Such securities, dividends, and debentures that are not claimed for over seven years are transferred by companies to the Investor Education and Protection Fund Authority (IEPFA) under the ministry.
According to an ET report by Banikinkar Pattanayak, the ministry is planning to enable the companies concerned to settle such claims after following the due processes and obtaining the IEPFA approval.
Transfers by the authority
The authority will continue to hold the shares and debentures. If requested by companies, it will transfer the unclaimed papers to them for refund to the rightful claimants. The companies will be instructed to transfer the items within 15 days, according to the individual.
Currently, the Investor Education and Protection Fund Authority issues refunds to the beneficiaries after the respective company suggests the transfer, following the verification of numerous documents related to the claims, claimants, or their legal heirs.
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“As per the latest proposal, the ultimate responsibility of the transfer will lie with the companies concerned,” said the person. “They will do due diligence, verify documents, ascertain the genuineness of claims and claimants, and release the shares after the authority transfers these to them. Furthermore, they will be responsible for any mistakes.
The authority will closely monitor the settlement process.
In the financial year 2023-24, the Investor Education and Protection Fund Authority refunded 10.58 million shares to investors, compared to 7.65 million shares in the previous year. In March, the ministry requested feedback from stakeholders on the draft rules regarding the refund process.
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The ministry is also considering a proposal to simplify the process for claimants by reducing unnecessary paperwork.
Currently, refunds require about twenty-four documents to be scrutinized multiple times at various levels. As a result, the process is delayed, and the settlement frequently exceeds a year, instead of the intended 60 days.
The ministry is also planning to allow those claimants to express their complaints through video conferences organized by it occasionally.
The ministry has been working on an integrated portal to expedite transfers, as proposed in the budget for 2023-24, in order to enable investors to quickly retrieve unclaimed dividends and shares.