How to Claim Inherited Shares After the Death of a Shareholder

When a loved one passes away, their financial assets—such as shares in a company—form part of their estate. If you're an heir or legal representative, understanding the process for the recovery of shares is essential to ensuring those investments are rightfully transferred to the beneficiaries. While the process can be time-consuming and document-heavy, it’s certainly manageable with the right approach.

This guide walks you through everything you need to know about share recovery, including how to recover shares from the Investor Education and Protection Fund (IEPF) if they've been transferred there due to inactivity.

Why Is Share Recovery Necessary?

When a shareholder dies, their shares don’t automatically transfer to the legal heirs. The legal title must be formally changed through a set legal process. Until this is done, the shares remain frozen and cannot be sold, transferred, or claimed for dividends. In many cases, if the shares are unclaimed for seven years or more, they are transferred to the IEPF under Indian law. This makes share recovery from IEPF a common issue among heirs.

Understanding the procedures for claiming inherited shares ensures that valuable assets don’t remain locked away or lost indefinitely.

Step-by-Step Guide to Claim Inherited Shares

Whether the shares are still with the company or have been transferred to IEPF, the process starts with establishing your right to claim them.

1. Identify the Shares and Holding Details

Start by collecting all relevant information about the deceased shareholder’s holdings:

• Company name(s)

• Number of shares held

• Folio numbers (for physical shares)

• Demat account details (for electronic shares)

• Dividend payment history, if any

Check for share certificates, Demat account statements, or past dividend cheques. If these aren’t available, you may need to contact the company’s Registrar and Transfer Agent (RTA) to retrieve shareholding details.

2. Determine Legal Heirship

Before sharing recovery, you must prove your legal relationship to the deceased. This usually involves:

• Death Certificate of the shareholder

• Succession Certificate from a court (in the absence of a will)

• Probate of will (if there is a registered will)

• Legal heir certificate (issued by the local authority or court)

If the deceased had a nominee registered with the company, the shares can be transferred directly to the nominee after verifying identity and documents.

3. Transmission of Shares (Non-IEPF Cases)

If the shares are still with the company and have not been transferred to the IEPF, you need to request a transmission of shares. This is not a regular transfer—it is a legal process initiated upon death of the shareholder.

Documents required generally include:

• Original share certificates (for physical shares)

• Death certificate (notarized copy)

• PAN card and address proof of the claimant

• Succession certificate or probate of will

• Indemnity bond and affidavit as per the company’s format

• Client master list (for credit to Demat account)

Once approved, the company will transmit the shares into the heir’s name. For Demat shares, they will be credited to the claimant’s Demat account.

Recovery of Shares from IEPF

If the shareholder did not claim dividends for 7 consecutive years, the shares would have been transferred to the Investor Education and Protection Fund (IEPF). In such cases, the share recovery process must go through the IEPF Authority under the Ministry of Corporate Affairs (MCA).

1. Check IEPF Status

Visit the IEPF website (www.iepf.gov.in) and use the "Search for Unclaimed Shares" option to check if shares have been transferred. You’ll need the shareholder’s name and company details.

2. File Form IEPF-5 Online

To initiate recovery of shares from IEPF, the claimant must file Form IEPF-5 on the MCA portal. The form requires:

• Details of the claimant and the deceased shareholder

• Company name and folio/Demat account details

• Amount of unpaid dividends, if any

• Bank details for refund

• Aadhaar and PAN of the claimant

After submission, a copy of the IEPF-5 form must be printed and sent to the Nodal Officer of the company along with supporting documents.

3. Submit Supporting Documents to the Company

Post submission of Form IEPF-5, the following documents must be sent in hard copy to the company's Nodal Officer:

• Printout of the IEPF-5 form

• Acknowledgement receipt

• Original physical share certificates (if applicable)

• Indemnity bond and advance stamped receipt

• Copy of Aadhaar, PAN, and death certificate

• Succession certificate or legal heir certificate

The company verifies the documents and forwards its recommendation to the IEPF Authority.

Also Read: Step-by-Step Procedure for SEBI AIF Registration

4. Final Processing by IEPF Authority

Once all documents are verified and the company confirms your claim, the IEPF Authority initiates the transfer of shares and/or dividend amounts to your Demat and bank accounts, respectively.

The entire process usually takes around 3 to 6 months, depending on the accuracy of documentation and response time from the company and IEPF.

Tips for Faster Share Recovery

• Maintain clear and organized copies of all documents

• Submit notarized and self-attested documents where required

• Ensure name consistency in all forms of ID and legal documents

• Follow up regularly with the company’s RTA and IEPF Authority

• Seek legal advice or professional services if the process becomes complex

Common Challenges in Share Recovery

• No nominee registered: This often results in a longer legal process

• Loss of share certificates: Requires additional steps for duplicate issuance

• Multiple legal heirs: May lead to disputes and require a court-issued succession certificate

• Shares transferred to IEPF: Adds more steps and longer waiting times

• Name mismatch: Differences in spelling between documents can cause rejections

Despite these hurdles, timely action and proper paperwork can ensure the rightful recovery of shares.

Also Read: What are the Documents Required for NBFC Registration?

FAQs

1. What happens to shares if no nominee is registered?
If the shareholder did not appoint a nominee, legal heirs must present a succession certificate or a court-approved probate of will. The company will transmit shares based on these documents.

2. How long does it take to recover shares from the IEPF?
The average time for recovery of shares from IEPF is around 3 to 6 months, depending on document verification and coordination between the company and the IEPF Authority.

3. Can I recover dividends along with the shares from IEPF?
Yes, when you apply for share recovery from the IEPF, any unpaid dividends linked to those shares are also claimable and are credited to your bank account upon approval.