This Is How One Can Recover Their Unclaimed Investments
As of today, crores of money have been wasted on securities, mutual funds, insurance policies, demat accounts, and etc. Investors invest their money and forget about them as time passes. Looking at it from an advantageous point of you, all the money can be saved for longer periods of time but the same cannot be said in the case of investments. It is true that money will last longer, but doesn’t save the investments from going to waste.
One of the main reasons for that is that most elderly citizens prefer to hold all their shares in physical form, i.e. holding the share certificates in physical form rather than dematerialising those certificates. Dematerialisation is the procedure of converting these physical shares into electronic forms. The certificates for these shares are verified to for their originality and then destroyed after the respective shares are converted into digital form to prevent any fraud or malicious activity using those share certificates like faking the ownership of more shares than the investor has legally bought. As time passes, investors forget about the existence of these certificates and they just end up as some useless papers. This is not say that all the investors fall under the same category and do the same things as other, there are also investors who maintain proper records for everything but other factors like time, health, and etc. play a big role in the situation.
And after being forgotten, all the amount which remains unclaimed and yet to be collected is then transferred to over to SEBI’s Investor Education & Protection Fund (IEPF). This amount includes all the unclaimed funds from the shares which were issued but have been forgotten. All the unclaimed deposits & also the money present in the inoperative bank accounts are then transferred to the RBI’s Depositor Education & Awareness Fund after a time period of 10 years.
What is Investor Education & Protection Fund?
The Investor Education & Protection Fund, or for short known as IEPF, is fund prepared by the government to provide safety and security to all the unclaimed dividend and claims until they have been claimed by their owner in the future. In short, it can be defined as a fund put together by the government which consists of all the amount that remains unclaimed by the investors on their investments in securities, shares, mutual funds, insurance policies and etc. As mentioned previously, the unclaimed amount is moved to this fund after a period of 7 years have passed by and yet the funds remain unclaimed. When the investor tries to reclaim all this amount back from the respective company where the investor has invested their money in, the company uses this Investor Education & Protection Fund to recover the claims and investments made by the investor years ago.
The money can then be recovered by dematerialising all these physical share certificates and then converting them into digital form.
More On Dematerialisation
As already mentioned above, dematerialisation is the procedure of converting these physical shares into electronic or digital form. For this procedure to work, the investor will need to bring along the documents and certificates of the shares he owns. What will that do? Well, all these certificates and relevant documents will be verified to see whether these shares are real, the investor’s ownership over the shares, and convert them to digital form. Once the verification is done, the amount and the shares will then be transferred to investor’s demat account from where the investor will have the freedom to sell those shares or buy more if he wants to. This means that all the unclaimed investments and dividends left out by the investor have now been converted to and are available to the investor in digital form and can use them to carry out more financial activities in the future if he wants.
What Happens to All the Share Certificates & Ownership Documents After Dematerialisation?
Once all the physical shares have been dematerialised and all the investments are now claimed, all these documents and certificates of the ownership are destroyed. Yes, and the reason being that now that the physical shares have been converted into a digital form, there’s no need for the existence of physical documents of ownership. This makes handling on the part of the investor way easier and he can manage all the things easily in digital form and from wherever he wants. This also prevents them from doing any illegal activities or owning more shares than they originally had to which don’t even exist in the physical form now. Overall, having everything converted to digital means makes almost all these documents useless since managing these financial activities digitally is more effective than having all these shares and certificates in physical form.
Conclusion: The Best Course of Action
From our point of view, the best course of action in a situation where investments have not yet been claimed by the investor and the shares available are in physical form is to get all of them dematerialised which will allow you to reclaim and redeem all those unclaimed investments and dividends from the shares in digital form. Dematerialisation is the correct way of doing things because it allows for a better managing experience for the investors.
Most of these investors that still own shares in the physical form and have their investments unclaimed is generally because of their forgetfulness on the matter and it can safely be said that most of such investors are elderly citizens and are of older ages. It becomes very hard for them to maintain all these physical documents and certificates of the shares they own and investments they have made. Looking at the overall picture, it makes keeping track of things harder plus they are easily forgettable. In this case, converting them into digital form is superior choice where it allows the investor to handle and manage their investments in shares from anywhere and at any moment from a single digital mode making things a lot easy and convenient.
All of this is possible only because of the existence and assistance from The Investor Education & Protection Fund (IEPF). The IEPF also works on educating its fellow investors and spreading awareness about such situations that they can face while they indulge in financial activities. It is the role of IEPF to provide safety to the collective unclaimed funds and amounts from the investors which is yet to be claimed. It allows the investors to recover their unclaimed dividends, redeem their shares, and also to recover any past investments that they might have made before. On its website, it tells us in more detail about such situations and also provides us with ways to face those situations correctly by taking the right measure and precautions on the matter. Crores of these unclaimed amounts of such investors sit in the IEPF which is used by the respective companies to recover the investments made by the investors.
The investment made years ago can turn out to be more profitable than it was at the moment of investment. After time passes, the value of potential returns also changes and that’s why it’s important to recover those investments back on time before its profitability strikes down.
