Shares Due to IEPF: Section 124(6) Seven-Year Screening and the IEPF-4 Reconciliation

Test share transfer and cash transfer independently

Section 124(6) of the Companies Act, 2013 covers shares for which dividend has not been paid or claimed for seven consecutive years or more. A payment or claim in any year of the relevant seven-year sequence prevents transfer on that sequence. This is different from section 124(5), which measures seven years for an individual amount from its transfer to the Unpaid Dividend Account and then provides a 30-day period to transfer the amount to the Fund. Maintain separate share and cash registers; an old unpaid dividend may still require cash treatment even where the share transfer test fails.

Read the applicable text: India Code: Companies Act, 2013, section 124(5)–(6) MCA Gazette G.S.R. 178(E): substituted Rule 6 Gazette G.S.R. 571(E), 2019: amendment to Rule 6(5) and related provisions IEPF Authority: IEPF-4 instruction kit

Reconstruct the holding history

Link each dividend event to the folio or demat identifier and share class, using the member register and registrar or depository data. Match payment references and claims, including later settlements, and investigate returned or failed payments. If identifiers or quantities changed, bridge them through the corporate actions rather than assuming every historical row belongs to the current quantity. A missing payment entry is not proof that the holder did not claim the dividend.

Separate transfers from exception reporting

Build a candidate list, then screen the restrictions under Rule 6, including an applicable restraint order, a pledge or hypothecation within the rule, and shares already transferred. Check the scope of the exception and any corresponding reporting obligation. Keep each supporting document and its scope. Distinguish an excluded holding because the statutory seven-year test is not met from one that meets the test but cannot be transferred and may require exception reporting. Rule 6 provides for notice to the affected shareholder at the latest available address three months before the transfer due date, with simultaneous public notice in a leading English newspaper and a leading regional-language newspaper with wide circulation, directing holders to the identifying details on the company’s website. Obtain Board authorisation for the Company Secretary or other signatory. Transfer eligible shares within 30 days of their becoming due, subject to applicable exceptions.

Match the current form and keep claim evidence

For the covered filings, use the current IEPF-4 instruction kit, which records the merger of IEPF-3 into IEPF-4. Select the purpose corresponding to shares transferred or the applicable information for shares and dividend not transferred. For a section 124(6) transfer, the instruction kit identifies purpose field 2(a), approved linked dividend filing SRN at field 2(d), corporate-action date at field 3 and share count at field 4(b). Reconcile the investor-wise data to those fields. Rule 6(5) provides a separate deadline for IEPF-4: file within 30 days of the corporate action under Rule 6(3)(c) and attach the public notice. For a qualifying restraint order, the kit identifies a separate non-transfer reporting purpose and a 30-day period from financial year-end. Apply the Rule 6(3)(b) proviso to the facts of each exception. A claimant can seek return of shares transferred to the Fund through the prescribed IEPF-5 process. Use the applicable form version; the 2025 amendment substituted IEPF-5 from 6 October 2025. Retain the original transfer and dividend history for the claim review.

Six worked illustrations

All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.

Illustrative example 1: Seven unclaimed years

A reconciled holding of 1,200 shares meets the statutory test across seven consecutive years. If no separate restriction applies, 1,200 enter the transfer population before final processing.

Illustrative example 2: One claim interrupts the sequence

A holding of 900 shares has six unclaimed years in the seven-year schedule and a proved claim in year four. The current seven-year sequence contributes zero shares to transfer on that basis.

Illustrative example 3: Cash remains separate

One historic dividend of ₹8,000 meets the separate cash ageing test; another year’s ₹3,000 dividend was paid and interrupts the seven-year share test for the relevant holding. On the stated facts, the cash review includes ₹8,000 while the share transfer candidate amount is zero shares.

Illustrative example 4: Screen exceptions

Of 4,800 candidate shares, 600 are covered by a verified applicable restraint. The transfer working contains 4,200 shares and the exception population 600.

Illustrative example 5: Corporate action break

The approved list is 3,100 shares but the depository confirms transfer of 2,950. The difference of 150 shares requires investigation before the filing is treated as reconciled.

Illustrative example 6: Corporate action quantity bridge

A holding of 400 shares is affected by a documented one-for-one bonus, with both quantities confirmed to fall in the supported current eligible holding. Reconcile 400 original and 400 bonus shares to 800 current shares; do not infer eligibility from the quantity change alone.

Ten-step verification table

Step	Action	Evidence
1	Identify the legal population	Section 124(6) and relevant Rule 6 records.
2	Build a holding crosswalk	Folio, demat ID and share-class history.
3	List seven consecutive years	Dividend events and year-by-year status.
4	Verify claims and payments	Bank, registrar and correspondence evidence.
5	Separate cash ageing	Unpaid Dividend Account dates and balances.
6	Track corporate actions	Historical and current share quantities.
7	Screen restrictions	Restraints and other applicable exceptions.
8	Document communication and approval	Notices, authorisation and final investor list.
9	Reconcile actual movement	Depository confirmation and excluded quantities.
10	File and archive	IEPF-4 purpose, acknowledgement and claimant evidence.

Sixteen practitioner FAQs

1. Is the seven-year test based on one dividend amount?

No. The share test concerns the dividend history for the relevant shares across consecutive years.

2. Does a claim in one of the seven years matter?

Yes. It interrupts the transfer test on that sequence.

3. Can cash still be due to IEPF when shares are excluded?

Yes. Apply the separate section 124(5) cash test to the amount.

4. Does a failed transfer prove dividend was paid?

No. Reconcile the payment result and any claim evidence.

5. Is a pending claim the same as a verified claim?

Confirm the facts and preserve status rather than guessing.

6. How are duplicate folios treated?

Reconcile identity and holdings before counting the same shares.

7. What if share quantities changed?

Track corporate actions and prove which current holdings are covered.

8. Does absence of a bank entry settle the test?

No. Also verify claims and alternate payment evidence.

9. What if a court order restrains transfer?

Review the actual scope, duration and exception reporting requirements.

10. Can any commercial lien be treated as a statutory hold?

Verify that the restriction falls within the applicable rule.

11. Is the candidate list itself evidence of transfer?

No. Match the actual corporate action confirmation.

12. Which form should the team check?

Use the current IEPF-4 instruction kit and applicable filing purpose.

13. Is IEPF-3 still the separate V3 route for the merged data?

The official kit states that IEPF-3 was merged into IEPF-4.

14. Can the same shares be transferred again in a later batch?

Check prior action and avoid duplicate transfer.

15. Can the holder reclaim transferred shares?

Section 124(6) preserves the prescribed claim route.

16. What should the company preserve for a claim?

Dividend history, holder identifiers, transfer confirmation and filing references.