Unclaimed Dividend

Unclaimed dividends are those not yet claimed by shareholders and are a liability for the company.
Unclaimed Dividend
3 min
09-January-2024

A company that has declared a dividend is obligated to pay unclaimed dividends. However, if a dividend remains unclaimed for more than seven years, the company may transfer it to the Investor Education and Protection Fund Authority (IEPF), which falls under the jurisdiction of the Ministry of Corporate Affairs.

Unclaimed dividends are sums of money owed to shareholders that have not been claimed for various reasons, such as outdated contact information or neglect. In this article, we will dive into what unclaimed dividends are, provide examples to illustrate the concept, and guide you through the process of checking for and reclaiming these dividends. We'll also explore the implications of unclaimed dividends for both companies and shareholders, and discuss the steps companies take to manage and distribute these funds. By the end of this article, you'll have a comprehensive understanding of how unclaimed dividends work and how you can ensure you're not missing out on potential earnings.

What is an unclaimed dividend?

Unclaimed dividends refer to dividend payments that remain uncollected by shareholders following their declaration and attempted distribution by companies. These funds arise when shareholders fail to claim their dividends due to various reasons, such as outdated contact information, forgotten investments, or dormant accounts.

There can be various reasons why dividends remain unclaimed. Some of these include:

  • The registered address of the shareholder has changed and has not been updated.
  • Bank account details to which the dividend has to be sent have been changed or not updated.
  • Death of the primary holder without any details of nominees or inheritors.
  • Some shareholders are unaware that the dividend was declared, while others may forget to claim.

Example of unclaimed dividend

Consider a scenario where a shareholder of company ‘X’, Mr. A, has not claimed his dividends declared for the last several years. Notifications were sent to Mr. A via mail, but they could not reach him due to an outdated address. These dividends kept accumulating over the years and remained uncollected in the company’s financial records.

The above is a fairly common scenario of unclaimed dividends, especially for large corporations with crores lying in unclaimed dividends. This is because they usually have many shareholders who might simply not be reachable due to changes in the last known contact information.

Also read: What are dividend yield funds?

How do you check for unclaimed dividends?

Here is a step-by-step guide to check if you have any outstanding dividends left to be claimed:

Step 1: You can directly visit the website of the company whose dividends you think have not been claimed by you. An alternative is to visit the Investor Education and Protection Fund (IEPF) website—a government initiative to protect investor interests.

Step 2: On the company website, go to the investor relations tab or shareholder services section that will give you the information regarding dividend details. Alternatively, on the IEPF website, you can enter the Client ID/Account Number to view unclaimed dividends.

Step 3: Under the investor relations tab or shareholder services section, you will find a section for unclaimed dividends dedicated to dividends declared but not claimed. On the IEPF website, select the name of the entry that matches your details.

Step 4: On clicking ‘Unclaimed Dividends’, you will be prompted to enter specific details like your name, Permanent Account Number (PAN), or your folio number to access the result. While on the IEPF website, you can click the box in the S. No. column and then hit ‘Submit’.

Step 5: On entering the details on the company website, a list will appear that will display if there are any unclaimed dividends with the individual’s account. On the IEPF website, you can browse and see the unpaid share dividends for your account.

Unclaimed dividend treatment

Unclaimed dividends that are not claimed within seven years are mandatorily transferred to the Investor Education and Protection Fund (IEPF).

Let us understand this with the help of an example.

A company declared dividends for a shareholder, Mr. A, in 2016. Mr. A did not claim these dividends for seven years until 2023. Hence, the unclaimed dividends will now be transferred to IEPF. However, this does not mean that Mr. A is not eligible to claim his dividends or will have to forfeit his dividend rights.

The shareholder will not have to claim his dividends from the IEPF after following a long-drawn process—the exact details of which we will cover in our next section.

Broadly speaking, it would require preparing a claim application and meeting all necessary legal requirements and documentation.

With this treatment of unclaimed dividends, the funds of the shareholder remain safe and can be claimed by the rightful owner even after several years from the declaration.

Also read: What is IDCW in mutual funds

How to claim unclaimed dividends?

Step 1: Visit the IEPF website

On the homepage, go to the ‘Services’ tab, where you will find the ‘Claim Refund’ option. After clicking, you will be redirected to the ‘Upload eForms’ page.

Step 2: Log in to the MCA Portal

Upon clicking ‘Upload eForms’, the browser will redirect you to the MCA portal and ask you to log in. Once you are logged in successfully, go to the ‘MCA Services’ tab and click the ‘IEPF-5’ option.

Step 3: Fill out the online form

To fill out the refund claim form on the website, you will be required to enter all your details, such as name, folio number, cancelled cheque, PAN number, demat account number, etc., to verify your identity and establish your right to your investment in the company.

Step 4: Attach the required documents

Attach the necessary documents, such as your PAN card, cancelled cheque, ID proof, and other documents that establish your entitlement to the investment in the company. Make sure all details entered are correct to avoid any delays in processing.

Step 5: Submission of the form

Upon submitting the form through the portal, an SRN acknowledgement will be assigned to you to help you track your claim status.

Step 6: Share physical documents with the nodal officer

You must submit physical copies of your documents to a nodal officer designated by the company. Upon accessing your documents, the nodal officer will send an e-Verification Report to the authorities of IEPF.

Step 7: The company files a verification report

In this step, the company's nodal officer will review all the physical documentation you have submitted online. Once complete, an online e-Verification Report will be delivered with approval to the respective authorities of the IEPF.

Step 8: IEPF authority approval

The verification from IEPF can take some time, so you might need to follow up, with 60 days being the maximum time frame. You might also be required to produce additional documents if deemed necessary. Upon successful verification, an approval email will be sent to you on your registered email.

Step 9: Initiation of refund and transfer of money

On successful claim verification, the IEPF authority will start the refund process. The unclaimed dividend amount will be transferred to your bank account.

Also read: What is mutual fund yield?

Why are dividends left unclaimed?

Several factors contribute to dividends remaining unclaimed. Outdated contact information, forgotten investments, and uncommunicated changes to bank details can hinder successful disbursement. Shareholders may disregard small dividend amounts, considering them insignificant. Physical dividend warrants may be returned undelivered due to address changes, while technical issues like incorrect bank details or IFSC codes can obstruct electronic transfers. Long-term investors, especially those holding inherited or older investments, may lose track of their holdings. The lack of regular portfolio monitoring and failure to update Know Your Customer (KYC) details further contribute to unclaimed dividends.

This version maintains the original meaning while presenting the information in a more concise and flowing manner.

Conclusion

Getting hold of your unclaimed dividends can boost your financial health. Recovering assets you would otherwise have lost or forgotten about is always rewarding. Investors should be proactive and not shy away from taking the necessary steps to reclaim their unclaimed dividends.

If you want to ensure transparency and efficiency in your investment journey, you can invest in mutual funds through the Bajaj Finserv Mutual Fund Platform. You can browse over 1,000 mutual fund schemes and compare mutual funds to find the ones that align with your risk tolerance. You can then make a lumpsum investment or SIP investment to realise your financial goals.

Essential tools for mutual fund investors

Mutual Fund Calculator

Lumpsum Calculator

Mutual Funds SIP Calculator

Step Up SIP Calculator

SBI SIP Calculator

HDFC SIP Calculator

Axis Bank SIP Calculator

ICICI SIP Calculator

Tata SIP Calculator

BOI SIP Calculator

Motilal Oswal Mutual Fund SIP Calculator

Kotak Bank SIP Calculator

Nippon India SIP Calculator

ABSL SIP Calculator

Groww SIP Calculator

LIC SIP Calculator

Frequently asked questions

How do I find my unclaimed dividends?

To locate unclaimed dividends, you can:

  • Review Shareholder Statements: Check past statements for any missed dividend payments.
  • Contact the Company: Reach out to the company's investor relations department or registrar for assistance.
  • Utilize Government Resources: Check with the relevant national depository or government websites that track unclaimed financial assets.

To claim unclaimed dividends, you typically need to submit a claim form to the company or the designated authority. This process often involves providing necessary documentation, such as proof of identity and address.

How do I redeem unclaimed dividends?

To redeem unclaimed dividends, contact the company's registrar or follow the specific procedures on the investor relations website, which typically involve submitting a claim form along with necessary identification and proof of ownership documents.

What is unclaimed dividend example?

An example of an unclaimed dividend could be when a shareholder does not cash or deposit a dividend check, leading to the funds remaining with the company as unclaimed.

What causes unclaimed dividends?

Unclaimed dividends often occur due to shareholders not updating their contact details, overlooking notifications, or not being aware of the dividend payments.

What is another name for unclaimed dividend?

Another name for unclaimed dividends is "outstanding dividends."

How many years can you claim unclaimed dividends?

You can claim unclaimed dividends for up to seven years, after which they are transferred to the Investor Education and Protection Fund (IEPF).

What is the time limit for unclaimed dividends?

Unclaimed dividends have a time limit. If a company declares a dividend and it remains unclaimed by shareholders within a specified period (often seven years), the company is legally obligated to transfer the unclaimed amount to the Investor Education and Protection Fund (IEPF).

This transfer ensures that unclaimed funds are not lost and can be utilized for investor education and awareness programs.

This response provides a concise and informative summary of the legal requirement regarding the transfer of unclaimed dividends to the IEPF.

Are unclaimed dividends taxable?

Yes, unclaimed dividends are taxable. They are considered income when they are originally declared and payable, and they must be reported in your tax return for that fiscal year, regardless of whether they are actually claimed or not.

How do I know if I have unclaimed dividends?

You can check for unclaimed dividends on the Investor Education and Protection Fund (IEPF) website or contact the company’s registrar and transfer agent to inquire about any unclaimed amounts.

Show More Show Less

Bajaj Finserv app for all your financial needs and goals

Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finserv App to:

  • Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
  • Invest in fixed deposits and mutual funds on the app.
  • Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
  • Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
  • Apply for Insta EMI Card and get a pre-approved limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
  • Shop from over 100+ brand partners that offer a diverse range of products and services.
  • Use specialised tools like EMI calculators, SIP Calculators
  • Check your credit score, download loan statements and even get quick customer support—all on the app.

Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.

Do more with the Bajaj Finserv App!

UPI, Wallet, Loans, Investments, Cards, Shopping and more

Disclaimer

Bajaj Finance Limited (“BFL”) is an NBFC offering loans, deposits and third-party wealth management products.

The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. 

This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.