Where do unclaimed shares go?

Varun is 45 years old and is working in the IT sector. Five years back, Varun purchased 100 shares in ABC company.

Sadly, in a grim twist of fate, Varun had an untimely demise. As Varun had no immediate heir, no one claimed his shares.

With no one there to use Varun's demat account, it became dormant, and for the next seven years, every time company ABC released dividends, it was reverted back to the company's account.

But does the company have a rightful claim on that money? And who should own the shares in that dormant demat account?

Section 125 of the Companies Act, 2013, addresses such scenarios. According to the act, shares that remain unclaimed and dividends that remain unpaid for seven consecutive years must be transferred to the Investor Education and Protection Fund Authority (IEPF).

With unpaid dividends and unclaimed shares of an entire nation getting transferred to one entity, IEPF's holdings have skyrocketed over the years. IEPF's stake in companies has almost tripled in the past three years. As of December 31, 2022, it has a stake in over 1,500 companies, amounting to Rs 50,665 crore.

To put that into perspective, if you ranked all the listed companies in India according to their market cap, you would have to add the market cap of around 2,000 companies from the bottom of the list to hit Rs 50,000 crore.

Yes, its holdings are worth the combined market cap of more than 2,000 listed companies!

Here are the top holdings of IEPF.

How to reclaim shares from IEPF
If you are the legal owner of shares deposited in IEPF, you have to submit an online application to IEPF by filling out the FORM IEPF-5. You can follow this link for further details on how to claim your shares.

If you are not sure if your shares or dividends are with IEPF or not, you can visit this link to find out.

If it hasn't been seven years, and the shares or dividends are not with IEPF, you can directly contact the registrar of the company.

To get the details of the registrars of the companies you have invested in, follow these steps.

• Visit bseindia.com.
  
• Type the company name.
  
• Click on corporate information.
  
• Scroll down to find the registrar's details.

Suggested read: How to convert physical shares into demat?

This article was originally published on April 12, 2023.