How to Claim Your Unclaimed Dividends and Shares

Did your parents or grandparents invest in the stock markets?

If yes, they may have earned dividends on their investments which were never claimed.

As per the Investor Education Protection Fund (IEPF), the value of unclaimed dividends was more than 5000 crores at the end of November last year!

Worry not, in this blog you can learn how to claim these unclaimed dividends and shares.

What are unclaimed dividends and how are they managed?

Investors have various investment options and opportunities in the Indian financial market, but sometimes, funds may go unclaimed or forgotten. When an investor fails to cash in a redemption or dividend cheque before it becomes invalid, the amount is classified as unclaimed. However, investors should also note that unclaimed dividends do not disappear but remain with the respective financial institutions until rightfully claimed.

The unclaimed dividends and shares are held by the company in trust for the shareholder for a certain time period after which they are transferred to the Investor Education and Protection Fund (IEPF) account, which is managed by the Ministry of Corporate Affairs.

Why are dividends left unclaimed?

There could be multiple reasons for dividends being left unclaimed. Some common factors contributing to unclaimed dividends in the Indian market include:

• Change in address
• Misplaced or damaged physical share certificates
• Non-updation of bank details
• Death of the primary holder with no information to inheritors etc.

What is the Investor Education and Protection Fund (IEPF)?

The purpose of the Investor Education and Protection Fund (IEPF) is to increase investor awareness and safeguard their interests against fraudulent activities in the financial markets. Additionally, IEPF also manages the facilitation of the refund process for unpaid dividends and shares transferred to it on behalf of investors.

How can someone find out if they or someone they know have unclaimed dividends?

Here’s a step-by-step guide to help you find out if you or someone you know have unclaimed dividends:

Step 1: Visit this link- https://www.iepf.gov.in/IEPFWebProject/services.html and click on “Search Unclaimed/ Unpaid Amount” under Quick links on the left side of the page.

Step 2: In the next screen that appears, enter the person’s name whose unclaimed amount you want to view and click on Search. Alternatively, if available, one can also search by entering the folio number or Client ID/Account Number.

Step 3: You will be able to see the search results. Click on the name of the entry that is similar to the one you are searching for.

Step 4: You will be shown the details of the entry selected. If it is the current record, you can select it by clicking on the box in the S. No. column and clicking on the Submit button.

Step 5: You will be able to see the list of all the unpaid shares and dividends in the selected person’s name.

How can one claim unclaimed dividends?

As per Rule 7 (1) of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, the unclaimed dividends that have been transferred to the IEPF can be claimed by submitting the IEPF-5 Form.

Here’s a step-by-step guide to help you claim your unclaimed funds:

Step 1: Visit the IEPF website

Visit the iepf.gov.in website. On the homepage. Click on the ‘Claim Refund’ tab under the “Services” section. In the ‘Claim Refund’ tab, click on the ‘Upload eForms’ link on the left side of the page.

Step 2: Log in to the MCA Portal

You will be redirected to the MCA Portal, where you will need to log in. After logging in, you need to click on ‘MCA Services,’ followed by ‘IEPF-5.’

Step 3: Fill out the online form

Fill out the refund claim form online on the IEPF website by providing all the required details like name, PAN number etc.

Step 4: Attach the Required Documents

Attach all the required documents, such as your PAN card and cancelled cheque, along with any other documents that establish your entitlement to the investment in the company.

Step 5: Submit the Form

After filling out the form and attaching the documents, you need to submit it to the IEPF Authority. Once submitted, an SRN acknowledgement will be generated, which can be used to track the status of your claim.

Step 6: Share physical documents with the Nodal Officer

The submitted form needs to be printed and sent, along with all supporting documents, duly signed, to the Nodal Officer of the Company.

Step 7: Verification Report is filed by the Company

The Nodal Officer of the company will verify the physical documents after they are received and  an online E-Verification Report will be sent along with the Approval to the IEPF Authority.

Step 8: IEPF Authority Approval

The claim will be verified by the IEPF Authority, and they may request additional documents or information if necessary. The verification process takes some time, and you may need to follow up with the authority for updates. After the verification, the IEPF Authority will send an approval email to your registered email ID.

Step 9: Initiation of Refund and Transfer of Money

The IEPF Authority will initiate the refund process if your claim is verified and approved, and the amount will be credited to your bank account. The shares will be transferred to your Demat Account.

In the recent announcement of the Union Budget 2023, the Finance Minister emphasized the importance of a streamlined process for investors to reclaim their unpaid dividends and unclaimed shares. To achieve this, an integrated IT portal will be created to simplify the process and make it more convenient for shareholders. The portal will enable shareholders to claim their unpaid or unclaimed shares/dividend amount using a straightforward and user-friendly procedure.

Despite multiple efforts from the authorities concerned, the refund rate remains extremely low at 1.8%. The primary reason for this low refund rate is the shareholders’ lack of awareness. Therefore, we need to step up and help those around us become more aware of the channels and methods available for them to claim what rightfully belongs to them. We know that dividends can be accumulated over a period of time for long-term investors and hence this amount could be much higher for a few individuals than they would think. Hence, it is of utmost importance that investors should ensure that claims are made for the dividends on time which they are rightfully owed.