city, a sudden medical emergency and fund requirement revealed non-receipt of dividends. The motive was {that a} change in deal with was not intimated to corporations. Correspondence revealed that some investments had already moved to IEPF. Kalyani initiated the method instantly and the IEPF purposes bought uploaded through the subsequent few weeks and bodily submissions have been made to the corporate for verification. (The instance and names given listed below are merely for illustration). 

Kalyani then wrote to the RTA/firm for claiming unclaimed dividends of six years, mendacity with the corporate. Just a few corporations acknowledged that it might be offered on completion of the IEPF course of. 

Kalyani’s pupil, a monetary advisor, made a illustration to the RTA/firm intimating the attainable applicability of penal provisions underneath Sec 124 (7). Post this, the RTA telephonically intimated Kalyani concerning the oversight of the employees involved. However, precise financial institution credit score continues to be awaited. 

Legitimate shareholders are entitled to obtain their unpaid and unclaimed dividends mendacity with the corporate. Once the corporate has verified and uploaded the affirmation on the IEPF portal, it establishes the possession of the claimant as a shareholder.  The RTA/firm is benefiting from the unaware retail investor fraternity and continues to ignore rules of investor/ shareholder safety and pursuits.

Rajat Dutta is founder & initiator of Inheritance Needs Services Pvt. Ltd.

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