Procedure for Transfer of Shares to IEPF

Raghvendra Singh Shekhawat

Raghvendra Singh Shekhawat

Published on: Jun 10, 2025

Priya Gandhi

Updated on: Jun 10, 2025

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104

Introduction:

Equity shares for which dividends have remained unpaid or unclaimed for 7 consecutive years or more are subject to transfer, to the demat account, of the Investor Education and Protection Fund (IEPF) Authority. This ensures that unclaimed financial assets are safeguarded and can be reclaimed by rightful owners later. The procedure involves identifying such shares, informing shareholders, transferring them to the IEPF’s Demat account, and filing necessary forms with the Ministry of Corporate Affairs (MCA).

Applicable Provisions:

1. Section 124, 125 of the Companies Act, 2013
2. Rule 5, 6 of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016

MANDATORY REQUIREMENTS

1. Identify unclaimed dividends and unclaimed shares.
2. Intimate shareholders about the impending transfer.
3. Disclose list of shareholders whose shares are transferred to IEPF on company’s website.

PROCEDURE

1. Identification of Eligible Shares:
   Shares associated with unclaimed dividends for 7 consecutive years should be identified.
2. Intimation to Shareholders:
   • Company shall inform the concerned shareholder, at their latest available address, about the proposed transfer of shares, at least three (3) months prior to the due date of such transfer.
   • Important points to mention in the intimation to shareholders for the transfer of shares to IEPF:
   • Purpose of the intimation regarding proposed transfer of shares to IEPF
   • Reference to relevant provisions of the Companies Act, 2013 and IEPF Rules
   • Statement that dividends have remained unclaimed for 7 consecutive years
   • Details of the unclaimed dividend years and corresponding shares
   • Name of the shareholder and identification details (Folio No. / DP ID – Client ID)
   • Due date of proposed transfer to IEPF
   • Instructions to claim unpaid dividends before the due date to avoid transfer
   • Consequences of no action being taken (transfer of shares and benefits to IEPF)
   • Information on how to reclaim shares/dividends after transfer via Form IEPF-5
   • Contact details of the company or RTA for assistance
   • Disclaimer that this is a mandatory legal compliance communication.
3. Convene a Meeting of Board of Directors:
   • Company shall pass a Board Resolution at a duly convened meeting of the Board of Directors, approving the transfer of shares to the Investor Education and Protection Fund (IEPF) in accordance with applicable provisions.
   • The Board shall also authorize the Company Secretary or any one of the Directors to undertake all necessary actions, execute the required procedure, and sign all relevant documents pertaining to the transfer of shares. [Please refer to the Procedure for Conducting Board Meeting for further details]
4. Publish Notice in Newspaper:
   Company shall simultaneously publish a notice in a leading English and regional language newspaper with wide circulation, informing shareholders that the names of such shareholders, along with their folio numbers or Depository Participant (DP) ID–Client ID, are available on the company’s website. The notice shall also clearly mention the website address.
5. Inform Depository for Transfer of Shares:
   Company shall inform depository for transfer of shares to IEPF Authority as under:
   • In case shares are in Electronic (Demat) Form:
     
     • Initiate a corporate action with the respective depository to facilitate the transfer of shares held by shareholders in demat form to the IEPF Authority’s demat account
     • Shareholders details, including their DP ID and Client ID, number of shares, and the relevant financial year for which dividends remained unclaimed, shall be provided in the corporate action form
     • Upon approval, the depository will affect the transfer of such shares to the IEPF demat account.
   • In case shares are in Physical Form:
     
     • Company Secretary, or any person authorized by the Board, shall submit an application on behalf of the concerned shareholder to the company for the issuance of a new share certificate
     • On receipt of the application, a new share certificate for each such shareholder shall be issued and it shall be stated on the face of the certificate that “Issued in lieu of share certificate no. for the purpose of transfer to IEPF” and the same be recorded in the register
     • Particulars of every share certificate shall be in Form No.SH-I as specified in the Companies (Share Capital and Debentures) Rules, 2014
     • After issue of a new share certificate, the company shall inform the depository by way of corporate action to convert the share certificates into Demat form and transfer in favor of the IEPF Authority.
   Note: Company shall make transfer of shares through corporate action and shall preserve copies for its records.
6. File Form No. IEPF 4 with IEPF Authority:
   • A statement in Form IEPF-4, is to be submitted to the IEPF Authority, within 30 days of the corporate action, providing details of the share transfer. Additionally, copy of the public notice published, as per the requirements of Form IEPF-4, is also to be attached.
   • b. All benefits accruing on such shares like bonus shares, split, consolidation, fraction shares and the like except right issue shall also be credited to such Demat account by the company, which shall send a statement to the Authority in Form No. IEPF-4 within thirty (30) days of the corporate action containing details of share transfer.
   Note:
   • In case any dividend is paid or claimed for any year during the said period of 7 consecutive years, the share shall not be transferred to IEPF.
   • Shares transferred to IEPF will have frozen voting rights until claimed by the rightful owner.
   • Transferred shares must be included when calculating total voting rights under SEBI (SAST) Regulations, 2011.
   • In case, where there is a specific order of Court or Tribunal or statutory authority restraining any transfer of shares and payment of dividend or where such shares are pledged or hypothecated under the provisions of the Depositories Act, 1996 or shares already been transferred to the authority, then company shall not transfer such shares to the Fund. Company shall furnish details of such shares and unpaid dividend to the Authority in Form No. IEPF 4 within 30 days from the end of financial year.
7. Update on Company’s Website:
   Company shall upload on its website the details of shareholders whose shares are liable to be transferred to the IEPF, including their names, folio number/DP ID-Client ID, and number of shares.