Can Legal Heirs Claim Shares from IEPF Without Probate?

The Investor Education and Protection Fund (IEPF) was created under the Companies Act, 2013 to safeguard the money and shares of investors that remain unused or forgotten for a long time. As per the law, if dividends or shares are not claimed by an investor for seven continuous years, the company is required to transfer those dividends and shares to the IEPF. The idea behind this system is to protect investors and ensure that their assets are not misused or lost.

In recent years, with the shift towards dematerialisation of shares and a sharp rise in retail investors, many families are now discovering old or forgotten investments. This situation becomes more complicated when the original shareholder has passed away, and the shares or dividends have already been transferred to IEPF.In such cases, the legal heirs such as children, spouse, or other family members often face confusion. The most common question they ask is:

Can we recover shares from IEPF without getting probate or a succession certificate?

This question has become very important in estate and succession planning, especially because probate proceedings can be time-consuming, expensive, and stressful for families. Many heirs are unaware of the rules and worry that they may permanently lose their inherited investments.Over time, the government has introduced procedural relaxations and simplified documentation requirements in certain cases, especially where the value of shares is small or where family relationships are clear.

Is probate mandatory for claiming shares from the IEPF, or can legal heirs recover such shares without probate?

Probate proceedings can take a lot of time, cost a significant amount of money, and add emotional stress especially for families handling small investments or situations involving multiple heirs. That’s why it is important to know when probate is actually mandatory and when simpler documents can be used instead to settle the matter.

What is IEPF?

The Investor Education and Protection Fund (IEPF) is a government-managed fund created under Section 125 of the Companies Act, 2013. It is handled by the IEPF Authority, which works under the Ministry of Corporate Affairs (MCA).

In simple words, IEPF is meant to protect investors’ money and shares that have been forgotten or left unclaimed for a long time.

Main purposes of IEPF

The IEPF has two clear objectives:

• Protecting investors’ interests: If dividends or shares are not claimed for several years, they are transferred to IEPF so they remain safe and can be claimed later by the rightful owner or legal heirs.
  

• Spreading investor awareness: The fund is also used to educate people about investing, financial planning, and protecting their rights as investors.

Simply put, IEPF acts as a safe holding place for unclaimed investments and helps investors stay informed and protected.

What Gets Transferred to IEPF?

Under Section 124 of the Companies Act, 2013, certain investor assets are moved to the Investor Education and Protection Fund (IEPF) if they remain unclaimed for seven continuous years.

In simple terms, the following items are transferred to IEPF:

• Unpaid or unclaimed dividends: Dividends declared by a company but not collected by the shareholder for seven consecutive years are transferred to IEPF for safekeeping.
  

• Equity shares linked to those unpaid dividends: If dividends on shares remain unclaimed for seven years, the related equity shares are also moved to IEPF.
  

• Matured deposits that were not claimed: Fixed deposits accepted by the company that have matured but were never withdrawn by the investor are transferred to IEPF.
  

• Matured debentures and their redemption amounts: When debentures mature and the investor does not claim the redemption amount, both the principal and related amounts are sent to IEPF.
  

• Interest earned on all the above amounts: Any interest accrued on unclaimed dividends, deposits, or debentures is also transferred along with the main amount to IEPF.

Once these are transferred, the company no longer holds the shares or money. Instead, the IEPF Authority becomes the temporary custodian of these assets. The original investor or their legal heirs can still recover them later by filing a proper claim, but the claim must now be made directly with the IEPF Authority, not the company.IEPF holds your unclaimed investments safely until the rightful owner comes forward to claim them.

Rights of Shareholders and Legal Heirs

Continuity of Ownership Rights

Under the IEPF system, an important legal principle is that ownership of shares is not lost just because they are transferred to IEPF. The transfer only means that the shares are kept in safe custody due to non-claim for a long period.The original shareholder or, in case of death, their legal heirs continue to remain the rightful owners of the shares. They have the full legal right to reclaim both the shares and related dividends at any time, provided they follow the prescribed IEPF claim procedure.

Who Can Claim Shares from IEPF?

The following persons are legally allowed to claim shares and dividends from the Investor Education and Protection Fund (IEPF):

• Original shareholder: If the shareholder is still alive, they can directly apply to reclaim their shares and dividends from IEPF.
  

• Nominee: If the shareholder had registered a nominee, the nominee can file the claim after the shareholder’s death.
  

• Legal heirs: In the absence of a nominee, the legal heirs such as spouse, children, or other family members can claim the shares.
  

• Successors under a Will: If the shareholder left behind a valid Will, the beneficiary named in the Will can claim the shares, subject to required legal documents.
  

• Administrator or executor appointed by court: If a court has appointed an administrator or executor to manage the estate, that person is authorised to claim the shares on behalf of the estate.

Probate, Succession Certificate and Legal Heirship

To know whether probate is compulsory, it is important to first understand the legal documents used in inheritance and succession.

Probate of Will

Probate is a court-issued certificate that officially confirms that a Will is genuine and valid. It is granted by a competent court and serves three main purposes:

• Confirms the authenticity of the Will: The court verifies that the Will is real and legally valid.
  

• Recognises the authority of the executor: It confirms that the person named in the Will has the legal right to act.
  

• Allows administration of the estate: It gives legal permission to manage and distribute the deceased person’s assets.
  

In practical terms, probate is not required in every case. It is mandatory only in certain jurisdictions and situations, mainly relating to immovable property located in specific cities such as Mumbai, Chennai, and Kolkata. For movable assets like shares, dividends, and securities, probate is not universally mandatory, and in many cases, claims can be processed using alternative documents, depending on the facts of the case.

Succession Certificate:

A Succession Certificate is a court-issued document that comes into play when a person dies without making a Will (this is called intestate death). It is issued under the Indian Succession Act, 1925.This certificate legally proves who is entitled to receive the deceased person’s movable assets.

What does a Succession Certificate allow?

Once issued, it authorises the holder to:

• Collect shares, dividends, mutual funds, debentures, and other securities
  

• Receive bank balances, fixed deposits, and other financial dues
  

• Deal with investments that are in the name of the deceased
  

For IEPF-related claims, this certificate is especially important because it gives court-backed authority to the claimant, reducing the risk of disputes.

When is a Succession Certificate usually required?

A succession certificate is commonly asked for when:

• The deceased did not leave a Will
  

• There are multiple legal heirs
  

• The value of shares or investments is significant
  

• The company, RTA, or IEPF Authority wants strong legal proof before releasing assets
  

Why do companies and IEPF rely on it?

Companies and the IEPF Authority rely on succession certificates because:

• It protects them from future claims by other heirs
  

• It clearly identifies who has the legal right to collect the assets
  

• It carries the authority of a court, making it legally safe
  

Is it always mandatory?

No.In smaller or undisputed cases, especially where heirs are clearly identifiable, legal heir certificates, affidavits, NOCs, and indemnity bonds may be accepted instead. However, if authorities insist on a court order, a succession certificate is usually the preferred and practical option (especially when there is no Will).

Letter of Administration

A Letter of Administration is a legal document issued by a court when the deceased person’s estate needs to be managed, but probate cannot be granted.

It is issued in situations such as:

• There is a Will, but no executor is named in the Will, or
  

• The Will is disputed, unclear, or challenged, making probate impractical at that stage
  

Once issued, the Letter of Administration gives the holder authority similar to probate. This means the person appointed by the court is legally empowered to manage, collect, and distribute the deceased person’s assets, including shares, dividends, and other securities.

Legal Heir Certificate

A Legal Heir Certificate is an official document that only identifies the surviving family members of a deceased person, such as the spouse, children, or parents.By itself, this certificate does not transfer ownership of shares or assets. It simply confirms who the legal heirs are.

However, in low-value and non-disputed cases, companies, RTAs, and even the IEPF Authority often accept a Legal Heir Certificate along with supporting documents, such as:

• Affidavits from heirs
  

• Indemnity bonds
  

• No Objection Certificates (NOCs) from other heirs
  

A Legal Heir Certificate helps prove family relationships, and when combined with other documents, it can be sufficient to claim shares especially where the risk of dispute is low.

Legal Structure for Recovery of Shares and Unclaimed Amounts from IEPF

The process for recovering shares and other unclaimed amounts from the Investor Education and Protection Fund (IEPF) is governed by a clear legal framework laid down by the government.

The key laws and rules involved are:

• Companies Act, 2013 especially Sections 124 and 125, which deal with unclaimed dividends, shares, and the creation of IEPF
  

• IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, which explain how shares and money are transferred to IEPF and how they can be claimed back
  

• Subsequent amendments and circulars issued by the Ministry of Corporate Affairs (MCA) from time to time to simplify and clarify procedures
  

Procedure for making a claim

Rule 7 of the IEPF Rules specifically lays down:

• The step-by-step procedure for filing refund claims
  

• The documents required for different types of claimants
  

• The process to be followed when legal heirs, nominees, or successors are making the claim
  

Important point on probate

A very important aspect of these rules is that they do not say probate is compulsory in every case. Instead, the requirement of probate or other court documents depends on:

• The facts of the case
  

• The value of the claim
  

• Whether there is a Will or multiple heirs
  

• The level of risk involved

Documentary Requirements for Legal Heirs Claiming Shares from IEPF

The documents needed to recover shares from the Investor Education and Protection Fund (IEPF) are not the same in every case. They depend on a few important factors, such as:

• Whether a nomination was registered by the shareholder
  

• The value of shares held in each company
  

• The number of legal heirs involved
  

• Whether the shareholder left behind a Will or not
  

Where Nomination Exists

If the deceased shareholder had already registered a nominee, the process becomes much simpler:

• Probate is not required
  

• The nominee is treated as the rightful claimant for IEPF purposes
  

• Only standard documents are generally required, such as:
  

• Death certificate of the shareholder
  

• KYC documents of the nominee (PAN, Aadhaar, address proof)
  

• Bank details of the nominee
  

Nomination avoids succession disputes and allows the nominee to claim shares from IEPF smoothly, without the need for court proceedings.

Can Legal Heirs Claim Shares from IEPF Without Probate?

Yes. Legal heirs can claim shares from the IEPF without probate in many cases. Probate is not an automatic or compulsory requirement under the Companies Act, 2013 or the IEPF Rules.

Whether probate is needed depends on practical factors such as:

• Value of the securities: Higher value shares usually attract stricter scrutiny, and authorities may insist on court orders to avoid future disputes.
  

• Availability of alternative legal proofs: If documents like legal heir certificates, NOCs, affidavits, and indemnity bonds are available, probate may not be required.
  

• Whether there is any dispute among legal heirs: If all heirs agree and there are no competing claims, simpler documentation is generally accepted; disputes often make court intervention necessary.

When Probate Is NOT Required

Probate is generally not required when:

• All legal heirs agree and submit No Objection Certificates (NOCs)
  

• There is no dispute or competing claim
  

• Indemnity bonds and affidavits are provided to protect the company, RTA, and IEPF Authority
  

• The value of shares is modest and the case is straightforward
  

In such cases, IEPF claims are often processed using legal heir certificates, affidavits, NOCs, and indemnities, without going to court.

When Probate Becomes Practically Necessary

Probate or a court order may become unavoidable when:

• The value of shares is substantial
  

• There are multiple legal heirs who disagree
  

• The Will is disputed or challenged
  

• The company or RTA insists on judicial confirmation to avoid future legal risk 

Procedure for Claiming Shares from IEPF as Legal Heir

Step 1: Transmission of Shares

Before filing an IEPF claim, the legal heir must get their name recorded in the company’s records by completing the transmission process.

Step 2: Filing Form IEPF-5

The claimant must file Form IEPF-5 online on the MCA portal, providing:

• Share details

• Claim amount

• Bank and demat details

Step 3: Submission of Physical Documents

Physical copies of:

• Form IEPF-5 acknowledgement

• Supporting documents

• Indemnity and affidavits

must be submitted to the company’s Nodal Officer.

Step 4: Company Verification

The company verifies documents and submits a verification report to IEPF Authority.

Step 5: Approval and Credit

Upon satisfaction, the IEPF Authority credits:

• Shares to the claimant’s demat account

• Dividends to the bank account

Common Challenges and Reasons for Rejection

Many IEPF claims are delayed or rejected due to simple but avoidable issues. The most common reasons include:

• Incomplete documentation: Required forms or supporting papers are missing or not properly attached.
  

• Missing NOCs: No Objection Certificates from other legal heirs are not submitted where required.
  

• Incorrect affidavits: Affidavits are wrongly drafted, improperly notarised, or contain incorrect details.
  

• Delay in submission: Documents are not submitted within the prescribed timeline after filing the claim.
  

• Mismatch in signatures or personal details: Differences in names, signatures, or personal information across documents lead to objections.

Importance of Estate Planning and Nomination

Many disputes and delays in IEPF claims arise simply because basic estate planning steps were not taken. The most common gaps include:

• No nomination registered for shares and investments
  

• Outdated KYC details, such as address or bank information
  

• Absence of a proper Will, leading to confusion among heirs

Comparative Perspective: Probate vs IEPF Practice

While probate is a strong and court-backed proof of inheritance, the IEPF follows a more practical and investor-friendly approach, especially in cases involving small investors.

Instead of insisting on probate in every situation, the IEPF allows the use of alternative documents where the risk of dispute is low. This approach helps families avoid unnecessary legal costs and long court procedures.

Conclusion

Legal heirs often worry that shares transferred to the IEPF are lost forever, especially when the original shareholder has passed away and probate proceedings seem complicated. However, probate is not mandatory in every IEPF claim. The Companies Act, 2013 and IEPF Rules allow heirs to recover shares using alternative documents such as a legal heir certificate, affidavits, indemnity bonds, and No Objection Certificates (NOCs), particularly in low-value and undisputed cases. The key idea is that ownership does not end when shares move to IEPF they are only held in safe custody by the government.

Probate or succession certificates become necessary mainly when the share value is high, heirs disagree, or authorities require stronger legal proof to avoid disputes. In clear and consensual family cases, IEPF follows a practical and investor-friendly approach. With correct documentation, coordination among heirs, and compliance with procedures, shares and dividends can be successfully recovered without court intervention, saving time, cost, and stress.

Frequently Asked Questions (FAQs)

Q1. Is probate compulsory to claim shares from IEPF?

Ans. No. Probate is not compulsory in all cases. It depends on the value of shares, presence of disputes, and availability of alternative documents.

Q2. What if the deceased shareholder left no Will?

Ans. Legal heirs can claim shares using a succession certificate or, in low-value cases, affidavits and indemnity bonds.

Q3. Can one legal heir claim shares without the consent of others?

Ans. Generally no. NOCs from other heirs are required unless a court order exists.

Q4. Is a Legal Heir Certificate sufficient for IEPF claims?

Ans. By itself, no. It must be supported by affidavits, NOCs, and indemnity bonds.

Q5. How long does an IEPF claim take?

Ans. Typically, 3–6 months, depending on documentation accuracy and verification timelines.

Q6. Can NRIs claim shares from IEPF without probate?

Ans. Yes, subject to the same rules. Additional documentation and attestation may be required.

Q7. What happens if there is a dispute among heirs?

Ans. The IEPF Authority generally requires a court order to resolve competing claims.

Q8. Can IEPF rejected claims be re-filed?

Ans. Yes, after rectifying defects and submitting additional documents.

Q9. How can future IEPF issues be avoided?

Ans. By updating nominations, maintaining KYC, and preparing a clear Will.