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
A dividend is a profit that companies distribute to their shareholders. A shareholder can receive the dividend as cash or additional shares. Unfortunately, some shareholders do not claim their share of the profit, resulting in an unclaimed or unpaid dividend that remains with the company.
Suppose, for some reason, you have not claimed your dividend. Don’t worry, it will not vanish! The company will hold the dividend for seven years from the first date it was declared. This rule was implemented as per the Companies Act of India, 2013. The rule also states that the company will hold the unclaimed account in a separate bank account referred to as the Unpaid Dividend Account.
Suppose you have not collected the dividend from the company for seven years. In that case, your dividend amount and the interest accrued are transferred to the IEPF Authority, a body entrusted with the administration of the IEPF.
It is important to remember that you are not alone in experiencing losses from unclaimed dividends.
Who Incurs Losses Due to Unclaimed Dividends?
Three stakeholders – the shareholders, companies, and the government – incur losses due to an unclaimed or unpaid dividend.
- Shareholders: Loss of income and the opportunity to invest or spend the money
- Companies: Since dividends are a legal obligation, they create liabilities for companies leading to additional administrative and regulatory compliance costs
- Government: Governments levy tax on dividends paid to shareholders, and unpaid dividends lead to a loss of revenue
If you have not collected an unpaid dividend from the company or the IEPF, there are processes you can follow to claim the cash or shares.
Step-by-step Process to Claim Unpaid Dividend
The first step you need to take to claim an unpaid dividend is to establish if you are a verified claimant.
Identifying unpaid dividends and verifying you are a claimant:
When you do not claim a dividend within 30 days from the date it was first declared, the company transfers the amount to the Unpaid Dividend account. Within 90 days, the company prepares a list and maintains a register of all shareholders who have not claimed their dividend. The statement and register will include the shareholders’ name, last known address, and the amount of unpaid dividend.
You can visit the company’s website and search for the register to confirm if you are a claimant and get details on the claim information.
Claiming Unpaid Dividend From A Company
The process to claim unpaid dividend from a company is straightforward.
- Check the company’s unclaimed register or contact the company’s shareholder services department to confirm if you are registered as a claimant
- Check the register to know the last date to claim the dividend to avoid missing the deadline
- Submit an application to the company stating that you are entitled to the claim amount or fill out the claim form the company provides. Submit your application well before the last date to claim the dividend.
- Your application must have your name, address, PAN number, folio number, and the unclaimed dividend amount. Submit your application with the documents needed, including proof of identity and ownership of an unpaid dividend.
- The company will follow its protocols as well as the government-approved protocols to verify your claim
- Once the verification is complete and you are verified as a legal claimant,
- the amount is transferred to your bank account
- Shares are transferred to your demat account.
Claiming Unpaid Dividend from IEPF
The process to claim unpaid dividends from IEPF is quite simple.
Check for unpaid dividends: Go to the IEPF website here. Fill in the details and click on search to search for your name and unclaimed amount.
Fill out the e-form: Go to the MCA website here. Fill out the e-form provided on the IEPF website and pay the required fee. Fill out the form accurately before uploading it on the IEPF website to avoid rejection or delays in your claim.
Save your SRN: An acknowledgment is generated when you upload Form 5. It will bear a unique serial number known as SRN. Note the SRN, as you will use it for all future transactions regarding your claim.
Submit the documents: Along with the form, submit documents that include KYC documents and documents that support your claim.
If you are an original shareholder
- A copy of acknowledgment with a unique serial number (SRN) generated on online submission of e-Form IEPF 5
- Indemnity Bond (original) with claimant’s signature
- Advance Stamped receipt (original) with revenue stamp and claimant’s signature, and witnesses’ signature
- Self-attested copy of your Aadhaar Card
- Proof of entitlement (certificate of share/interest warrant/application number, etc.)
- Canceled cheque
- Copy of Passport, OCI, and PIO card in case you are a foreigner or NRI
- If the dividend refund is Rs. 10,000 or more and/or the market value of shares, you would need a non-judicial stamp paper of appropriate value as the Stamp Act of the State prescribes. However, for a claim of Rs. 10,000 or less, you can execute an indemnity bond on plain paper.
If you are a legal heir
A legal heir must provide the required documents as SEBI prescribes, along with the documents mentioned above. The additional documents will be:
- Copy of death certificate of the original shareholder
- Affidavit from the legal heirs
- Indemnity bond
- Succession certificate or probate of will or letter of administration, etc., for share with a market value greater than 2 lakh
- NOC from other legal heirs and relinquishment deed in favor of you as a claimant
Submit the form to the Nodal Officer: Take a printout of Form 5 along with all other documents to the Nodal Officer of the company in an envelope marked “Claim for a refund from IEPF Authority:. The Nodal Officer is found at the company’s registered address.
Verification of the claim: As per the rules, every company is required to share a verification report with the IEPF Authority within 15 days of receipt of a claim refund application.
Processing the Refund: Once the company verifies the application, it is time for IEPF Authority to verify the claim. If the claim is verified, you will receive the amount via electronic transfer.
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.
Am I allowed to resubmit my Form 5 if I have filled it in incorrectly?
Yes, you are allowed to resubmit Form 5 on the IEPF if you have made any errors. This is known as Resubmission, and you can do it within 15 days. Just remember, you can resubmit only once.
How can I track my unpaid claim status?
· Go to https://www.mca.gov.in/mcafoportal/mcatrackComplaintLayout.do
· Input your SRN number along with the start and end date
· Click on Search to track the status