The process of share recovery, particularly when shares are transferred to the Investor Education and Protection Fund (IEPF) due to inactivity or unclaimed dividends, often leads to confusion. One of the most frequently asked questions is: Who has the right to file for recovery of shares — the nominee, legal heir, or the shareholder?
This article provides clarity on that question, outlining eligibility, the legal framework, documentation required, and the procedure for recovery of shares from IEPF.
Understanding the Context of Share Recovery
Under the Companies Act, 2013, if dividends are unclaimed on shares for seven consecutive years, the shares and corresponding dividends are transferred to the IEPF. However, rightful claimants can apply to recover those shares by filing the prescribed form and providing supporting documentation.
Knowing whether you are eligible to file a claim—whether as the registered shareholder, a nominee, or a legal heir—is crucial before initiating the process.
Who Can Legally File for Share Recovery?
1. Shareholder
The original shareholder is the primary claimant if the shares have been transferred to the IEPF due to inactivity. In such cases, the shareholder can initiate the recovery process, provided their identity matches the company’s records.
To file for recovery, the shareholder must provide proof of identity (such as PAN and Aadhaar), bank and demat details, and file the official IEPF Form-5 online. The shareholder must also submit physical documents to the concerned company for verification.
2. Nominee
If a nominee was officially appointed via Form SH-13 and the nomination is recorded in the company’s registers, the nominee becomes the rightful claimant upon the death of the shareholder. The law grants the nominee precedence over legal heirs in such scenarios.
A nominee must provide the death certificate of the shareholder, valid nomination proof, and identification documents. Once verified, the nominee can recover both the shares and any associated dividends from the IEPF.
3. Legal Heir
In the absence of a registered nominee, legal heirs of the deceased shareholder can apply for recovery. Legal heirs may include the spouse, children, parents, or any individual named in a will or recognized under succession law.
However, in such cases, companies and the IEPF Authority generally require legal evidence such as a succession certificate, a probated will, or a legal heir certificate. Without such documentation, legal heirs may not be permitted to initiate the share recovery process.
Legal Precedence Among Claimants
In terms of legal priority:
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A living shareholder has the foremost right to reclaim shares transferred to the IEPF.
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A registered nominee, as per the Companies Act and company law precedents, has a superior claim over legal heirs.
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Legal heirs are permitted to recover shares only when no nomination is recorded or when a valid will or court order exists that overrides other claims.
Also Read: Right Legal Structure for AIF Registration in India
How to Recover Shares from IEPF
Once eligibility is confirmed, the process of recovery of shares from IEPF involves the following steps:
Step 1: File Form IEPF-5 Online
Visit the official IEPF website and fill out Form IEPF-5. This form requires information about the claimant, the original shareholder, the company involved, and the details of the shares and dividends.
Step 2: Submit Physical Documents to the Company
After filing the online form, print and sign the acknowledgment. Send it along with the following documents to the Nodal Officer of the company:
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A copy of the submitted Form IEPF-5
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A self-attested copy of PAN and Aadhaar
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Original share certificates (if in physical form)
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Proof of entitlement (such as death certificate, nomination form, or legal heir certificate)
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Indemnity bond and affidavit (as per IEPF guidelines)
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Cancelled cheque of claimant’s bank account
Step 3: Company Verification and Report
The company verifies all documents and sends a verification report to the IEPF Authority within 30 days. The accuracy and completeness of this step are critical to the success of your claim.
Step 4: Approval and Refund by IEPF Authority
Once the IEPF Authority verifies the report and documents, it issues a sanction order. Shares are credited to the claimant’s demat account, and any unpaid dividends are transferred to their bank account.
The entire process typically takes between 2 to 6 months, depending on the documentation and responsiveness of the involved parties.
Also Read:
Common Challenges in Share Recovery
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No Record of Nomination
Even if a shareholder has designated a nominee, failure to submit Form SH-13 officially can invalidate the nomination. -
Multiple Legal Heirs Without Agreement
In the absence of a nominee, if there are several legal heirs and no succession certificate, the process can become legally complicated and may require court intervention. -
Discrepancies in KYC Details
Differences in names, addresses, or ID details between records and submitted documents can delay or result in rejection of claims. -
Incomplete Documentation
Missing essential forms, affidavits, or certificates is one of the most common reasons for delay or rejection of IEPF claims.
Also Read: How to Register NBFC with RBI?
Required Documents Based on Claim Type
For Shareholders:
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PAN and Aadhaar
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Canceled cheque
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Demat and bank account details
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Proof of shareholding
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Form IEPF-5 acknowledgment
For Nominees:
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PAN and Aadhaar
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Death certificate of shareholder
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Valid nomination form (Form SH-13)
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Proof of identity and relationship
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Company and share details
For Legal Heirs:
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Legal heir certificate or succession certificate
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Death certificate of shareholder
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PAN, Aadhaar, and proof of address
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Proof of relationship
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Court order, if applicable
Final Thoughts
The recovery of shares from IEPF requires a clear understanding of who is legally entitled to file the claim. The shareholder has the first right. If the shareholder has passed away, the nominee, if registered, becomes the rightful claimant. In the absence of a nominee, legal heirs may claim the shares, but must be prepared to provide valid legal documentation.
Given the complexities involved, especially in cases involving deceased shareholders and missing documentation, it’s wise to consult a legal or share recovery professional to guide you through the process and avoid delays.
If you’re dealing with unclaimed investments or need help with the recovery of shares, ensure you follow the correct legal path based on your relationship to the original shareholder and the availability of nomination or succession documents.
