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Since the date of new IEPF regulation came into force where-in the shares where dividend remained unclaimed for seven consecutive year then the respective shares will also get transferred to IEPF (Investor Education and Protection Fund). The IEPF authority is flooded with claim application and it is currently taking longer time to get the claim process due to various reasons.

Current Issues / Challenges to claim dividend / Shares from IEPF

• Movement of physical copy of claim document from Investor to verify claim
• Limited bandwidth at company end to process the claim
• Lack of detail information / coordinates where in IEPF authority can directly talk / communicate with the nodal officer of the company
• No tracking of physical papers from company to IEPF. In case the document gets misplaced during the movement from company to IEPF authority, it becomes very difficult to track the papers which unreasonably delay the process.
• Filing of claim for single polio in one financial year by the investor. Multiple folios not allowed in single financial year.
• No penal provision on the company for delaying the process
• No mobile / email verification system of the claimant who fills the form. This may lead to delay in process if there is wrong mobile or email id being inserted while filling the form.
• No provision as such for fraudulent claim.

IEPF rules have been revised recently with a view to streamline the process of IEPF

claim by Investor and also to fix the responsibility of the Nodal officer and company as a whole in the claim process.

The major highlights of the amendments which will be applicable i.e. 20th September, 2019

Introduction of E-Verification report:

The major amendment is that now company need to send an online verification report (E-verification report) to the authority and most importantly shall attach the scanned copy of all the original documents submitted by claimant with a scanned copy of both sides of original share certificate(s).

Further all the necessary documents such as Death certificate, succession certificate, Indemnity, Affidavit etc have to be attached along with form.

Thus the chances of loss of original documents in transit between company and Authority would reduce as was happening very often earlier.

IEPF-5 form will be transmitted online:

The IEPF claim form IEPF-5 will be transmitted online to the Nodal officer of the company for verification of claim.

This will help the Nodal officer to prepare the verification report as soon as he receives the online IEPF-5 form. Earlier he had to wait for the physical copy of claim documents from investor.

Proper KYC verification process to avoid fraud:

To streamline the process, to the IEPF Claim form more informative and to avoid any chances of fraud, the IEPF -5 form has been revised.

Now the mobile number, e-mail id and PAN have to be verified by the claimant through an OTP to avoid duplicity or fraudulent claim.

Appointment of Deputy Nodal offer for faster claim processing by the company:

Due to increase in IEPF claims, Authority has allowed the company to appoint Deputy Nodal officer for faster processing of claims.

Nodal officers are required to provide their details such as address, phone number, mobile number and e-mail id to the authority so that if there is any information required by authority from company, they can easily communicate with Nodal officer.

Allowing facility to file single form with multiple folios

Another major amendment which is also investor friendly is that now an investor claim file claim even for multiple folios held by him in a company. Earlier claim for only 1 folio was allowed in a financial year. This made investor helpless and had to wait for another financial year to file claim for multiple folios.

Resubmission in case of defective or incomplete document

Where the Authority, on examining any application for claim, finds it necessary to call for further information or finds such application or e-form or document to be defective or incomplete in any respect, the authority will direct , to company / claimant to re-submit such application or e-Form or document within fifteen days from the date of receipt of such communication.

Penalty for delay in processing of claim:

Further to fix the responsibility of company in a time bound manner, companies are now required to submit the E-verification report within 30 days of filling of claim and if the

Company fails to do so, company is required to pay a fine of Rs. 50/- per day, maximum up to Rs. 2,500/-.

Further Authority has been given discretion to reject the claim after sending a communication to claimant and company, if the verification report along with other claim documents is not received by Authority within 60 days of filling of IEPF-5 form. The authority may reject the form IEPF-5 after sending a communication to the claimant and the concerned company, on the e-mail address of the claimant and the company, to furnish response within a period of fifteen days

To prevent any fraudulent claim, Authority has also provided through this amendment that if any person fraudulently claims the investment, he shall be liable to be punished u/s 447 of the Companies Act, 2013 which have the provision of imprisonment from 6 months to 10 year and fine up to 3 times the amount of fraud.

With these welcome changes, we see smooth claim process from IEPF.

Happy Investing.

Should you have any query?

Please mail us at samadhan@sharesamadhan.com

D – 011- 4908 4015

011- 4908 4026

011- 4908 4002

www.sharesamadhan.com

 

Should you have any of the following question then please feel free to reach out to us at samadhan@sharesamadhan.com for any of the assistance

• IEPF CLAIM?
• IEPF claim of share
• How to claim my old share ?
• How to convert my physical shares  in to demat?
• How to claim shares  from IEPF?
• How to file IEPF CLAIM OR  IEPF refund for  share?
• How to resolve discrepancy in IEPF?
• How to claim lost shares , what will I do?
• How do I claim my forgotten shares ?
• How do I claim my deceased family member’s  share?
• How to get duplicate share ?
• How to get succession certificate for shares  of my family?
• How to get unclaimed dividend   ?
• Discrepancy in IEPF
• How much time it will take from IEPF claim
• Guaranteed IEPF
• Timeline for IEPF CLAIM
• Process of IEPF claim
• Office of IEPF CLAIM
• How to get refund of unclaimed dividend  from IEPF?
• How to get the shares of   in the death of the joint holder?
• How to get the shares  in case of nominee?
• How to get the shares ,   if the legal heir is minor?
• How to get the shares  after the death of shareholder where there is couple of legal heir?
• How to get the shares  when there is dispute in the family to claim the shares of deceased?
• How to claim the shares of   after the death of the trustee of the trust who was the shareholder?
• How to claim the shares  in case of death of shareholder?
• How to claim the shares  for NRI?
• How to claim the shares  for foreign personnel?
• How to claim the shares  in case of deceased NRI?
• How to Transmit shares from demat  ?
• How to claim shares from Unclaimed suspense account  ?
• How to demat shares  in case of mismatch of name ?
• How to update the Address or signature in company records for  ?
• How to demat the shares  if one of the joint holder is deceased ?

Agent of investment companies lure clients to sell their various deposit schemes but when investors or their heirs approach them to recover the money, they are not welcomed. The Investors or their legal heirs are forced to run from pillar to post for their rightful money and are often denied their rights. Share Samadhan is a platform for aggrieved clients and their relatives.

Delhi based Share Samadhan has launched ‘Bad Debts & Debtor Retrieval Services ‘for banks, resolution professional as well as official liquidator apart from its investment retrieval business.

The new service is part of the ‘Mission Money Back’ initiative of the company which was launched in the year 2011 to assist investors in getting the money back. Share Samadhan, backed by a battery of legal experts and reputed chartered accountants makes rigorous and sustained follow up of lost investments in shares, debentures, insurance, real estate, bank deposits, etc. The company, so far, claims to have recovered more than Rs 100 crores worth of lost investments for clients across all the asset class.

“We have a team of experienced professionals like Company Secretaries, MBAs, Charted Accountants, Lawyers, who have expertise in various laws, companies act, drafting complaints and follow up at suitable standards. We conduct in-depth research to recover the money of investors of far their legal heirs blocked in PF, Mutual Funds, Shares, Bank Deposits, and insurance, etc. We have served customers at National and International level, “said Mr. Abhay Chandalia, Founder Director of Share Samadhan describing his model to ensure recovery of investors’ money from various financial instruments like PF, Shares, Insurance, and Debtor, etc.

Mr. Vikash Jain, Co-Founder of Share Samadhan said “It’s very easy to invest in shares, insurance, banks, and properties but it’s quite difficult to get back your money in need. The agents of investment companies lure clients to sell their various deposit schemes but when investors or their heir approach them to recover the money, they are not welcomed,”. He further added, “The investors or their legal heirs are forced to run from pillar to post for their rightful money and are often denied their rights. We, at Share Samadhan, help the aggrieved investors to get their money back. “ He further informed that even a clue about any investment could lead to the recovery of entire legal money as our team is expert in data mining from various financial institutions, government organizations and autonomous bodies.

The company has recently opened its second office in New Delhi. Share Samadhan assists aggrieved investors to recover their Lost Investment/Forgotten Investments/Scattered Investments or Unclaimed Investments lying with private/listed companies, the government in the form of old shares, Mutual Funds, Unclaimed Insurance, Provident Fund, Bank Deposits, Postal Savings, the money blocked in debts. The company would be assisting the borrower of banks/NBFC by helping the borrower to recover money from their debtors/EMD/Security deposit/execution of awards/decrees. This would ultimately help Bank /NBFC to reduce their growing NPA.

SME MAXX and Share Samadhan on Wednesday announced a strategic alliance between two companies to cater to the unmet need of professional dues and investment recovery services for MSMEs.
The delayed realization of their bills and receivables is a common problem among MSMEs, leading to financial hardships and liquidity constraints- a key reason for many of them turning into non-performing assets (NPAs), affecting their sustainability.

While the government has taken an active interest to mitigate this problem by setting up the MSME Samadhan portal, most MSMEs have not been able to utilize the facilities due to lack of awareness or procedural expertise. The alliance will address this problem by providing procedural, administrative and legal support to MSMEs to recover their dues.

Lack of proper record keeping and succession planning among MSMEs has created a massive problem of unclaimed investments. The value of physical papers / unclaimed investment in the country is more than Rs 5 Lakhs crore. The Alliance will offer MSME owners and their successors a one-point registration channel on SME Maxx to identify and recover unclaimed assets.

“Through this initiative, we aim to achieve the twin objective of improving MSME cash flow and unclaimed asset recovery said Vikash Jain co-founder of Share Samadhan. “This alliance will strengthen our reach to a wider set of MSMEs in  smaller cities and towns who have little or no access to such facilities.”

Dr. Anand Bidarkar, CEO of SME Maxx said that “The combination of our fintech platform and Share Samadhan’s Proven expertise through this alliance will bring a much needed financial service to our SME partners.”
Besides the obvious commercial benefits, MSMEs utilizing the services of the Alliance will also be able to free up their bandwidth and resources on more productive pursuits. This will be a small but important step towards meeting the government’s goal of increasing SME contribution to the country’s GDP.

Micro, Small and Medium Enterprises (MSME) have a duel battle to fight. One is growing competition and the other is a growing requirement of funds. Any irrecoverable debtor will have a considerable strain on the business of MSME. The recent Insolvency and Bankruptcy Code (IBC) has been a big sigh of relief for MSMEs, which would ensure the faster debt recovery or liquidation process. 

The IBC Law was brought about with the objective to ensure that ease of doing business greatly improves in India. This law has simplified the winding-up process in respect of companies, which was earlier fragmented due to multiplicity of statutes as well as forums. 

One of the main purposes of this code is to empower the creditor wherein he or she can get back the dues through the Corporate Insolvency Resolution Process (CIRP) or through liquidation of defaulting debtor entity. 

When does the Insolvency and Bankruptcy Code (IBC) apply?
The Insolvency and Bankruptcy code at present can only be triggered if there is a minimum default of Rs 1 lakh. This process can be triggered by way of filing an application before the National Company Law Tribunal (NCLT). The process can be initiated by two classes of creditors which would include financial creditors and operational creditors. But for the application to be admitted, the creditor will have to show that a requisite default is ascertainable. 

Another important aspect that has to be seen in respect of Insolvency and Bankruptcy Code (IBC) is that at present only companies (both private and public limited company) and Limited Liability Partnerships (LLP) can be considered as defaulting corporate debtors. This code also contains provisions in respect of individual insolvency, but these provisions have not been notified they have consequently not come into force yet. Therefore cases relating to unpaid debts against individuals and partnership firms would fall outside the purview of this code.

What happens once National Company Law Tribunal (NCLT) admits the application against defaulting debtor? 
As soon as the matter is admitted by the NCLT, the NCLT proceeds with the appointment of an Interim Resolution Professional (IRP) who takes over the management of the defaulting debtor. The Resolution Professional may then be continued or removed, contingent on the wishes of the Committee of Creditors (COC). The role of the Resolution Professional primarily entails making on efforts to ensure that the defaulting debtor should as far as possible continue to operate as a going concern. All efforts will be made to ensure that the maximum realization of debts can take place as a consequence of the Corporate Insolvency Resolution Process (CIRP) process. 

What is Corporate Insolvency Resolution Process (CIRP)?
The CIRP may include necessary steps to revive the company such as raising fresh funds for operation, looking for a new buyer to sell the company as going concern. The outstanding debts may be satisfied by way of another person submitting a Resolution plan to take over the Company and pay off the remaining debts. In the event a resolution plan is not submitted or not approved by the committee of creditors (COC), the CIRP process is deemed to have failed. In such a situation the liquidation proceedings would then commence subject to the order of the tribunal. 

Definite timeline for Resolution Plan
In light of the recent amendment to the code, for conducting the entire process a time period is specified which is 330 days. 

Will Limitation Period apply in IBC?
The Limitation period has been made applicable by the insertion of section 238A in the IBC. The earlier view was that this would be applicable only for cases arising after the amendment. But the Supreme Court has clarified that this would be applicable to old cases as well. But like any other suit, the limitation period can be condoned by the appropriate authority. 

Who bears the cost of Resolution process?
Another important question that arises is who is responsible for incurring the expenses of the Resolution Process while the CIRP is in effect? It is the applicant creditor who would incur the expenses of the Resolution Professional which is otherwise known as Resolution Costs. But such an applicant would be reimbursed at a later stage at the time of approval of Resolution Plan or at the time of Liquidation. 

Abhay Chandalia is Co-founder, Share Samadhan Private Limited. It is India’s leading Investment & Debtor recovery company focusing on the recovery of Lost / Forgotten / Blocked or Old Investment and can be found at www.sharesamadhan.com 

Big relief by SEBI in old transfer deed cases seems to be confronted by RTA by saying that the shares have been transferred to IEPF. On the other hand the timeline to get pending transfer cases to demat is 31st March-19

As per Rule 6(3) (d) of IEPF Rules, 2016 read with Section 124(6) of the Companies Act, 2013, if dividend is unclaimed for 7 years, shares pertaining to those unclaimed dividend would be transferred to IEPF.

As per Rule 6(3)(d) of IEPF Rules, 2016; for affecting the transfer of physical shares to IEPF, Company Secretary / Authorised person of Board of Directors shall make an application, on behalf of shareholders to the company for issue of duplicate share certificates. On receipt of application, company shall issue duplicate share certificate and those shares will be transferred to IEPF through SH-4 form. Shares will be dematted in favour of IEPF till the actual claimant approaches company. Further in case of claim of shares by investor, IEPF will transfer shares from it’s demat account to investor’s demat account.

However on November 06th, 2018, SEBI issued a Circular (SEBI/HO/MIRSD/DOS3/CIR/P/2018/139) regarding transfer of shares with transfer deeds executed prior to December 01, 2015 and allowed transfer of shares subject to fulfilment of certain conditions by transferee.

The motive of SEBI to bring this notification was to mitigate the practical difficulties faced by Transferee who could not lodge the shares for transfer within 1 year from the date of transfer deed and was pending since many years due to Non-availability of PAN of transferor or mismatch of signature of transferor or any other reasons.

It seems that the purpose of SEBI’s notification is defeated as the shares which have been transferred to IEPF are not being considered for transfer to the transferee by RTAs (Registrar and Transfer Agents) and transfer claims are being rejected.

What is the Disconnect?

IEPF gives back shares to shareholder (ideally whose name appearing as member on the register of member company) but what about someone who bought the shares from shareholder long back and he / she is holding the physical share along with transfer deed who is yet to become shareholder of the company? This needs clarification by IEPF.

On one side SEBI allowed transfer of shares with old transfer deed which were pending since many years, by bringing this new notification and on another side RTAs reject such claims due to shares being transferred to IEPF. Thus it is contradiction of the rules / provisions of transfer of shares by two different Authorities of Ministry of Corporate Affairs, Govt. of India i.e. SEBI and IEPF.

As per Rule 6(3) (d) of IEPF Rules, company issues the duplicate share certificates against shares which are lying in physical form, thus rendering the physical shares lying with Transferees invalid and consequently claim of Transfer of Shares being rejected by RTAs. Further, to add to the irony of Investors / Transferees, there is no way out given to Investors / Transferee by RTAs, SEBI or IEPF and this has created ambiguity to the investors / transferees who has genuinely purchased the share from the shareholder

What Needs Clarification by IEPF (Ministry of Corporate Affairs)?

Considering the spirit of the SEBI notification and interest of investor at large, IEPF need to provide clarity in the matter of Old transfer deed cases and, allow the transfer of shares in the name of the person who is holding Original Shares, Original Transfer Deed, which establishes the genuinity of buyer. This is completely unfair to absolve the rightful owner of share to get their share from IEPF.

Author,

Vikash Jain

Happy Investing

Please free to reach out to us at Samadhan@sharesamadhan.com