IEPF clears 6,000 refunds in 10 months

Govt also sends notices to companies

The government, in the past 10 months, has approved over 6,000 investor claims such as matured company deposits and unpaid dividends through the Investor Education Protection Fund (IEPF) Authority, according to sources. The IEPF Authority, set up in 2016, had cleared only 800 claims till March last year.

The Ministry of Corporate Affairs has also issued notices to companies to submit the verification report of investor claims and also to transfer the unclaimed dividend and shares to the Fund. These monies are supposed to be moved to the IEPF if not claimed within seven years.

The IEPF Authority has found that many companies are sitting on such amounts and not transferring them to the Fund even after the time limit lapses.

While the total amount claimed by investors is not known, according to industry estimates, the IEPF has more than ~4,000 crore in its corpus.

More than 6,000 claims are still waiting government approval which can be given only after the company verifies these dues. Between September 2016 and March 2019, the IEPF

Authority had cleared only 800 claims of investors. The activity has picked up after a series of awareness programmes were taken up to sensitise public about its investor education, rights, Ponzi schemes, etc.

The IEPF has been set up under Section 205C of the Companies Act as a pool of refund of application money, unclaimed dividend, matured debentures, grants and donations by the government, companies or any other institutions, among others. Until 2016, there was no provision for investors to get their claim.

In April last year, Peerless General Finance and Investment Company had deposited over ~1,500 crore into the Fund which it had owed its investors for more than 15 years.

“This is for the first time that government decided to return the money and allow investors to seek a refund on their unclaimed rewards. Till now this fund was just sitting in the Investor Protection fund,” a senior official said.

However, experts say the IEPF Authority needs to plug a lot of technical issues and ease the process of claiming the funds. In many cases companies, too, have complained that they have not received or are unable to access the verification forms.

“While the process requires adequate documentation, it is very lengthy with a lot of back and forth between companies, investors and government… Some steps such as standardised forms will help,” said Ankit Singhi, partner, Corporate Professionals.