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 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 which will be applicable from 20th September-2019, we see a smooth claim process from IEPF.
Happy Investing.
CAclubindia
