Unclaimed Dividend & Unclaimed Share

The Indian government has set up the Investor Education and Protection Fund (IEPF) to educate investors and prevent them from losing control of their assets and stocks. In countless cases, investors have failed to appoint a proxy for their shareholdings.


This means that in the event of the investor's death, their investments will be transferred to the government along with unclaimed dividend monies. These funds can then be used by the government as it sees fit unless the investor's rightful heirs assert their claim.


The IEPF enables and encourages investors to approach the government to claim their dividends and seek recovery of their long-forgotten shares, facilitating the recovery of lost shares.


The IEPF was established in the best interest of shareholders and helps protect investors' funds while raising awareness of this issue.


CAN INVESTOR CLAIM BACK HIS SHARES AND DIVIDENDS FROM IEPF


Investors can apply to the government to receive unclaimed dividends and shares up to 7 years after they were considered lost. Usually, people had to approach the respective companies individually to get information about their dividends and shares and then collect them. However, the IEPF is a one-stop solution that allows the public to claim their rightful inheritance from multiple companies through a single channel when it comes to recovering unclaimed shares.


    INVESTORS AS PROTECTED UNDER THE COMPANIES ACT

       The Companies Act of 2013 dictates IEPF’s operations. When a corporation announces a dividend on its stock, the shareholders have 30 days to claim it. If the dividends are not claimed by the shareholders after 30 days, the corporation is required under the above-mentioned legislation to transfer the dividends to a designated account known as the ‘Unpaid Dividend Account’.

 

Following that, the corporation has 90 days to post a list of all shareholders on its website, along with their unclaimed dividends. In case the company sends physical shares to the investor’s registered address and they are returned undelivered, they are then transferred to an ‘Unclaimed Suspense Account’. They can then be claimed from the account above. However, if they remain unclaimed for seven years, they are transferred to IEPF.

 

During this period, the company or its RTA can utilize any means of communication to notify its members of any unclaimed dividends or unclaimed shares held by the corporation. Typically this communication is done via email. If a shareholder wishes to collect their due from the ‘Unpaid Dividend Account’ or the ‘Unclaimed Suspense Account’, they must submit an application to the company’s transfer agent.


However, if a shareholder fails to collect a dividend from the firm for seven years for any reason, the corporation will transfer the unclaimed payout to the IEPF Account. If dividends are not claimed for seven years, the stock on which the dividend was declared is deemed forgotten stock. As a result, they are transferred in the name of the IEPF. If dividends go unclaimed for seven years, both the dividend and the shares are transferred to the IEPF account as well.

 

The procedure of IEPF shares recovery and claiming the dormant dividend has been simplified thanks to these guidelines. The entire process is now more transparent which guarantees that the payouts reach the proper people and are not tainted by fraud.

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