Personal Finance

Claiming unclaimed dividend

M. S. VAIDYANATHAN | Updated on January 12, 2018 Published on January 15, 2017

Claiming unclaimed dividend

Till recently, the unpaid or unclaimed dividend lying with a company for more than seven years was required to be transferred to the “Investor Education and Protection Fund (IEPF)” created by the Government of India. In the recent past, a couple of changes having significant impact for shareholders have been introduced under the provisions of Section 124 (6) of the Companies Act 2013. The present position is that shares in respect of unclaimed/unpaid dividend for seven years or more shall be transferred to the account created for this purpose, namely, IEPF Suspense Account on completion of three months from the effective date of notification of the IEPF (Accounting, Audit, Transfer and Refund) Rules, 2016, that is, from July 7, 2016 or such other date as may be extended.

Claiming dues

Once the unclaimed amount is transferred to the IEPF account, it does not preclude the investor from claiming the amount which is rightfully due to him. Similar is the case with shares, which may be in dematerialised or physical form.

Shareholders holding shares in physical form, whose shares are liable to be transferred to IEPF Suspense Account, should understand that the company concerned will be issuing duplicate share certificates in lieu of the original share certificate(s) held by them for the purpose of transfer to IEPF Suspense Account as per the Rules and upon such issue, the original share certificate(s) which stands registered in their name will stand automatically cancelled and will have no effect whatsoever.

For many reasons, investors fail to get their dividend amounts, especially where the shares are held in physical form. Their address might not have been duly updated with the company concerned. Sometimes, where investors have a stake in many companies, they may miss out on updating their records and consequently lose out on what is their due.

In any case, in compliance with the mandatory provisions of the Companies Act, all listed entities are required to host on their website the list of shareholders who have not claimed their dividend. How many shareholders pick up the clue from the newspaper advertisements or visit the website of the companies where they hold a stake is a pertinent question. It is common knowledge that mind-boggling sums of such dividend are transferred periodically to the IEPF account and remain unclaimed.

The process

The procedure for claiming the shares transferred to the IEPF Authority has been spelt out in the IEPF website

To avoid the hassles, shareholders can act in a proactive manner, go through their holdings, visit the website of the companies and make a claim to the company concerned wherever applicable, for there is still time. After all, it is our hard earned savings; so why subject it to unwarranted loss of time and money .

The author is a freelance writer and a cost accountant and company secretary

Published on January 15, 2017
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