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MCA Mulls faster Transfer of Old Unclaimed Shares to Beneficiaries

The corporate affairs ministry is considering a faster way of transferring to beneficiary’s shares, dividends and matured debentures in inactive accounts that have not been claimed for years, said a person privy to the development.

Such securities, dividends and debentures that remain unclaimed for more than seven years are transferred by companies to the Investor Education and Protection Fund Authority (IEPFA) under the ministry.

The ministry is planning to enable the companies concerned to settle such claims after following the due processes and obtaining the IEPFA approval, said the per son, who did not wish to be identified.

While the authority will continue to be the custodian of the shares and debentures, upon requests by companies, it will transfer the unclaimed papers to them for subsequent refund to the rightful claimants.

The companies will be directed to transfer them in 15 days, the per son said.

Currently, the IEPFA issues refunds to the beneficiaries after the relevant company recommends the transfer, following the verification of scores of documents pertaining to the claims, claimants or their legal heirs.

“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 genuine ness of claims and claimants, and re- lease the shares after the authority transfers these to them. And they will also be held accountable for any lapses.”  

The authority on its part, will closely monitor the settlement process. In 2023-24, 10.58 million shares

were refunded by the IEPFA to investors, against 7.65 million in the previous year. In March, the ministry had sought stakeholder comments on the draft rules for the refund process.

OTHER INITIATIVES

The ministry is also weighing a proposal to ease the process for claimants by curtailing superfluous documentation,

About two dozen documents are currently required for refunds, which are scrutinized multiple times at different levels. This delays the process and the settlement of ten takes more than a year, against the targeted 60 days.

 The ministry is also planning to allow such claimants to air their grievances through video conferences organized by it from time to time.

Among other initiatives to expedite transfers, the ministry has been working on an integrated portal, as proposed in the budget for 2023-24, to enable investors to get back unclaimed dividends and shares quickly.

S-ET Image Source: Google

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