You Deserve Your Money back

Ban on Physical Share Transfer of Listed Co-

Last Date 31.3.2019- Problem and Solutions

Organised by

NIRC of ICAI

Wealth Recovery

This happens when one does not share

Stocks / Mutual

Fund : Rs.

5,35,000 Crores

lying in physical

form

Unclaimed

Corporate

Dividends :

Rs 3,454 Crores

Unclaimed Bank

Account:

Rs 11,302 Crores

Unclaimed

Insurance :

Rs 15,166 Crores

Unclaimed

Provident Fund :

Rs 43,000 Crores

Unclaimed Post

Office accounts :

Rs 1,001 Crores

Value of Unclaimed / Physical Investment in the country is more

than Rs 6,08,923 Lakhs Crore

All hassles for an Investor !!!

• RTA

• MCA

• SEBI

• NCLT

• PF office

• PF trust

• Legal Advisor

• Courts

• Banks

• RBI

• Company

• C.S

Does Anyone want their family to roam around from pillar to post to

claim the investment ? Too many touch point to recover

Investments…..

• Broking Firm

• Financial

Advisor

• Post office

• CA

• Insurance Co.

• IRDA

What we do ?

• Matured

Insurance

• Unclaimed

Mutual Fund

• Old Shares • Postal Savings • Bank Deposits

• Unclaimed

Provident Fund

We assist in Recovery of Lost / Forgotten or scattered

Investment in…..

• Assisting to

recover any

Investment

• Debtor

Recovery • Fixed Deposit

Unclaimed Dividend as well as Shares on which dividend remained

unclaimed for more than 7 years gets transfer to IEPF (Investor

Education & Protection Fund) after 7 years u/s 125 of Companies Act,

2013

Unclaimed corporate deposit along with interest transfer to IEPF after 7

year

Share application money due for refund gets transfer to IEPF

Matured deposits or debentures also gets transferred to IEPF

If an account is inoperative for more than 10 years, the amount has to

be transferred to Depositors Education and Awareness Fund (DEAF)

operated by the RBI

Why Investor Need to worry

Shares & Securities Instrument Shares & Securities (Dividend / Interest)

Regulator SEBI (Securities & Exchange Board of India)

Relevant provision Section 124/125 of Companies Act, 2013

When it is considered to be Unclaimed ? When dividend is not encashed within 30

days of declaration

To whom it gets transferred ? Investor Education & Protection Fund

After how may years its gets transferred to

Authority ?

7 years from the date amount becomes

unclaimed

What happens after it transferred to

Authority ?

Refunded to investor, investor awareness

etc

Whether it can be claimed back by

investor ?

Yes

Formalities to claim back

File form IEPF 5 online and submit it with

Indemnity, Adhar Card, Advance Reciept,

Letter of Entitlement etc to Nodal Officer

of concerned company

Appellate Authority SEBI

Shares & Securities

If original share certificates are lost, apply for duplicate shares

KYC documents

Indemnity

Affidavit

Surety ( KYC and Income Proof)

Advertisement in Newspaper (If value of shares more than Rs.

10,000/-)

Copy of Dividend warrant / Any communication from Company

ISSUE OF DUPLICATE SHARES

•Transfer of physical shares from Transferor to Transferee

•Form SH-4 dully filled, signed and executed

•Pan Card of Transferor mandatory as per Regulation 40(7) and 61(4) of

SEBI (Listing Obligation & Disclosure Requirements) Regulation, 2015.

However SEBI circular dated 06th

November, 2018 has given

exemptions if shares are purchased before 01st December, 2015.

•KYC documents of Transferee

•Signature verification of Transferor from bank as per format given by

RTA (Registrar & Transfer Agent)

•Stamp Duty to be paid @ 0.25% of market value of shares

•However as per Regulation 40 of SEBI (LODR)(Amendment)

Regulation, 2018, Transfer of Physical shares will not be allowed after

31st March, 2019 (Earlier deadline was 05

th December, 2018)

Shares & Securities

TRANSFER OF SHARES

Shares & Securities

•Transmission of share happens when legal heir claims the shares from

deceased shareholder

•KYC documents of Legal heir

•Indemnity, Affidavit etc

•If value of shares is more than Rs. 2 Lakhs (in case of physical shares) and

Rs. 5 Lakhs(in case of demat shares) – Probate of Will or Succession

Certificate is required from Court

•If value of shares is less than Rs. 2 lakhs – Surviving Member’s Certificate

is required from SDM (Sub-Divisional Magistrate) / DM (Divisional

Magistrate) office.

TRANSMISSION OF SHARES

Shares & Securities

• As per IEPF Authority(Accounting, Audit, Transfer and Refund) Rules,

2016; if dividends are unclaimed for continuous 7 years from the due

date of declaration of dividend, dividends are transferred to IEPF

•As per Section 125 of the Companies Act, 2013 read with IEPF Rules,

2016, if dividend remained unclaimed for continuous 7 years, shares

pertaining to those dividend are also transferred to IEPF.

•To claim the shares / dividends from IEPF, Investors need to file Form

IEPF 5 and submit requisite documents to the Nodal Office of the

company.

•Nodal Officer of the company need to issue Verification Report to IEPF,

on the basis of which, IEPF Authority approves / rejects the claim

Transfer of shares to IEPF(Investor

Education & Protection Fund)

Shares & Securities

•UNLISTED PUBLIC COMPANIES:-

As per newly inserted Rule 9(A) of Companies (Prospectus and Allotment of

Securities) Third Amendment Rules, 2018, dematerialization of shares of

Unlisted Public Companies has been made mandatory w.e.f. October 02nd

,

2018.

Every Unlisted Public Company shall ensure that before issue / buyback of any

security or issue of bonus or right shares, entire holding of securities of its

promoters, directors, KMP has been dematerialized

Even Unlisted companies are required to make fresh issue or allotment in

dematerialized form only

• Listed Companies:-

No transfer of Physical shares of Listed Companies shall happen after 31st

March, 2019 as per SEBI(LODR)(Amendment) Regulations, 2018

Transfer of shares of Listed Companies can take place without PAN card in

case of NRIs being Transferors (Sellers)

contd….

Recent Amendments & Developments

Shares & Securities

•SEBI Circular dated 06th

November, 2018 for Transfer of Shares:-

Shares can be transferred even if Transfer Deeds are executed prior to

notification of LODR (01st December, 2015), without PAN of Transferor

Shares can be transferred even in case of Mismatch of Name of transferor on

PAN and Share Certificate

Shares can be transferred even in case of Non availability / Mismatch of

Signatures of Transferor

RTAs shall try to connect with transferor bases on his last known address and

dividend history

In case Transferor is not approachable or is not co-operating, RTAs need to

make a public announcement in this regard with a waiting period of 30 days

If there is no objection even after 30 days of public advertisement, Shares can

be transferred by RTAs by asking for Indemnity Bond and Address proof of

Transferee and also an Undertaking that Transferee shall not sell / demat shares

within 6 months of transfer of shares in his favor.

Recent Amendments & Developments

Unlisted Public Co Share in DEAMAT only

•MCA NOTIFICATION DATED 10 SEPT 2018

•Every unlisted public company shall –

• (a) issue the securities only in dematerialised form; and

• (b) facilitate dematerialisation of all its existing securities in

accordance with provisions of the Depositories Act, 1996

and regulations made there under.

Physical Shares transfer last date 31.3.19

•Transfer of securities only in demat form- Deadline

extended till April 1, 2019 - Dec 03, 2018- SEBI- PR

No.: 51/2018

•

• The Board, on March 28, 2018, decided that except in case of transmission or

transposition of securities, requests for effecting transfer of securities shall not

be processed unless the securities are held in the dematerialized form with a

depository. This measure was to come into effect from December 5, 2018.

•

• Subsequently, SEBI has received representations from shareholders for

extension of the date of compliance. In view of the same, the deadline has

been extended and the aforesaid requirement of transfer of securities only in

demat form shall now come into force from April 1, 2019.

NO PAN FOR NRI-Feb 2019

• Markets regulator Sebi Monday granted relaxation to non-residents such as NRI, PIOs, and foreign nationals from

furnishing a copy of PAN card and allowed them to transfer equity shares held by them to their immediate relatives.

However, the relaxations are subject to certain conditions, Sebi said in a circular.

Under Sebi's LODR (Listing Obligation and Disclosure Requirements) provisions, transferee as well as transferor is

required to furnish a copy of their PAN (Per ..

•

• Many of the non-residents like Overseas Citizens of India (OCIs), Non Resident Indians (NRIs), Persons of Indian

Origin (PIOs) and foreign nationals were facing difficulties in transferring the shares, as many of them do not posses

the required PAN card.

To address such difficulties, it has been decided to grant relaxation to the non-residents from furnishing PAN card

details and allowing them to transfer equity shares held by them in the listed entities to their immediate relatives, Sebi

said.

However, the relaxation will only be available for transfers executed after January 1st, 2016 and, only for non-

commercial transactions i.e transfer by way of gift among immediate relatives.

•

Shares & Securities

17

RS 10000 of Wipro

Today’s worth is

more than 750 cr

Rs 10,000 of CIPLA

Today’s worth is

more than 100 cr

Rs 10,000 of Infosys

Today’s worth is

more than Rs 150 cr

ASTONISHING FACTS

Debtor Recovery

Recovery from Debtor is done through Insolvency & Bankruptcy

Code, 2016

It is a time bound resolution for recovery of Bad Debt (within 6-9

months)

Recovery can be made for Debts arising for last 3 years

IBC (Insolvency & Bankruptcy Code) empowers all classes of creditors

(secured and unsecured lenders, employees, trade creditors, regulatory

authorities)

Provides for immediate suspension of the BOD and promoters’

powers.

Some Facts

Debtor Recovery Insolvency Resolution

The process may be initiated by either the debtor or the creditors.

National Company Law Tribunal (NCLT) would deal with matters

relating to corporate insolvency

Who are Financial and Operational creditors ?

Financial debt: means debt extended against consideration for the time

value of money, and includes the following example:

Term Loans, Working capital loans etc.,

Receivables etc;

Operational debt: means debt incurred in exchange for the provision of

goods or services (including employment) or debt in respect of the

payment of statutory dues;

• Creditors include secured, unsecured creditors including foreign

creditors and decree holders from the court

Wealth Protection

o Most of us work hard to create financial assets.

o We spend a lot of time planning our finances, pondering over

that expensive house we plan to buy and creating wealth

through stocks and gold.

o For all of us, the sole motive of such measures is leave a

rich financial legacy for children / family.

o Therefore, it's important that the wealth is transferred in the

right hands in case of any contingencies

We are earning for whom??

Unclaimed Provident Fund

Unclaimed Matured Insurance

Inoperative Bank Accounts

Physical Shares

Pending Transfer of shares

Pending Transmission of shares

Unclaimed Dividends

Unclaimed Bonuses, Split Shares

Corporate Deposit

Some example of Unclaimed Investment

23

Share Samadhan

Reason of Unclaimed Investment

Life is Uncertain

Old Age

Ailments Natural

calamities Disability

Untoward

Incidents

Variety of

Investments

Job/Income

Changes

Buy Term Policy from Life Insurance Companies.

Suggestive to take term policy equivalent to approx 12 time of

the income of the earning member.

Road accident death compensation from MACT (Motor

Accident & Claim Tribunal)

Never delay in the renewal of General Insurance

Should not compromise…

Some lesser known facts

In case of sudden demise, the person whose PF was getting deducted

then there is EDLI (Employee Deposit and Linked Insurance) insurance

is also there upto Rs. 600,000/- claims can be made.

A wrong perception : PF can not be claimed in case employer shut

down the operation .

Now accidental cover though booking of tickets through IRCTC is up to

Rs 10 Lakhs

Just imagine these Situation

One Sudden Cardiac

Arrest in every 33

Second

400 daily death in Road

Accident In India

3000 in world

Around 100 daily rail accident

Death in India in 2014 30,000 death in Gujrat

Earthquake in fraction

Of seconds

Documents may be

gutted in fire Theft / Document

misplace

Floods

Is Your Family member

aware about your

Investments?

What to do then…..

Family Need to

Know Nominee

Preserving the

information is

structured

manner

Else Rest this with digital wallet companies

How about someone there

who is like a Trusteeship of

your Investment

Preventive measures

•Keep photocopy of all the investments at Home.

•Password saving

•Family should be aware

How safe is subscriber Info

No info sharing

till subscriber

alive

Family verification

will be done before

sharing

It is just as Gmail

of your

Investment

Up to 256 SSL

Secured and

encrypted

We do not ask

any document

Media Coverage

Economic Times _09.03.2016 Purvodaya_08.03.2016

Economic Times Wealth _13.03.2016 Focus News_04.09.2015

Zee Business_25.03.2016

Pratidin_30.06.2015

Share Samadhan – Journey started in 2011

Abhay Chandalia

Abhay is a Chartered Accountant,

Company Secretary and LLB who

co-founded the Whiteinc group

after long 15 years of corporate

association with prominent groups

like K K Birla, L N Mittal.

Vikash Jain

Vikash is a qualified Chartered

Accountant and Company

Secretary co-founded Whiteinc

group after his illustrious service in

CEAT Tyres (RPG group), KPO-

major Evalueserve and Carnation,

owned by former MD of Maruti,

Jagdish Khattar.

20 employee team

8 Graduates /support staff 12 CA/CS/MBA

We would be glad to hear from you….

Regd office

B 35, Lower Ground Floor,

South Ex Part II, New Delhi- 110049 (India)

M: +91 8800332200| P: +91 11 4908 4001 (60 lines)

ww.sharesamadhan.com

36

CA Abhay Chandalia FCA, FCS, LLB, MCOM, MBA

M- 9310116111 Abhay.chandalia@sharesamadhan.com