Unclaimed Dividend Recovery of Reliance from IEPF: Why Is It a Good Option?
‘Rs. 10000 invested in Reliance Industries Limited in 1977 during its IPO would have made the shareholder a Crorepati today.’
No! this is not a joke. This information was revealed by Reliance group’s Managing Director and One of the Richest Person in the world Mr Mukesh Ambani in the AGM (Annual General Meeting) of the company in 2017.
“Rs. 1000 invested in Reliance Industries shares in 1977 are worth Rs 16,54,503 – over 1,600 times valuable. In past 4 decades, Reliance has grown from a small business startup to one of the largest, most admired companies”.
Mukesh Ambani in AGM 2017
Now, what do these stats indicate to an investor? The main thing one can interpret is that if by chance anyone has got a few invested stocks from 1977 or early 80s then they could get rich today by claiming dividends for them. Thus, recovery of lost shares and unclaimed dividends of Reliance becomes important. In recently released reports by RIL, it has the largest no. of unclaimed dividend for associated shares among companies in India. The detailed analysis of the data associated with unclaimed IEPF shares is shared in the upcoming sections of this blog. In the upcoming sections, we will find answers to questions like,
Unclaimed Shares and Dividends
People generally follow the simple formulae to invest their income into different stocks to reduce the risk on their investments. This seems profitable as it reduces the risk of putting all the eggs in a single basket, that is, not depending on a single stock to gain returns. However, during the process, some people might forget about the small investments made by them in penny shares and do not claim the dividends for them.
This happens because penny shares take a lot of time to grow to a significant amount especially when the invested amount is small. The bought shares could remain dormant for years with no investor to claim their dividends. This happens especially with senior citizens who might buy shares from their retirement money and forget to nominate an heir to shares thinking that the investment is too insignificant. After their death, the same invested money leads to unclaimed dividends or shares remaining dormant with companies.
About Reliance Industries Limited
Reliance Industries Limited abbreviated as RIL is an India-based corporate, operating in the Petroleum Refining sector and manufactures Petrochemicals products, Oil, and Gas. It also has a strong presence in other segments like Organized Retail (Reliance Mart, JioMart), Digital Services (Reliance Jio) and other Financial Services. The Refining segment of the company generates the bulk of profit and includes production and marketing related operations of its petroleum products. The Petrochemicals segment deals with the production and marketing of petrochemical products. The Oil and Gas segment comprising of crude oil and natural gas includes exploration, development, and mass production of these products. Its Organized Retail segment is spread across India and includes organized retail outlets of groceries and other household products. The Digital Services segment comprises a range of digital services and investment in telecom infrastructure with the development of new technologies like the 5G network. The Financial Services section includes management and deployment of identified fiscal resources to various financial activities including insurance broking and non-banking financial service. The conglomerate’s other operating areas include Textile, Creation of Special Economic Zones (SEZ), Media, and Entertainment business management.
Status of Unclaimed Shares of Reliance India Limited
Reliance Industries Limited (RIL) is one of the largest conglomerates of India. According to recent MCA (Ministry of Corporate Affairs) reports regarding unclaimed shares, it also has the highest residual of unclaimed dividends. Till 2016 when IEPF was introduced, RIL had almost 113 crores worth of recorded unclaimed dividends of its investors. RIL has released all the data associated with unclaimed dividends on its website. It also urged all the investors to claim their dividends on time and get the refund of shares before it is forced to transfer the related shares to IEPF under the IEPF Rules 2016. The details for unclaimed dividends are available in the following link:
The latest released RIL data also gives the transfer status of IEPF unclaimed funds for different financial years in the following chart. One can access the documents from the link mentioned under the table to get an in-depth understanding of the information.
Status of unpaid/unclaimed dividend for Reliance Industries:
|Unclaimed Dividend up to financial year 1994‑ 95||Unclaimed Dividend for financial years 1995‑96 to 2011‑ 12||Unclaimed Dividend for financial years 2012‑13 and after|
|Transfer of unpaid dividend||Transferred to General Revenue Account of the Central Govt.||Transferred to Investor Education and Protection Fund (IEPF)||Will be transferred to IEPF within 30 days of respective due date(s)|
|Claims for unpaid dividend||Can be claimed from IEPF according to the prescribed procedure under Companies Act, 2013||Can be claimed from IEPF after complying with the prescribed procedure under Companies Act 2013||Can be claimed from the Company’s R&TA Department before respective due date(s)|
Growth Story of Reliance Shares
The above data just shows how much the organization has grown over the past few decades. To understand the value of Reliance shares bought long ago in today’s scenario let’s understand it through the following calculation.
Bonus Shares means that the company is rewarding its shareholders fully paid up shares without any cost for staying loyal to the company and showing their faith in its growth.
Issuing bonus shares at a 1:1 ratio means that for every 10 shares owned by an investor, the company issues another 10 shares for him. This means that if you had bought 100 shares in 1995, then they would have become 100 + 100 = 200 shares.
Rs. 2061 x 800 shares = Rs. 16,48,800 (Sixteen Lakh Forty Eight Thousand Eight Hundred).
|Announcement Date||Effective Date||Dividend Type||Dividend(%)||Remarks|
|11/06/2020||02/07/2020||Final||65%||Rs.1.6250 per share (65%) Dividend|
|30/04/2020||02/07/2020||Final||65%||Rs.6.5000 per share (65%) Dividend|
|18/04/2019||02/08/2019||Final||65%||Rs.6.5000 per share (65%) Final Dividend|
|27/04/2018||27/06/2018||Final||60%||Rs.6.0000 per share (60%) Dividend|
|25/04/2017||13/07/2017||Final||110%||Rs.11.0000 per share (110%) Dividend|
|08/03/2016||17/03/2016||Interim||105%||Rs.10.5000 per share (105%) Interim Dividend|
|17/04/2015||08/05/2015||Final||100%||Rs.10.0000 per share (100%) Dividend|
|21/04/2014||16/05/2014||Final||95%||Rs.9.5000 per share (95%) Dividend|
|16/04/2013||10/05/2013||Final||90%||Rs.9.0000 per share (90%) Dividend|
So, if you had invested in just 100 shares of Reliance India Ltd. in 1995, you would have made tremendous returns by today. This is why we have recommended that recovery of any unclaimed share of Reliance from the past (especially from the 80s) could easily make you a Crorepati by today’s valuation. However, the obvious question that arises now is how would you get the said money even if you find an old share certificate of Reliance in the name of your Grandpa?
The obvious issue would be how to claim these shares as you cannot simply claim them from the company as too much time has passed since the investment was made. As per the rules stated by Government regarding dormant shares, these older shares will now be owned by the Investor Education and Protection Fund (“IEPF”) formed by the Government of India. It was enacted in 2016 and is ruled by IEPF authority to oversee the claims related to old and forgotten investment which dates to more than 7 years from the date of raising a claim.
About Investor Education and Protection Fund (IEPF)
As mentioned above, IEPF was set up by the Govt. to take hold of the unclaimed shares on behalf of the rightful shareholders from the company. People who have made the investment but have forgotten about them due to which the shares have remained dormant for more than seven years gets transferred to this fund.
Before the enactment of IEPF, such unclaimed dividends and shares were transferred to the public funds which were then used by the Central and State governments in the public welfare schemes offered by them and also, other developmental works. The issue was, when people came to make a claim for their dividends later, they would not be able to get it as it was already transferred by the company to the Government. To resolve this conundrum, the government came up with the idea of IEPF. It became a medium to handle the claims for lost or forgotten shares and dividends.
The IEPF authority was set up by the Government to handle the claims for lost funds in invested shares and sanctions the cleared funds to claimants after verifying their ownership of the shares. The authority works under the regulations of the Companies Act, 2013 read with Investor Education and Protection Fund Rules, 2016. These rules mandate that after the declaration of dividend by the company, investors will get 30 days to apply to the company and get their dividend directly from the company. Every company must create an “Unclaimed Dividend Fund” under the IEPF rules and if the investors do not claim their money within 30 days of the release of dividends then their shares will be transferred to this special fund of the company.
The company releases a list of names of investors within 90 days of transferring the amount to the “Unpaid Dividend Fund” on its website. The investor must file a special request to the Nodal Officer of the company to get the money from this fund. Now, even after the transfer of dividend to this special fund, an investor is unable to claim their dividend for seven years then their dividend gets transferred to the IEPF as per the rules. The investor has to make claims to the IEPF authority to get his dividends after that period.
One can simply conclude from the above data that owning shares of Reliance from the 80s could be the most profitable investment ever. Therefore, recovery of lost shares of Reliance is the right thing to do especially in tough times like these when the economy is under severe stress due to the Pandemic. Obviously, one would require legal help to claim all the lost shares but spending a small sum to get the lost shares is not a big deal considering the profits it will bring. Hiring a legal consultant becomes even more important in case the elder has died without claiming the amount and his kin is laying claim on the amount. All the grandchildren/relatives might start asking for a share in the huge amount. This is where legal assistance can play a major role as they can help to get the will of the elderly to resolve the claim issue among family members. A legal professional can also help in filing a claim with the IEPF Authority. So, if you find old shares of Reliance, just find a reputed legal consultant, and apply for getting the refund of your owned shares.
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