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
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.
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