Many companies have published an updated list of shareholders who have not claimed dividends in the past seven years. Such lists are released within 60 days of a company’s annual general meeting. About 4,000 investors are on the list of unclaimed dividends for fiscal year 22, while the number is much higher if you take the list of the last seven years. Here’s what you should know about the unclaimed dividend and the process for applying for the same.
Because the dividends remain unclaimed
The dividend distributed by a company may remain unclaimed for various reasons. One, if a person holds shares in physical form and in the event of a change of address, they may not receive dividend checks due to which the dividend remains unclaimed. Also, upon the death of an investor, if their bank account is closed and the nominee is not mentioned, dividends may be missing. Likewise, there may also be other reasons such as not canceling dividend checks even after receiving and name mismatch in bank account.
What happens when there are no buyers?
Once a company declares a dividend, it must distribute it within 30 days. A seven day grace period is granted so that the part that remains unclaimed can be used by the investor, after which the amount should be transferred to a bank account called Unpaid Dividend Account which will be opened by the company in a scheduled bank . After the transfer, the company publishes the list of shareholders and the unclaimed amount, as well as the last known addresses. The unclaimed amount remains in the account for seven years during which investors can apply to the company to claim dividends. Even afterwards, if an amount remains unclaimed, it is transferred to the IEPF (Investor Education and Protection Fund), created primarily to safeguard the interests of investors and promote awareness. Along with dividends, all shares relating to the unclaimed dividend for seven consecutive years are also transferred to the IEPF.
How to claim credits
When the amount lies in the unpaid dividend account and a person claims they are entitled to it, they can request payment from the company. In order to take advantage of the uncollected dividend account from the company’s unpaid dividend account, a letter of request must be sent to the company’s Registrar and Transfer Agent (RTA) which should contain details such as depositary participant ID, customer ID, folio number in case of physical shares together with the period for which the dividend was not received. These are verified by the RTA. Subsequently, it can issue a draft claim for the uncollected amount to the claimant.
If not from the unpaid dividend account, you can request dividends from the IEPF which are transferred after seven years. Here, it is necessary to fill in the IEPF-5 web form and submit the same on which an acknowledgment will be generated indicating the SRN (service request number). Therefore it is necessary to present the original indemnity deposit, copy of the receipt and self-certified copy of the electronic form together with the other documents indicated in the IEPF-5 Form to the Nodal Officer (IEPF) of the company at its registered office for verification. After verification, the refund can be transferred by the IEPF authority to the applicant’s bank account by electronic transfer. If so, the legal heir of the deceased person wishes to claim dividends entitled to the deceased person, documents such as Certified Copy of Death Certificate. The notarial certificate of succession / Probate / Text must also be presented and no objection certificate from another holder, among others, the title of compensation for the transmission.
What you should do
When there is a change of address, bank account or other details, these changes must be registered with the RTA by the shareholder. In most cases, dividends remain unclaimed for those who have problems stemming from physical stock certificates. The dematerialization of the shares and the connection of the bank account to the demat account allows the payment of dividends through the ECS (Electronic Clearing Service) method directly in the bank instead of collecting checks.