Unclaimed dividends are a hidden treasure trove for many investors, who remain unaware of such unclaimed fragments resting with the companies. Over the years, the estimated collective figures of dividend money have gone unclaimed. Reportedly, more than Rs. 4,000 crores are lying in the accounts of listed Indian companies, and more than Rs. 10,000 crores are with the Investor Education and Protection Fund (IEPF) awaiting claims.
In the case where one has invested in the listed company and not claimed the dividend, it would be treated as unclaimed after a specified period. But there is no need to worry as claiming these dividends back is a straightforward process if you understand the simple steps and requirements to do so.
In this article, we will guide you through the step-by-step procedure to Trace Unclaimed Investments and claim them from listed companies. We will further list a few reasons for unclaimed dividends along with the process to track and claim process. This process is made possible through the Investor Education and Protection Fund (IEPF) under the Ministry of Corporate Affairs (MCA) in India.
What are Unclaimed Dividends?
A dividend is a portion of a company’s profit that is paid to the shareholders as a reward for the investment in equity in that company. The announcement of dividends is invariably made periodically, either annually or quarterly. The payments may either be in cash or by way of additional shares. The payment of dividends depends on the earning position of the company, and shareholders are entitled to the dividends according to the number of shares held by them.
The company keeps the dividend for the shareholder for some time. If not claimed after the stipulated time (usually 30 days), such a dividend is called unclaimed. Under those circumstances, the company has to transfer such unclaimed dividends to a special account called the Unpaid Dividend Account. After seven years from when the dividend became unclaimed, all such dividends were transferred to the IEPF administered by the Ministry of Corporate Affairs.
Causes of Unclaimed Dividends
It is not unusual to find unclaimed dividends, which are put down to several reasons, but with the primary reasons being unsurprisingly that:
Outdated Contact Information: Where a shareholder has changed their address, email, or mobile number, the company is unaware of it.
Incorrect Bank Details: In some instances, the bank account details given by the shareholder could be incorrect or out-of-date; for example, if the bank account just becomes inactive or dormant.
Demat Account Issues: Active or outdated Demat accounts will not be credited, thereby resulting in no dividend payment.
Death of the shareholder: If a shareholder dies without furnishing necessary nominee details about the inheritance, dividends shall also remain unclaimed.
Shareholder’s Ignorant: They may not know there had been a declaration, especially if they have not been following their mutual fund’s announcements actively.
What Happens to Unclaimed Dividends?
If dividends remain unclaimed for 7 years, it is required that the company transfer such unclaimed dividends to the Investor Education and Protection Fund (IEPF) undertaken by the government under the Ministry of Corporate Affairs. This is for the security of the funds with an intent to assist rightful shareholders to put forth future claims.
How to Track Unclaimed Dividends?
Once we are aware of the concept of unclaimed dividends, let’s see how one can track if he has any unclaimed dividends from listed companies.
STep:1 Visit the IEPF Website
To track unclaimed dividends, you will have to open the IEPF portal. This is a government-initiated single platform wherein all unclaimed dividends and shares are sent after 7 years.
This is how you can easily track down your unclaimed dividends:
- IEPF website: You have to log in to the official IEPF website.
- Select the ‘Search Unclaimed/Unpaid Amount’ option: You’ll find this option in the “Quick Links” section.
- Provide Details: Search by the name of the shareholder, folio number, or Demat account number. If you don’t know the folio number, the name search will also help you find any unclaimed dividends associated with your name.
- View Search Results: After feeding in the details, the unclaimed dividends will be displayed. Go through them keenly to find out the unclaimed dividends that belong to you.
Step 2: Verify Details
Once you have found your name or the aforementioned records, check that the details line up with your shareholding and dividend history. It is important since it can help you make certain that the dividend at stake is yours.
Step 3: Get Detailed Information from MCA
If you want further elaborate tracking and to claim the unclaimed dividend, then you might have to check the Ministry of Corporate Affairs (MCA) portal. That will open up more elaborate records about your dividends and shares transferred to IEPF.
Process- Claiming Unclaimed Dividends from Listed Companies
Once you have tracked your unclaimed dividends, the next step is to file a claim. Here’s how you can claim them:
Step 1: File Form IEPF-5
- Visit the Ministry of Corporate Affairs (MCA) website and download Form IEPF-5. This form will be used to apply for your unclaimed dividends.
Step 2: Attach Required Documents
Documents you will need to attach:
- Copy of pan card
- Demat a/c details
- Cancelled cheque
Step 3: Submission on the MCA Portal
- Complete the Form IEPF-5 and file it online with MCA.
- You will receive a Service Request Number (SRN) that can be used to track your claim.
Step 4: Send Physical Documents
- Make a physical copy of the application form and any supporting documents and send them to the company’s nodal officer for IEPF to verify. The company will authenticate the details and forward the information to the IEPF authority.
Step 5: Follow-Up
- Claims typically wash through the IEPF authorities within 60 days, during which additional documentation and clarifications may be sought. Make sure you are responsive and efficiently provide any further requested information.
Step 6: Claim Approval
- Upon successful verification, an email will confirm the acceptance of your claim. The pending dividends will then be transferred into your bank account once it is approved.
Ways to Avoid Unclaimed Dividends
Unclaimed dividends can cause frustration and financial loss, but by taking proactive steps, you can ensure that your dividends are received promptly. Here are some key ways to avoid unclaimed dividends:
Update Contact Info
- Keep your email, phone, and address updated regularly with your broker and the company.
Keep Track of Dividend Payments
- Keep a close watch on your dividend payments and the IEPF portal for any unclaimed dividends regularly.
Ensure Bank Details Are Current
- Update your bank account information to avoid any failures in receiving payments.
Stay Active with Shares
- Stay on top of your stock holdings and ensure they are updated as necessary.
File Claims Quickly
- Do not waste time in advancing claims for unclaimed dividends.
Respond to Notices
- Act swiftly on any correspondence from the company or the IEPF concerning unclaimed dividends.
Use Online Platforms
- Track your dividends and what is unclaimed via the IEPF portal or company platforms.
Review Dividend History
- Check up on your dividend payment records regularly so as not to miss any payments.
Submit Complete Claims
- Ensure the accuracy and completion of your claim form so that you may not be rejected.
Stay in the Loop
- Stay in the loop regarding your company’s dividend policies and payment schedules.
Still, if you have unclaimed dividends stuck in IEPF, talk to Investorlink experts and get the solutions for the Recovery of Unclaimed Dividends.
Conclusion
Unclaimed dividends are sums of money sitting unattended in the accounts of companies awaiting claim by their real shareholders. The process for claiming these has been made simple by the portal initiated by the IEPF. By following the steps outlined above and ensuring that your contact information is updated, you can easily track and reclaim any unclaimed dividends or shares.
Just keep in mind that even if your dividends are being transferred to the IEPF, your funds are still safe and can be claimed anytime. All you need to do is go through the right steps and stay alert on your investments. So, if you have unclaimed dividends, track and claim them ASAP! To get expert assistance in recovering your unclaimed dividend from listed companies, visit https://investorlink.in/.
Frequently Asked Questions (FAQs)
An unclaimed dividend is a portion of a dividend that is supposed to have been paid to a company shareholder but has not been paid simply and plainly because the shareholder failed to claim it for whatever reason and within a specific time frame. Accordingly, such dividend is classified as “unclaimed.” Companies usually declare dividend payments every year or every quarter, but if shareholders don’t claim them before a timeframe set (usually within 30 days), they will be unclaimed. Unclaimed dividends are then subsequently transferred to the IEPF when they remain unclaimed for seven years.
Legally, after seven years of remaining unclaimed, companies must transfer the amount to the Investor Education and Protection Fund, or IEPF. The Investor Education and Protection Fund is maintained by the Ministry of Corporate Affairs in India and serves as a holding platform for such funds to enable rightful claimants to come forward for it later. Investor awareness and protection of such interests are what the fund essentially deals with.
You can search for your unclaimed dividends on the official website of the Investor Education and Protection Fund, where dividends become unclaimed after 7 years. The website has the feature of searching unclaimed amounts by entering your name, folio number, or Demat account number. In case of any unclaimed dividends related to your name, they will be shown in the search results.
Once you know there are some unclaimed dividends under your name, check them carefully. Match the dividend history with your records and ensure the dividends are yours. Make sure you check the name of the company, the year of declaration, and the amount to verify that it is indeed yours. That information will have to match your previous shareholding and dividend declarations.
When claiming your unclaimed dividends, you will need the following documents:
-PAN Card
-Demat Account Details
-Cancelled Cheque
Dividends that are awaiting claim must be submitted through the Ministry of Corporate Affairs (MCA) website by filling in Form IEPF-5. This form addresses the claiming of those unclaimed dividends and the shares transferred over to the IEPF.
Yes, the nodal officer of the company must receive one hard copy of Form IEPF-5 and all annexures within one week after making the online application.
The Service Request Number gets generated after an online submission of Form IEPF-5. This is a unique number that provides tracking of the status regarding whether the claim has been filed in the MCA portal. It serves as a reference for you and the legal authority to follow the application status.
After the application is made via Form IEPF-5, the entire process for claim verification and transfer of the amounts is defined within a maximum period of 60 days. However, discrepancies/errors and additional documentation requests may lead to delays.
To ensure that the application will not get rejected, please see that:
-All entries in Form IEPF-5 must be filled in correctly and completely.
-All necessary attachments (PAN card, Demat account details, and cancelled cheque) must be included.
-Hard copies of the Form and documents are sent to the correct nodal officer of the company.
-Follow-up should be done with the company in cases where a claim was made only to make sure that it is considered on time.
Related Blog: How to Check and Claim Your Unclaimed Dividend?