Source: BS
Context:
The Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI) are jointly developing a framework to streamline the transfer and claim process for unclaimed shares and dividends.
Key Highlights:
- Objective: Harmonise shareholder identification requirements, simplify transmission of shares, and ensure uniformity across companies.
- Current Rule:
- If a dividend remains unpaid/unclaimed for 30 days, it must be moved to an unpaid dividend account. This is mandated by Section 124 of the Companies Act, 2013.
- If unclaimed for seven consecutive years, both the amount and the associated shares are transferred to the Investor Education and Protection Fund (IEPF).
- Challenges: Varied verification processes by companies (e.g., affidavits, document requirements) create hurdles for investors.
- MCA’s Stand: Urged companies to run outreach campaigns to locate missing shareholders.
- SEBI’s Initiatives:
- Mitra: A searchable database for unclaimed/inactive mutual fund folios.
- Digilocker Integration: Allows investors to fetch and store mutual fund and demat account statements.
- Awareness Drives: Conducted nomination campaigns to ensure smoother investor identification.
Significance:
A unified framework will make the recovery of unclaimed financial assets easier, reduce investor grievances, and boost trust in capital markets.
