IEPFA proposes faster refunds for unclaimed shares, dividends; seeks public comments on rule changes

The total number of unclaimed shares lying with the IEPFA is around 1 billion.

• IEPFA seeks public comments on amendments to simplify refund of unclaimed shares
• Proposed changes to expedite low-value claim refunds via company verification
• Amendments include reduced timelines, clearer rules, and a formal appeal process

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The Investor Education and Protection Fund Authority (IEPFA), is inviting public comments on the proposed amendments, that are aimed at simplifying, expediting, and strengthening the refund process of unclaimed shares and dividends for investors.

The IEPFA has proposed amendments to Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, for the purpose.

According to an official release, the proposed amendments focus on easing procedural requirements, reducing timelines, and improving efficiency in the processing of claims relating to unclaimed dividends, shares, matured deposits, debentures, and other eligible amounts transferred to the Investor Education and Protection Fund.

Moneycontrol had reported on January 22 IEPFA is likely to launch a new feature on its integrated portal to expedite the process of refunding or returning shares of low-value claims. The feature is expected to be launched in the next two months, which would allow low-value claims to be processed (transferred back to the claimant) using technology such as AI.

The total number of unclaimed shares lying with the IEPFA is around 1 billion, worth about Rs 1 lakh crore. The total value of unclaimed dividends stands at Rs 6,000-7,000 crore.

A key feature of the proposed reforms is the introduction of a streamlined mechanism for low-value claims, based on verification by the concerned companies. Low-value claims have been defined as: (a) Physical shares with a market value of up to ₹5 lakh; (b) Dematerialised shares with a market value of up to ₹15 lakh; and (c) Dividend claims up to ₹10,000

For such claims, the Authority proposes a reduced disposal timeline of 30 days, relying solely on the company’s verification report, thereby enabling faster and hassle-free refunds to investors, the release said.

The amendments also propose enhanced procedural clarity, rationalised documentation requirements, clearer responsibilities for companies, and the introduction of a formal appeal mechanism for claimants in cases of rejection, ensuring transparency, accountability, and protection of investor interests, the release said.

IEPFA is responsible for managing the Investor Education and Protection Fund (IEPF), which focuses on safeguarding investor interests by facilitating the refund of shares, unclaimed dividends, and matured deposits/debentures.

The organisation, through its initiatives, also plans to ensure transparency, protect investors' rights, and promote financial literacy across the country.