Did you know that there might be some money waiting there for you, which you had not claimed? Many investors forget their earned dividends when they have moved to another address or have not updated their details with their stockbroker. Due to this reason, a large amount of unclaimed money, roughly around Rs,50,000 crores, is now lying in the Investor Education and Protection Fund (IEPF).
If you have ever had stocks as part of your investments, then there is a likelihood that unclaimed dividends or shares are due to you. In this article, we will guide you through how to find out whether you have unclaimed dividends and how to retrieve the amount back to your bank account. It’s easier than you might think!
What do you Understand by Unclaimed Dividend?
An unclaimed dividend is a payment announced by a company that the shareholder never claimed. Due to any of the several factors, a shareholder might not be aware of their right to claim a share dividend. The causes likewise contribute when one of the parties involved dies without giving nomination details.
The dividend is considered unclaimed when more than 30 days have passed following the declared payment date. The company keeps unclaimed dividends on behalf of the owners for a certain period (usually seven years). But after that, they end up in the hands of the IEPF, maintained by the Ministry of Corporate Affairs.
Although companies are obliged to pay dividends in this scenario, the unclaimed funds eventually end up as a goodwill reserve protecting investor interests through the IEPF. The IEPF Authority administers the payout of unclaimed dividends to the owners, duly verified upon claims.
About Investor Education and Protection Fund in Brief
The IEPF is the Investor Education and Protection Fund formed in 2013 under the Companies Act, the initiative aims to protect the interests of investors and raise awareness about various financial markets. This fund takes care of all unclaimed dividends and shares due for over seven years. All unclaimed funds are transferred into the IEPF, providing a measure of protection from the moment the owner fails to arise till the actual owner arrives to claim.
For instance, if a shareholder doesn’t claim their dividends due to a change in contact details or if their only bank account gets closed, the company must transfer those share dividends to the Investor Education and Protection Fund. Through the IEPF portal, after following the prescribed procedure, the unnamed dividend can be subsequently claimed and returned to the rightful owner.
Commons Reasons for Unclaimed Dividends
Given below are the significant reasons for unclaimed dividends-
Change of Address or Non-communication: When a shareholder changes his address without informing the company. This leads to undelivered communication. Important cheques or notifications regarding dividends may not reach them, which later creates problems.
Lack of Awareness– Many shareholders are unaware of the dividends and do not keep track, leading to unclaimed dividends.
Nominee or Legal Heir Issues: On the death of shareholders, if the nominee or legal heir is unaware or fails to claim the dividend for various reasons causes the transfer to IEPF.
Forgotten or Lost Share Certificates- There are situations where shareholders lose their physical share certificates and forget about them. In such cases, the dividend payments might not be received because the company may not have accurate ownership records or may struggle to track smaller, older holdings.
Inactivity in Shareholding: Not everybody is active in trade. Some shareholders, after investing, do not keep up with the changes and updates. They are unaware of the decided time to claim the dividends.
Unpaid KYC: It is required to fulfil the documentation and verification process with the company’s registrar. When a shareholder fails to do so, dividends remain unclaimed.
Inactive Accounts: Inactive demat accounts being unclaimed can lead to dividends being transferred to IEPF.
Steps to Find out If you have Unclaimed Dividends
Ways to check for unclaimed dividends and missing money from various sources include:
Company Websites– These days, many companies do have an “unclaimed dividends” section, where a user can enter his/her folio number, DPID, or PAN to search for any unpaid dividends. Some companies let you download the forms or submit claims online.
Stock Exchange Websites– The NSE and BSE Websites have sections where you can search for unclaimed amounts using your PAN or name. Such platforms yield dividends for many companies, which can be organized according to either date or amount.
IEPF Website– The IEPF portal reveals unclaimed dividends, shares, and interest transferred to the fund. Enter your PAN, your name, or your company name to view everything sent to IEPF and download the status of a claim along with the forms for submitting one.
Through the DEMAT Account– By logging into your trading account, you can trace your portfolio concerning dividend history and company actions. You can sort of compare these with your bank statements to check what has not come into your account.
How to Retrieve your Unclaimed Money?
If you’ve missed out on claiming dividends, whether they’re with the company or have been transferred to the Investor Education and Protection Fund (IEPF), follow the given simple step-by-step guide to help you retrieve your unclaimed money:
Gather Your Details
- Your folio number, PAN card, original share certificates, and bank account details.
- Signature should match those on the company records, the address, mobile number, and email ID need to be updated.
If the Dividend is with the Company
- Write a letter addressed to the company secretary or RTA, with all necessary details such as the PAN card copy, and updated bank details, and make a request for the dividend issuance.
- Fill in the dividend claim form and attach the necessary documents; keep all the attached documents as copies.
- When a couple of weeks pass by; ensure to follow up on progress.
If the Dividend is with IEPF
- Visit the IEPF website and get the IEPF-5.
- PAN card, bank details, share certificates, and so on should be attached.
- Online submission will generate an SRN that will help track it, after which a physical copy must be sent to the nodal officer of your company for verification.
- Be patient after that; the IEPF takes time to verify and approve your claim before a refund is released.
What is the Time Taken to Claim the Unclaimed Dividends?
The time taken to claim the Unclaimed Dividends can take from 2 weeks to a few months. It depends on whether the dividend is still with the company or has been transferred to the Investor Education and Protection Fund (IEPF) and how quickly the necessary steps are completed.
Ways to Avoid Missing Dividends in The Future
In order to avoid unclaimed dividends, make sure to do a few of these key things:
Keep Records Updated– Provide accurate bank details, addresses, and emails for companies. Connect PAN with all your investments and accounts. Update nominee details in case of any unfortunate event.
Technology Work– Register with ECS for direct credit of dividends to your bank account. Keep a regular check on the demat account using bank alerts. Use investor portals or emails sent by the companies.
Mark the Dates– Mark a calendar for dividends and record dates. Make sure to ask through a follow-up once dividend creation is due but uncredited.
Be Aware– Get acquainted with dividend policies and any changes at the company and keep yourself informed. Annually, give reminders to check your investments.
Conclusion
Unclaimed dividends may occur when a shareholder fails to collect the dividends due by a company, perhaps due to a change of address, ignorance, or check default on the sharing of information, such as in the case of death where no detailed nominee has been submitted.
Over time, unclaimed dividends will be moved to the Investor Education and Protection Fund (IEPF), which will hold them until the rightful owner comes to claim them. Make sure your contact information, bank information, and PAN details are up to date to ensure you don’t miss any future dividends. This would include reviewing your demat account regularly, applying for ECS for direct bank credit, and keeping yourself informed of dividend declaration dates. Technology and information will help you to ensure that no dividend is missed, and hence, there would not be displaced to IEPF.
To recover your unclaimed dividend from IEPF, visit https://investorlink.in/.
Frequently Asked Questions
The time required for processing a claim refers to claiming unclaimed dividends. Depending on whether the dividend is still with the company or was already transferred to the Investor Education and Protection Fund (IEPF), this may take anywhere from 2 weeks to a couple of months to get processed. If dividends belong to the company, the process could be expedited, but if already transferred to the IEPF, the verification process may stretch out the wait. The IEPF generally takes time to vet the claim and approve the refund before releasing it to the claimant.
Yes, it is possible to make multiple claims on the same form. You can claim more than one unclaimed dividend or shares of different companies when filing with the IEPF, provided you follow the required procedure and attach the requisite documents in support of each claim. The IEPF allows for a joint filing of claims under IEPF-5, which would then be processed accordingly.
If a joint shareholder, co-claimant, or legal heir is entitled to file for unclaimed dividends on behalf of a deceased shareholder or for shares held in common, then the legal heir or joint shareholder is required to provide valid proof of his relationship to the deceased (like death certificate, legal heir certificate, or a copy of the will), with the other necessary documents such as PAN details, share certificates, and the relevant claim forms. The IEPF allows claims to be made by legal representatives and assures that the rightful heirs and joint shareholders can recover the unclaimed amounts.
No limit exists; there is no restriction on the number of claims that one can file with the IEPF. Unless you have valid unclaimed dividends, shares, or interest, you can file a claim for each item. It is important to provide all necessary documents and details for each claim, as each claim is evaluated and proceeded with separately.
To claim unclaimed dividends, documentation required would include:
– PAN card: For identification.
– Bank details: For proper credit into account. Must mention the bank name, branch, and account number.
– If the claim is based on physical shares, share certificates are needed.
– Along with it is the Dividend Claim Form, either by the company or by the IEPF.
If you don’t claim your dividends within the IEPF’s time frame, the unclaimed funds may remain in the IEPF indefinitely. However, as long as the money hasn’t been transferred out of the fund for any other purpose, you can still make the claims to retrieve; it quickly. The sooner you look at the unclaimed dividends, the easier it will be for you to get at them; the longer you wait, the more complicated it becomes.
There are several ways to check if you have received a dividend:
– By checking your bank or brokerage account statement.
– By reviewing the dividend history in your brokerage account.
– By calling the investor relations department of the company for confirmation.
Yes, if your dividend is still pending with the company and has not yet been transferred to the IEPF, then you can directly approach the company to claim the dividend. Compose a request to the company’s registrar and transfer agent (RTA) or company secretary, attaching your PAN and updated bank details along with the share certificates.
Related Blog: How to Claim Unclaimed Dividends from Listed Companies?