INSUBCONTINENT EXCLUSIVE:
By Dhirendra KumarOne of the oldest vexing issues in equity investing, that of lost money and shares, is well on its way to getting solved
Under the old Companies Act, money that was unclaimed for a number of years had to be transferred by the company to the government
If no claimant ever showed up, then the money basically belonged to the government
In theory, the law said that anyone could turn up and lay claim to the money.
However, this was no easy matter
kind of thing that an ordinary person, who may have a suspicion that their parents had forgotten some shares, could be expected to go
And the kind of people (or entities) who have access to legal and secretarial help to deal with this probably do not ever forget encashing
their dividend cheques or lose trace of their equity holdings
For all practical purposes, the money was eventually absorbed into the revenue account of the Government of India.
The Companies Act of 2013
changed the rules somewhat
Under the new law, dividends unclaimed for more than seven years would be transferred to the IEPFA
Additionally, shares whose dividends were unclaimed for a continuous seven years are also transferred to the ownership of this organisation,
which is part of the Ministry of Corporate Affairs (MCA).
Now, finally a new digital process is also under place
Under this process, investors who did not claim dividends and whose dividends and possibly shares have been transferred to the IEPFA can
register themselves on the www.iepf.gov.in.
They can then file an application with the details of their dividends and comprehensive proof of
After verification of the details, their lost assets are returned to them
So far, around Rs 200 crore has been restored to the rightful claimants to whom the funds belong.
As awareness of the service of the IEPFA
spreads, hopefully this problem will gradually get minimised
This means that as time goes by, untraceability of fresh investors should get practically eliminated and eventually most of the old funds
That issue has nothing to do with the MCA or the IEPF and has to be handled by the mutual funds themselves
As far as I know, the size of untraceable money in mutual funds is actually much larger than that of corporate dividends.
This is probably
because mutual funds have historically had a large number of investors who invest a small amount and then forget about it
About a year ago, there were Rs 44,000 crore of orphaned money in mutual funds
This is about 1.75% of the total money in mutual funds.
If I make the reasonable assumption that almost all of this is from individuals and
not companies then the percentage could be more than double that
Again, given the KYC and PAN card norms that have now existed for many years, all of this is probably fairly old money so the problem will
reduce over time as investors get traced.
(The author is CEO, Value Research)