Dividends are declared out of profits made by a company and distributed to shareholders. But if they are unclaimed for more than seven years, they are transferred by the company to Investor Education and Protection Fund Authority (IEPF). Here’s how to claim them.
Form IEPF–5
The rightful claimant or legal representative of a deceased person needs to fill the IEPF-5 form on the IEPF website (https://www.iepf.gov.in/IEPF/refund.html).
Documents
The following documents need to be provided:
- Aadhaar card of holder (passport/OCI/PIO card in case of NRIs).
- Client master list of demat account of the claimant.
- Proof of entitlement—share certificate, dividend warrant, transaction statement, etc.
- In case of death of original shareholder, notarised copy of death certificate along with succession certificate/probate or Will and NOC from other holders.
- Indemnity bond for transmission.
Process
After the application is submitted, a service request number is generated. Original copy of indemnity bond, copy of acknowledgement form, IEPF-5 form and other documents need to be submitted physically to the nodal official appointed by the company.
Verification and processing of refund
After the application is approved by the company, the IEPF will released the refund and credit it to the applicant’s bank account.
Points to note
- Shares transferred to the IEPF are debited from the demat account. If they were held in physical form, they are deemed to be cancelled.
- Any further dividends on such shares are credited to the IEPF until they are claimed by the rightful owner.
Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
FAQs
Filing Your Claim with IEPF to Recover Unclaimed Dividends
- E-form IEPF – 5 on the MCA portal to make your formal claim.
- PAN card copy as photo identity proof is compulsory.
- Statement showing your active Demat account details with any stockbroker or depository participant registered with NSDL/CDSL.
Original copy of indemnity bond, copy of acknowledgement form, IEPF-5 form and other documents need to be submitted physically to the nodal official appointed by the company. 1. 2. After the application is approved by the company, the IEPF will released the refund and credit it to the applicant's bank account.
Can I still claim my unclaimed dividends? ›
Submit completed e-Dividend Mandated forms at the nearest branch of your Bank or Registrar to register for the collection of your unclaimed dividends and subsequent dividends electronically. At the end of the process, the due dividends will be credited to your preferred Bank Account.
How do you account for unpaid dividends? ›
Reporting entities often declare dividends on common stock before the balance sheet date, and then pay the dividends after the balance sheet date. Unpaid declared dividends other than stock dividends should be presented as current liabilities.
How many years can you claim unclaimed dividends? ›
(5) Any money transferred to the Unpaid Dividend Account of a company in pursuance of this section which remains unpaid or unclaimed for a period of seven years from the date of such transfer shall be transferred by the company along with interest accrued, if any, thereon to the Fund established under sub-section (1) ...
What is the time limit for unclaimed dividends? ›
The Companies Act, 2013, specifies that unclaimed dividends can be claimed within seven years from the date they become due for payment. If you fail to submit the claim application within the prescribed time limit, you may lose your right to claim the unclaimed dividend.
How do I claim unclaimed dividends after 7 years? ›
Claim Submission: Shareholders can reclaim their unclaimed dividends and shares transferred to the IEPF by submitting Form IEPF 5, accompanied by the required fee. Verification by Company: The claimant's application undergoes scrutiny by the concerned company, which verifies the assertions made.
What happens if dividend is not claimed for 7 years? ›
"Securities in which dividends have gone unclaimed or unpaid for seven consecutive years or more are subsequently transferred to the Investor Education & Protection Fund (IEPF), which is managed by the Ministry of Corporate Affairs (MCA)," says Bhavik Gandhi- Head- Operations, Mirae Asset Capital Market.
How do I claim unclaimed dividends within 7 years? ›
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.
What is the difference between unclaimed and unpaid dividends? ›
What is the difference between unclaimed and unpaid dividends? The unclaimed dividend is the dividend paid by the company but not claimed by the shareholders. However, if the company does not pay a dividend after announcing it, then it is known as an unpaid dividend.
The Issuer shall issue dividend warrants to these shareholders directly. The Issuer will intimate the details of credit of dividend amount given directly in the bank account of the beneficial owners.
Can you take dividends from previous years? ›
Private companies make dividend payments to their shareholders. Moreover, they pay these from the company's post-tax realised profits. This means your company's profit for the year after you deduct Corporation Tax. You may ask if I can take dividends from the previous year's profits, and the answer is yes.
What happens to uncashed dividends? ›
If you don't cash dividend checks, those checks and associated stock may be escheated unless you have made contact with the transfer agent. Since most states sell shares immediately, you will lose out on any market gains, dividends or stock splits that occur after the shares are sold.
What are unpaid dividends called? ›
Unpaid dividends–also referred to as dividends in arrears–accumulate and are then paid out at a future date. Those dividend payments are made before any dividends are paid out to common stock shareholders. Shareholders collect a dividend payout at a fixed rate, which is set by the company.
