MCA’s new portal for checking for unclaimed shares, dividends

  • October 3, 2023
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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MCA’s new portal for check­ing for unclaimed shares, dividends

Subject: Economy

Section: Capital Market

Context: Check­ing for unclaimed shares, dividends to become easier with a new integrated IT platform.

Key Points:

  • MCA’s new integ­rated IT plat­form to enable users to deep dive for details of unclaimed securities.
  • Set­ting-up the integ­rated portal was announced by the Fin­ance Min­is­ter in her budget speech earlier this year.

What happens to unclaimed dividend?

  • Dividends are declared out of profits made by a company and distributed to shareholders. But if they are unclaimed for more than seven years, they are transferred by the company to the Investor Education and Protection Fund Authority (IEPF).
  • Gov­ern­ment had set up the IEPFA in Septem­ber 2016 for admin­is­tra­tion of Investor Edu­ca­tion and Pro­tec­tion Fund (IEPF). Pro­vi­sional data upto end Novem­ber 2022 showed that the total bal­ance in the IEBF stood at ₹ 5,685 crore. Total num­ber of unclaimed shares in IEPF stood at 117 crore shares.
  • There is very little aware­ness among invest­ing pub­lic on the exist­ence of IEPFA and the fact that they can reclaim shares or unpaid dividends that have been trans­ferred by com­pan­ies to the Investor Edu­ca­tion Pro­tec­tion Fund (IEPF) on account of vari­ous reas­ons.

What the portal will provide?

  • It will allow check­ing the status of share­hold­ings or unclaimed dividend that has been trans­ferred to the Investor Edu­ca­tion Pro­tec­tion Fund Author­ity (IEPFA) in an easy manner.
  • The integ­rated IT portal that may lets you deep dive not just for your lost wealth by searching on various parameters like name, folio number or district etc.
  • MCA has from time-to-time tak­ing meas­ures to stream­line the work­ing as well as refund pro­cess at IEPFA. In Janu­ary 2022, MCA had empowered IEPFA to liquid­ate shares held by it and acquired on account of dividend remain­ing unpaid or unclaimed by the share­holder for a period of seven years.

IEPFA’S role:

  • IEPFA was also empowered to offer the shares to the acquir­ing entity in case of amal­gam­a­tion, share exchange, con­ver­sion of secur­it­ies and also receive money on behalf of minor­ity share­hold­ers.
  • Earlier IEPFA could sur­render the shares only in case of del­ist­ing of secur­it­ies or when the com­pany was get­ting wound up.
  • MCA had also then said that the money received on behalf of the minor­ity share­hold­ers should be cred­ited to the IEPF and a sep­ar­ate ledger account should be main­tained for such pro­ceeds.
Investor Education and Protection Fund (IEPF)

  • It has been established under the Securities and Exchange Board of India Act, 1992.
  • The amounts such as contribution made by SEBI, grants and donations given to the Fund by the Central Government, State Government or any other entity approved for the purpose, etc are required to be transferred to the IEPF.
  • The Fund shall be utilised for the purpose of protection of investors and promotion of investor education and awareness in accordance with SEBI regulations.
  • The Fund is also utilised for distribution of money in cases where SEBI deems fit to make restitution to eligible and identifiable investors who have suffered losses resulting from violation of securities laws, be utilised only for the purposes of such restitution.

Advisory Committee of the fund

  • SEBI shall constitute an advisory committee for recommending investor education and protection activities that may be undertaken directly by SEBI or through any other agency, for utilisation of the Fund.
  • The Committee shall consider investor education and protection activities keeping in view the purposes and submit its recommendations thereon to SEBI.
economy MCA’s new portal for check­ing for unclaimed shares