Bought Shares in Your First IPO? Five Things to Set Up Now So They Never End Up in the IEPF

The Jio Platforms issue drew a very large number of applications — it was reported as subscribed about 22 times overall — and for many people it was the first IPO they had ever applied for. If you received an allotment, the shares are now in your demat account.

Demat is a great improvement on paper. There is no certificate to lose, nothing to be forged, no torn or water-damaged folio. But it is a common belief that demat shares can never end up in the Investor Education and Protection Fund, and that belief is wrong.

How demat shares end up in the IEPF

The rule is the same for paper and demat. Under section 124(6) of the Companies Act, when the dividend on a shareholding has gone unpaid or unclaimed for seven consecutive years, the company must transfer the shares themselves to the IEPF Authority. For demat holdings, the shares are simply moved out of your account into the Authority’s.

For a demat holder, a dividend goes unpaid in a very ordinary way: it is sent to the bank account linked to the demat account, and that account has since been closed. The payment fails, nobody notices, and the clock starts. The other common route is a death — the investments are in demat, but nobody in the family knows the account exists. Why shares and dividends move to the IEPF.

Five things to set up now

1. Keep the bank account on your demat account current. Whenever you close or change a bank account, update it with your broker or depository participant the same week. This one habit prevents most demat holdings from ever drifting towards the IEPF.

2. Add a nominee. New demat accounts must either name a nominee or formally opt out, and many people opt out just to get the form finished. Nominate instead. When a nominee is registered, the shares pass to them on a death certificate and a simple form, instead of the family proving who the legal heirs are. How to add a nominee.

3. Keep your mobile number and email up to date. Companies send dividend intimations and IEPF notices to the email and address on record. A notice that goes to an abandoned inbox is the same as no notice.

4. Write down where your investments are. One page is enough: the broker, the depository participant, the client ID, and your PAN. Keep it with your other important papers and tell one family member where it is. The depositories, NSDL and CDSL, also email a consolidated account statement listing your holdings across demat accounts — make sure it goes to an email address your family could reach.

5. Once a year, check for unpaid dividends. Not every company pays a dividend, but once one does, each unpaid dividend starts its own seven-year clock. A yearly look takes ten minutes. How to check unclaimed shares and dividends by PAN.

If there are paper shares in the family too

The people most at risk are not new investors but their parents and grandparents, whose holdings are still on paper with addresses from decades ago. If your IPO application is the first time you have thought about shares in years, it is worth asking the older generation the same questions. What to check on old physical shares.

None of this is advice on whether to hold or sell any share — we do not give investment advice. It is simply how to make sure that whatever you own stays yours. If you are weighing that decision, the questions to ask yourself and how the tax differs if you sell now or after a year may help.

Source: subscription figures as reported by Chittorgarh.