Unpaid Dividend: Understand How To Claim Them

Did you know that the Investor Education and Protector Fund (IEPF) conducted a study that showed unclaimed dividends in India amounted to INR 100 billion in 2022? Yes, you read that correctly! The IEPF, a fund created to help investors and shareholders, holds this staggering amount, waiting for the rightful claimants to come forward.

Are you a shareholder who missed out on collecting a dividend? Are you looking to claim your unpaid dividend? Well, you are at the right place. This article will act as a guide to help you claim what is rightfully yours.

Understanding Unpaid Dividend: What Are Unpaid Dividends and Why They Occur?

A dividend is a profit that companies distribute to their shareholders. If shareholders fail to claim it, the dividend remains unclaimed, becoming an unpaid dividend. Companies hold these dividends in a designated Unpaid Dividend Account for seven years before transferring them to the IEPF Authority, where shareholders can still claim them but through a formal process.

Reasons for Unpaid Dividends: Common Issues and Oversights

• Outdated or incorrect bank account details
• Change of address without updating records
• Lack of awareness about dividend payouts
• Mismatch in nominee or shareholder details

How to Claim Unpaid Dividend: A Detailed Process

1. Check for Unclaimed Dividend Information

Steps to Verify Dividend Status on Company Websites

• Visit the company’s official website and navigate to the Investor Relations or Unclaimed Dividend section.
• Enter your details such as PAN, folio number, and shareholder ID to check if you have any unpaid dividend.
• Companies also publish a list of shareholders with unpaid and unclaimed dividends.

2. Gather Necessary Documents for Claiming Unpaid Dividend

To claim your unpaid dividend, prepare the following documents:

• PAN Card (self-attested copy)
• Bank account proof (canceled cheque or bank statement)
• Shareholding proof (Demat account statement or share certificate)
• Updated KYC details

3. Submit a Claim to the Company’s Registrar

Role of the Registrar and Transfer Agent (RTA) in Processing Claims

• The Registrar and Transfer Agent (RTA) maintains shareholder records and processes unpaid dividend claims.
• Shareholders must submit a written request to the RTA along with required documents.
• Once verified, the RTA facilitates the transfer of the dividend amount to the claimant’s registered bank account.

Procedure for Claiming Unpaid Dividend Transferred to IEPF

1. What is IEPF and Its Role in Dividend Recovery: Importance of Recovering Unclaimed Dividends for Investors

The Investor Education and Protection Fund (IEPF) is a government-mandated body responsible for holding unclaimed dividends transferred from companies after seven years. Shareholders can reclaim their unpaid dividend and unclaimed dividend from IEPF through a structured process.

2. How to File an Application Through IEPF Form-5

• Visit the IEPF portal and download Form IEPF-5.
• Fill in details such as shareholder name, PAN, Aadhaar, and unclaimed dividend amount.
• Upload the form along with necessary documents.

3. Submitting Documents and Following Up With the Company: Key Requirements: PAN, Proof of Ownership, and Bank Details

• After submitting Form IEPF-5, print it and send it along with the supporting documents to the Nodal Officer of the company.
• The company verifies the claim and submits a report to the IEPF Authority within 15 days.

Upon approval, the IEPF transfers the unpaid dividend to the claimant’s registered bank account.

Common Challenges in Unpaid Dividend Claims

1. Delay in Processing Claims by Companies
   • Some companies may take longer than expected to verify claims, requiring consistent follow-up.
2. Missing or Incorrect Documentation
   • Ensure that all required documents, such as PAN and proof of shareholding, are updated and accurate.
3. Lack of Awareness About Unclaimed Dividend Timelines
   • Many investors miss the seven-year deadline for claiming dividends before they are transferred to IEPF.

How to Prevent Future Unpaid Dividends

1. Update Contact and Bank Details With Companies
   • Ensure that email, address, and bank details are up-to-date with the company’s registrar and transfer agent (RTA).
2. Monitor Dividend Payments Regularly
   • Keep track of dividend announcements and payment timelines to prevent missing out.
3. Use Digital Tools for Tracking Dividend Records
   • Register on online investment tracking platforms to receive alerts for dividend credits and unpaid dividend records.

Conclusion

A shareholder has the right to claim their share of unpaid dividend. But you must fill out the forms accurately to avoid rejection or delay. The process will become easier for investors to claim an unpaid dividend in the future as the government has highlighted the need to establish an Integrated Portal.

FAQs on Unpaid Dividends