Being personal finance professionals, we come across a variety of queries and documents from our clients. One of the most common documents clients come to us with is old share certificates. These are often excavated from the “pre-Demat” era and are sometimes a false alarm if the company is delisted, etc., or a sudden lottery (in most cases). Guiding your clients about the correct way to handle this and undertake the necessary processes to unlock their value and realize these securities in a useful form is an essential tool for us all. Let us understand this through the following points.

LIFE AFTER 1ST APRIL 2019 – BACKGROUND AND CURRENT RULES

1. SEBI has disallowed companies from accepting a request for the transfer of securities that are held in physical form after 1st April 2019. If anyone is holding shares in physical form then, there is no choice but to dematerialize them to be able to sell or transfer the securities.
2. One can continue to hold shares and other types of securities in physical form even after April 1, 2019. However, they will not be able to lodge the shares with a company or its registrar and transfer agent (RTA) for further transfer of securities.
3. However, after the end of the SEBI deadline, requests for transmission and transposition of securities in physical form only will be accepted by listed companies or their RTAs.

SO, WHAT’S THE PROCESS NOW?

Let me try and explain the process by means of a real-life case study (names changed for confidentiality)

I got a call from Mrs. Persis Cooper(self)who was visiting India with her family. Mrs. Cooper, with her husband Feroz Cooper, her Parents Mr. Aadar and Niloufer Bandukwala, and kids Khurshid and Dinaz migrated to Canada.
Mrs. Cooper approached us about some shares which needed to be dematerialized. She had a bundle of original share certificates along with a lot of unclaimed dividend cheques to start with. Since physical transfer is now not possible and her parents are old, she requested that we get her affairs in order.

We found the physical share certificates were in the following combinations –

• Mrs. Persis Cooper & Mr. Feroz Cooper(self and spouse)
• Mr. Aadar Bandukwala & Mrs. Niloufer Bandukwala (Mrs. Cooper’s Parents)
• Mr. Aadar Bandukwala, Mrs.Niloufer Bandukwala and Persis Bandukwla (self in maiden name with parents)
• Mrs. Persis Cooper & her son Khurshid Cooper (self and son)
• Mr. Yazad Cooper (husband’s brother in Canada)
• Mr. Nusli Cooper single holder (husband’s father, now deceased)
• Mr. Nusli Cooper (husband’s father, now deceased) & Mr. Feroz Cooper(husband)

Challenges in this case study:

a) Mrs. Cooper was in India only for a month (Challenge: investor’s limited availability in person)
b) Mrs. Cooper had misplaced some share certificates in the process of moving. (Challenge: Misplaced Share Certificates)
c) Her father, though of sound mind, was suffering from Parkinson’s and was unable to sign and held share certificates jointly with his wife. (Challenge: Unable to sign)
d) There were some certificates which were in Mrs. Cooper’s maiden name. Some shares held by Mr. Feroz Cooper had his name spelt as Feroze Cooper (Challenge: Name mismatch due to name change and spelling error)
e) There were some certificates with her son who was a minor at the time of buying those shares.(Challenge: Shares purchased before the investor turned 18)
f) Mr. Feroz has a brother who is staying in Canada and did not come to India with them.(Challenge: Shareholder unavailable to sign)
g) Mr. Feroz Cooper’s father had some shares in Single Holding in both physical form (Challenge: Shareholder deceased)

Here it was imperative that we did quite a few things simultaneously. Pre-empting all the possible documentation required is one of the things that aids the efficiency of resolution. We made a water-tight plan to have everything in place while they were available in person. In the future, even if the client would not be in India, we could continue the process on their behalf.

All documents were required to be self-attested. All indemnity and affidavits (we follow a checklist to avoid any snags) we thought we would be asked for were franked so that we just had to fill it, get it signed, and notarised to attach with our reply.

Basic Steps to Begin With

• Create an Excel sheet with initial data about available shares (we create this for our clients, but investors can also make this on their own)

• Check that all certificates are available and valid by checking for:

1. Face Value on the certificate – Some of the companies are sub-dividing their equity shares of higher value to a smaller value.

2. Name of the Company must be as per what is mentioned in the share certificate. In some cases, the company name might change due to the company’s internal effect i.e., Merger/demerger/amalgamation, etc.

3. Whether there is any Bonus/split of shares declared by the company. To avoid missing out on additional shares and to avoid repetition of steps, hence prolonging the process. The ideal way to ascertain this is to get in touch with the registrar or the company. Websites like https://www.bseindia.com, orwww.moneycontrol.com are also extremely useful.

4. In Case of Loss of Certificates, there could be 2 possibilities for loss of Certificates:

a) Undelivered – The certificate might be with the company, in case of change of address the certificate is returned to the company. If the Certificates are with the respective companies, they do resend them.
b) Loss of Certificates – if the company does not have the certificates and have been misplaced by the shareholders

Here during the process, we came across certificates of companies that we never heard of but when we did our due diligence, we were shocked to see the value. We saw certificates from Ind Suzuki (1984) which now is TVS motors, we came across a communication from Knoll Pharma of bonus shares (1998) which is now Abbot Ltd. and she had these shares. The best was a communication we came across from Bajaj auto (1998) for 200 shares on further enquiry we discovered that she now owns 4800 shares of Bajaj auto and 2400 shares of Bajaj FinServ and 2400 shares of Bajaj Holding. So be careful when you scrutinise the documents you never know if you are sitting on a gold mine and you are not even aware of it.

Beginning the Process

These are the things we submitted to the registrar as a part of our initial communication to start the process:

1) We asked for the process specific to each company in question. We also shared copies of all share certificates we had along with the self-attested copies of personal documents like PAN, Aadhaar, passport.
2) Banker’s verification is a document that helps to verify and update the signature in the Registrar’s record. This needs to have the following information
a. Bank Details: account number, account opening date, IFSC Code, Name of the Bank and Branch where the account is held.
b. Account Holder’s Details: Name, address, email ID and mobile number and signature
c. Bank’s Credentials (to be filled in by bank): Common Seal, name, employee code, designation and mobile number of the branch manager or signing authority.
3) Updating Bank Account: We updated Mrs. Cooper’s bank account so that all or any pending dividendscould be transferred simultaneously to their bank account and help them in getting future dividends credited via ECSrather than cheque.
4) Revalidation of Dividend Cheques: We also sent the dividend cheques we had in hand for revalidation so they could be received while Mrs Cooper was in Mumbai
5) Letter of Authority: This authorized us to seek information, make enquiries, collect documents, and correspond on behalf of all concerned shareholders.
6) Additional documents like marriage certificate, death certificates, and documents pertaining to name change or death of any holder from the shareholders of the certificate.

(Investors may also prepare this set on their own before seeking help with dematerialisation.)

Whenever communication is established with the registrar, it is particularly important to be in constant touch with them and try to get in touch with the right person. Although the process is computerised there is a human being at the other end who is going to check and verify everything. Therefore, constant communication helps. Also, finding out verbally whether everything is in order would help to get things ready for the second round of dispatch as opposed to waiting for the formal communication from their end.

Opening Relevant Demat Accounts

After establishing communication with the Registrar, the next step was opening Demat accounts in all the combinations in which the physical certificates were held. These would eventually be linked to bank accounts so future dividends could directly be credited.

Here I would also like to mention that in case the order of holding is interchanged then only one Demat account needs to be opened. Along with this, a separate form for transposition needs to be filled while dematerialising shares.
(Applicable to some combination of people holding shares but the order of holding is different)

Additional Procedures in Special Cases (As per the Challenges enlisted above)

• Availability of the Client for a Limited amount of time (Challenge A): We procured self-attested copies of all the basic documents (PAN, Adhaar, Passport etc) as well as indemnity and affidavits filed and notarized while they were in India to keep the ball rolling in their absence as well.

Misplaced Share Certificates (Challenge B): The companies usually require the following:

• Indemnity Bond on a Non-Judicial Stamp Paper, as per Mumbai Stamp Act for loss of shares.
• Affidavit on Non-Judicial Stamp Paper, duly Notarized.
• Advertisement in News Papers. (If required).
• Copy of F.I.R. lodged with Police Dept. for loss of shares.
• Affidavit for Change of Signature on Non-Judicial Stamp paper as with time, signatures may differ in company records and your current signature (if required)
• Affidavit for One and the same person on stamp paper (if there is a name change or correction in name is required due to Marriage or Minor become Major)

• Medical Incapacity (Challenge C): For Mr Bandukwala, who was suffering from Parkinson’s we made sure we had the thumb impression updated in his bank and Demat account. Also, a doctor’s certificate was attached with every communication sent to registrars. (Applicable when signing is not possible by the investor due to health reasons)

Name Mismatch (Challenge D):

• In Case of Spelling Error: We submitted copies of an affidavit for the person being one and the same.
• In Case of Change in Maiden Name: In addition to the above affidavit, we submitted a copy of the Marriage Certificate and the Gazette

• Shareholder is no longer a Minor (Challenge E): We applied for aPAN card for the Client’s son who was now a major. We opened a bank account in his name and requested the Registrar to update all records. We also requested for unclaimed dividends to be credited to the new bank account and applied for new share certificates.

• Unavailability of Shareholder (Challenge F): For Mr Cooper’s brother, since he was unable to travel with the family, he created a Power of Attorney in Canada which was attested by the local authority. This authorized us to execute the process on his behalf. This was submitted at every step involving shares in his name.

• Shareholder Deceased (Challenge G): The resolution of this challenge has been explained in detail below.
Mr. Feroz Cooper’s father, Mr. Nusli Cooper (deceased) had some physical shares in single and joint names and had 2Demat account, one where he was a single holder and the other joint with Feroz cooper.

Transmission is the process where the securities of a deceased account holder are transferred to the account of the legal heir or nominee.

There are 4 possible cases:

1. The deceased has a Demat Account in his name (single holder)
2. The deceased has a Demat Account (in joint holding)
3. The Deceased does not have a Demat Account (shareholding is single)
4. The Deceased does not have a Demat Account (shareholding is joint)

Procedure to be followed by claimant for Case 1 & 2

At the time of transmission, the Nominee (case 1) or Joint Holder (case 2) can submit the Client Master Form(given by the company where the Demat account is held) containing Demat account details where the shares are to be transmitted. This ensures that the beneficiary gets shares directly in Demat mode. This simplifies the process considerably.

Procedure to be followed by claimant for Case 3

Legal heirs/nominee/claimant must correspond with each company individually in which securities are held along with the following supporting documents.

• Death Certificate.
• PAN and Aadhaar of Claimant.
• Specimen Signature of Successor etc., dependent upon various circumstances may perhaps be considered essential for transmission by the Company.
• Original Share certificate.
• Ration Card

If the Market Value of the shares exceeds 2 Lakhsanyone of the below-mentioned documents
• Succession certificate
• Copy of probated will
• Letter of Administration

On receipt of the above documents, Registrar and Transfer Agent (RTA) sends the draft of affidavit/indemnity bond / no-objection to be executed on non-judicial stamp paper of requisite value and is furnished by the legal heir.

In case you do not have the original share certificate, then the duplicate cum transmission procedure may be done simultaneously to save time.

Procedure to be followed by claimant for Case 4

Where shares are held in joint names, a certified copy of the death certificate of the deceased shareholder must be submitted at the registered/corporate office or to Registrar and Share Transfer Agent of the Company. This needs to be submitted along with the share certificates so that the name of the deceased can be deleted from the Company’s records as well as the share certificates.

If the shareholder is an NRI and is doing the documentation for Transmission and Duplicate Share certificates like Franking, Notary, Bankers Verification or signing any documents, it may be imperative to be present in India as the RTA or Company may ask for the proof of your presence in India while signing the documents.

FINAL PROCEDURE WITH DEPOSITORY (Applicable for any kind of demat of shares once the share certificates are in order)

Once we received the physical shares as per our requirements, we filled in a DRF (Demat Request Form) which is available with the Depository Participant (that is the broker). We submitted the same along with physical certificates that were to be dematerialised. Separate DRF must be filled for each ISIN(every security has a unique ISIN which can be found easily online).

This process typically takes 15-20 working days to credit shares in the respective Demat Accounts.

BONUS

Procedure to Claim Outstanding Dividends

Nowadays, determining the outstanding amount of dividend has become easier. A direct search on the company’s website should provide all requisite holding details in the investor tab. To claim such amounts we need to follow the below procedure:

• Request letter: A request letter should be made to the company’s registrar and transfer agent (RTA). It should mention the folio number in case of physical shares, or depository participant ID and client ID, and the period for which dividend has not been received. If the shares are held jointly, they should be signed by all shareholders.
• Outdated dividend warrant may be provided, if available, the client master list reflecting the current shareholder details for shares held in the Demat form, Self-attested identity proof i.e. PAN card/Passport copy as well as an indemnity bond in the format prescribed by the company.

Dividends should be claimed on a regular basis. If dividends remain unclaimed for seven consecutive years, then the dividends along with their related shares are transferred to Investor Education and Protection Fund (IEPF) Authority.

This may seem complicated and a daunting journey to embark on. As someone who has done this multiple times for clients with various complications and situations, I can say that nothing is impossible. This was just a guide with the hope to demystify this entire process.

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