Forgotten wealth: Shares worth over Rs 13 bn lie unclaimed in top 100 firms

Such securities are transferred to the Investor Education and Protection Fund

More than 100,000 shareholders have unclaimed shares worth billions of rupees in some of India’s largest companies.

A Business Standard analysis of the shareholding records of the S&P BSE 100 firms shows that shares worth at least Rs 13.02 billion are lying unclaimed with companies.

Shares are unclaimed because of various reasons, including heirs not being aware of their inheritance and misplacement or loss of share certificates.

Tobacco major ITC accounts for the biggest chunk of such shares by value. It held 13.71 million unclaimed shares worth Rs 3.6 billion, the data as of end-December, analysed by Business Standard, shows. Gems and jewellery leader Titan Company held 1.71 million shares worth Rs 1.6 billion. Mining company Vedanta’s unclaimed shares number 3.4 million, worth about Rs 957 million.

The greatest numbers of shareholders affected are in Ambuja Cements. Shareholders numbering 166,277 have 1.14 million shares worth more than Rs 271.1 million lying unclaimed.

The numbers of shareholders involved are 7,083 in the case of ITC, 1,502 in the case of Titan, and 3,980 in Vedanta.

The amounts gain significance in the light of recent provisions that require transferring such shares to the Investor Education and Protection Fund (IEPF).

Based on latest shareholding as of December-end. Value is based on share price as on April 9, 2018; Sources: BSE, Business Standard analysis

Ankit Singhi, partner, Corporate Professionals, an advisory firm, said the transfer provisions came with the Companies Act of 2013. Companies were earlier required to transfer dividends unclaimed for seven years to the IEPF. This provision was made applicable to transfers of shares too, and came into effect when a revised provision was notified in 2016.

Even if there are pending dividends, investors can avoid a transfer if they have claimed dividends at least once over a seven-year period, according to Singhi.

“Shares are not transferred if a dividend is claimed in any of the preceding seven years,” Singhi said.

At least some transfers have happened. Zee Entertainment Enterprises included the following note as part of its records. “During the quarter ended December 31, 2017, 111,070 unclaimed equity shares held by 2,124 shareholders were transferred to the beneficiary account of the IEPF authority, according to Section 124(6) of Companies Act, 2013. These included 45,629 undelivered shares held by 116 shareholders reported under Regulation 39 of Securities and Exchange Board of India (Sebi) listing regulations,” it said.

The move to mandate this came after fraudulent transfers in such shares came to light.

Sebi had debarred registrar and share transfer agent Sharepro Services (I) from the market in its order of March 22, 2016. The order noted that unclaimed dividends and shares of people, including a deceased shareholder, were fraudulently usurped.

Hinesh Doshi of the Investors’ Grievances Forum said the transfer should not pose a problem so long as the government acted as custodian and no attempt was made to sell the shares. Currently, they can be reclaimed by filing a refund claim form with the IEPF.

Companies can make it a practice to identify shareholders before such transfers are made, said Bhavesh Vora of the Investor Education and Welfare Association.