Shareholder Alert: Claim Shares & Dividends by 31 March To Avoid Freezing
The recent SEBI Circular, issued on November 3, 2021, urged investors holding physical shares to ensure that their KYC compliances are completed by March 31, 2023, in order to avoid the risk of their shares and dividends being frozen.
Gone are the days when shares existed solely in physical form, printed on paper certificates. Electronic demat accounts, which facilitate modern-day buying and selling, were not available until the mid-1990s. Since then, all shares purchased are stored electronically in a Demat Account, eliminating the need for physical certificates.
Although the introduction of Demat accounts was a crucial step, there are still many physical shares in circulation that need to be dematerialized. SEBI has made efforts to mandate this shift towards digital records, but there is still work to be done. With the deadline of March 31, 2023, quickly approaching, investors must take action to ensure they meet their KYC compliances to avoid any disruption in their shares or dividends.
There are several reasons why investors may still hold physical shares, including:
* Shareholders are unaware of the fact that they hold such shares in physical form due to a change in address
* Death of the original allottee shareholder
* Shareholders have migrated abroad and due to lack of time & knowledge, the shares are still in their physical form
Investing in real estate has long been a favorite of Indians, and as a result, investments in old shares were put on hold while investors kept track of their physical share certificates and monitored their data. However, as time passed, most investors lost track of their previous investments made decades ago, resulting in a significant amount of unclaimed assets. Many investors fail to designate a nominee for their shares, leaving legal heirs in the dark and shares unclaimed.
The Investor Education and Protection Fund (IEPF) was established to provide investors with a single platform to claim shares and dividends that have been dormant and forgotten for a long time. Shares and dividends that have not been claimed for seven years or more are considered forgotten shares, and after 7 years, the company transfers the dormant shares to the IEPF account, which is now owned by the government of India.
However, claiming shares from the IEPF can be a long process, and even a small error can result in the application being rejected. To avoid such issues, shareholders owning physical shares must complete their KYC by March 31, 2023, appoint a nominee, and update their address proof, passport, email address, and mobile number.
It is important for shareholders to keep track of their investments and inform their families about them. Designating a nominee is crucial in all investments, including mutual funds, stocks/demat accounts, real estate, insurance, bank accounts, fixed deposits, etc. In addition, designating a joint holder on all bank accounts and investments, and creating a new version of the investment sheet every time an investment is changed, added to, or matures can help avoid future problems.
Achint Arora is the Founder and Director of WealthMax Consultancy Services Pvt. Ltd., a company that helps shareholders recover and retrieve unclaimed assets i.e. shares, dividends, mutual funds, insurance, etc. They also help solve issues of transmission/transfer of shares, recovery from IEPF (Investor Education & Protection Fund under the Ministry of Corporate Affairs) & Succession Matters. They can be reached out at www.wealthmax.co.in.
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