Think of unclaimed dividends as hidden fish waiting to be found. Recovering them can be simple using the right bait (correct documentation), finding the right fishing spot (identifying the source), casting your line (initiating the process) and then waiting. This ensures that no profits slip through the net of oversight, turning the journey into a thrilling adventure of reclaiming forgotten earnings.
In this blog post, we will give clarity on how to recover unclaimed dividends.
What is an Unclaimed Dividend?
Unclaimed Dividends are amounts of dividends that the legitimate owners have not claimed. Most unclaimed dividends result from a shareholder’s death, legal heirs being unaware of investments, a change of address or an incorrect address, and the closure of bank accounts linked to Demat accounts.
Companies update the list of investors who have yet to claim dividends in the last seven years within 60 days of holding an Annual General Meeting.
The details of unclaimed dividends, the shareholder’s last known address, and the deadline for transferring such shares to the IEPF are available on the company’s website.
You must write to the business or its registrar and transfer agent and include any necessary documentation to receive a refund.
Amounts transferred to the company’s unclaimed dividends account that have not been paid or claimed for more than seven years will be transferred, along with any accumulated interest, to the Investor Education Protection Fund (IEPF), which is managed by the IEPF Authority (IEPFA), an agency of the government under the ministry of corporate affairs (MCA).
The company then sends a Form IEPF-1 statement to the IEPFA Authority detailing the transfer. The Authority will then take control of the funds and provide the company with a receipt as proof of transfer.
In this article, let’s understand the process of claiming these unclaimed dividends.
How to claim dividends from the IEPF Authority?
You must electronically submit Form IEPF-5 is required to be filed according to sub-section (3) of section 125 of the Companies Act, 2013 and rule 7(1) of the Investor Education and Protection Fund Authority website (Accounting, Audit, Transfer, and Refund) Rules, 2016 for the unclaimed dividend and associated shares.
The process for requesting such a refund has no time limit.
You will now need to write to those companies with your KYC documents, signature verification from the bank, and your Demat account Statement reflecting the transfer of shares to IEPF to claim those shares back into your Demat account. After the necessary verification, the companies will issue you an ‘Entitlement Letter.’ At that point, you can submit the required paperwork to the companies and submit an online IEPF claim. The government alone is handling the IEPF claim.
You will have to get these Mandatory attachments with the IEPF-5 form:
1. The Claimant’s Aadhaar card and, if there are any joint holders, copies of all of their Aadhaar cards
2. For foreign nationals and NRIs, a passport, Overseas Citizen of India (OCI), and Person of Indian Origin (PIO) card
3. Client Master List of the Claimant’s Demat Accounts
4. Proof of entitlement – application number, statement of transaction, bonds, debentures, fixed deposit receipts, certificates of shares, interest warrants, dividend warrants
Once the verification is complete, click the ‘Submit‘ button to proceed with the challan generation.
After successful submission, a Service Request Number (SRN) is generated with an acknowledgment. Then, you must submit an original copy of the indemnity bond, a copy of the acknowledgment, and the IEPF-5 form, along with other supporting KYC documents, to the company’s nodal officer.
The IEPF authority will release the refund to your bank account once the company has verified and approved the application.
Conclusion
In closing, recovering forgotten dividends can be a concern but if you follow these steps: fill out Form IEPF-5 on the IEPFA website, attach necessary documents, and submit. Once approved, the IEPF sends your money back to your bank account.
FAQs
Do unclaimed dividends expire?
Unclaimed dividends not claimed within seven years are transferred to the IEPF account. Shareholders can claim them anytime.
What are the required KYC documents?
Required KYC documents:
For Indian citizens: Self-certified copies of PAN Card and Aadhaar Card.
For NRIs: Self-attested copies of Passport or Overseas Indian Card (OIC) issued by MHA, along with any available supporting documents.
For foreigners: Copy of Passport or PIO Card duly apostatized as per Hague Convention (in place of Aadhaar Card).
What is the Investor Education and Protection Fund (IEPF)?
The Investor Education and Protection Fund (IEPF) promotes investor awareness and safeguards their interests while facilitating refunds for unpaid dividends and shares.
