Unclaimed Dividend Recovery of Reliance from IEPF: Why Is It a Good Option?

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,

• How do the unclaimed shares come into being? 
• What is the valuation of Reliance shares bought 25 years ago in today’s terms?
• Why legal help is necessary to claim shares?

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:

https://www.rinfra.com/unpaid-unclaimed-dividend-holders

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)

Source: https://www.ril.com/DownloadFiles/IRForms/Shareholders-Referencer.pdf

Growth Story of Reliance Shares

• The market capitalization of Reliance has multiplied 5000- times from the year 1977 to 2017.
• Total assets increased from Rs. 33 crores to Rs. 700000 Crores.

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.

Calculation

• Suppose you bought 100 shares of Reliance India Limited in 1995 at the price of Rs. 25.48.
• The associated investment for the said shares will become Rs. 2548.
• In 1997, the company issued bonus shares in the ratio of 1:1. Now, what does it mean?

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.

• In 2009, Reliance Industries Limited again issued bonus shares in the ratio of 1:1. Therefore, the 200 shares in your name would have now become 400 shares.
• In 2017, RIL again issued bonus shares at a ratio of 1:1. Now, your number of shares has increased from 400 to 800 shares (400 shares + 400 Bonus Shares).
• Now, the price of 1 share of Reliance India Ltd., as of February 2021, is Rs. 2, 061. Thus, the net calculated value of your shares as of February 2021 will be:

Rs. 2061 x 800 shares = Rs. 16,48,800 (Sixteen Lakh Forty Eight Thousand Eight Hundred).

• So, in just 25 years (1995-2021), the growth of 100 Reliance shares was from Rs. 2548 to Rs. 1648800. This is an approximate increase of 64709%. The growth is obviously humongous and that too is calculated without adding the price gained for dividends offered by the company in the past 25 years.
• The data for the dividend offered by the company since 1997 has been shown in the table following this section. One can easily study the table and calculate the associated dividend for shares accordingly. The total amount for just 100 shares will be huge compared to what was invested.

Source: https://in.investing.com/equities/reliance-industries-historical-data?end_date=1614190264&interval_sec=monthly&st_date=790885800 

 https://economictimes.indiatimes.com/reliance-industries-ltd/infocompanybonus/companyid-13215.cms 

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
20/04/2012	31/05/2012	Final	85%
21/04/2011	05/05/2011	Final	80%
26/04/2010	10/05/2010	Final	70%
07/10/2009	16/10/2009	Final	130%
21/04/2008	08/05/2008	Final	130%
02/03/2007	21/03/2007	Interim	110%
27/04/2006	01/06/2006	Final	100%
27/04/2005	12/05/2005	Final	75%	AGM
29/04/2004	20/05/2004	Final	52%	AGM
23/04/2003	23/05/2003	Final	50%
30/09/2002	23/10/2002	Final	48%
12/04/2001	26/04/2001	Final	42%
30/03/2000		Interim	40%
22/04/1999		Final	38%
21/04/1997		Final	65%	Revised

Source:

https://economictimes.indiatimes.com/reliance-industries-ltd/infocompanydividends/companyid-13215.cms

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.

In Conclusion….

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.

*****

Disclaimer: The contents of this article are for information purposes only and do not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.