Did your parents or grandparents invest in stocks during India’s license raj decades ago? Have you inherited some share certificates but never bothered to check on them? Well, it’s time to dig them out – you may be pleasantly surprised!
As per recent government data, the total value of unclaimed dividends and shares has crossed Rs 5,000 crores! Just imagine how much money individuals may have lying dormant in such unclaimed investments.
At Muds Management, we want to help our clients discover any such assets belonging to their families and guide them through the process of claiming it back rightfully. Read on for a detailed guide.
What are Unclaimed Dividends and Shares?
Let’s first understand what constitutes unclaimed dividends and shares.
When equity investors fail to encash their dividend cheques or redeem shares before expiry, the amounts are classified as unclaimed. Typically, the company keeps these unclaimed dividends and shares in trust for the original shareholders for a specified dormancy period – usually 7 years.
Later, as per Investor Education and Protection Fund (IEPF) rules, the company transfers such unclaimed assets to an IEPF demat account operated by the Ministry of Corporate Affairs. The investors, however, remain the rightful owners and can claim refund at any time in the future.
Tarun’s Story: Forgotten Investments
Let’s take an example of Tarun, a businessman based in Bangalore.
Over 40 years back in the early 1980s, Tarun had invested Rs 1 lakh buying shares of ITC. He then got busy growing his garments export business and forgot about this investment.
Tarun also changed residences multiple times over the decades and lost touch with ITC. The company kept declaring dividends on his shares every year but attempts to contact Tarun failed.
By 2022, Tarun’s original investment value had grown to Rs 30 lakhs and total unclaimed dividends stood at Rs 12 lakhs!
Finally, Tarun’s daughter stumbled upon the old share certificates at home and approached us to understand their present status. Our team quickly helped them file for claims.
You too may discover a pleasant money surprise hiding in your family’s old investments!
Common Reasons for Unclaimed Dividends & Shares
There are several common reasons why investors fail to encash dividends or redeem investments, leaving them unclaimed:
1. Change in postal address and lost touch: This happens frequently as investors change residences even cities over long periods. Many forget updating the address registered with the companies
2. Lost or damaged physical share certificates: Before demat, share certificates in physical form often got misplaced during shifting houses
3. Non-updation of bank details: If bank details changed and registrars were not updated, dividend warrants may have got stuck
4. Death of the original shareholder: Assets left inactive if legal heirs remain unaware of the investments
5. Simply forgetting about investments over very long durations: Out of sight out of mind
Rajiv’s Story: Address Change Troubles
Let’s understand this with another common example:
Rajiv had bought shares of ABC Company in 1995 through his stockbroker while living in Chennai. He then shifted to Delhi in 1998 for a new job.
Unfortunately, Rajiv failed to intimate his address change to ABC Company’s registrars. Hence over the years, his dividend warrants kept getting sent to his old Chennai address and returned unclaimed.
By 2022, Rajiv had totally forgotten about this investment. After 27 long years, his total unclaimed amount had grown to almost Rs 20 lakhs comprising unpaid dividends and appreciation in share price.
A random school buddy of Rajiv who was still in Chennai helped him discover this asset at a mutual friend’s meet and Rajiv successfully filed for his claims.
Checking for Unclaimed Shares or Dividends
If stories like Tarun’s and Rajiv’s make you wonder if you or your parents, grandparents may have such unclaimed assets, here is the process to check:
Step 1: Visit the Official IEPF website
Go to the Investor Education and Protection Fund (IEPF) website https://iepf.gov.in. This is where unclaimed amounts are published after companies report it.
Step 2: Click on Unclaimed Data Search
On their homepage under ‘Services’, click on the “Search Unclaimed / Unpaid Amount” link.
Alternatively, go directly to: https://www.iepf.gov.in/IEPFWebProject/services.html
Step 3: Enter Name and other filters
On the search page, you can filter by entering the name of the person along with other parameters like company name, folio numbers etc. if known. Keep search criteria broad.
Step 4: Identify relevant records in results
Go through the search results and identify entries that may pertain to the person you are checking for. Click on relevant names for more details.
Step 5: View unclaimed amounts against entries
The individual record page shows unclaimed shares and dividend amounts if any. Also displays company details where assets exist.
Step 6: Dig up old records and approach company
If you find unclaimed entries worth claiming, dig up details in old records at home. Approach the respective company registrars with a claim request.
We suggest also seeking professional wealth management services like Muds for guidance.
Suresh’s Story: Wife’s Unclaimed Fortune
Let me share one inspiring real story from our Muds family:
Suresh and his wife Sheela migrated from Kerala to Oman in 1990 for work. Before leaving India, Sheela had invested around Rs 3 lakhs buying shares in Reliance Industries, TCS etc.
Over the years, she lost touch as address changes weren’t updated. Meanwhile her assets grew manifold in value, plus accumulated big unclaimed dividend amounts.
Many years later, Suresh was browsing the internet and chanced upon the IEPF website. Out of curiosity, he input Sheela’s name and was stunned to discover over Rs 4 crores worth of unclaimed investments in her name!
Suresh immediately reached out to us to claim the amounts successfully. Truly fortune favors the diligent!
Claim Your Unclaimed Dividends & Shares
If you find investments belonging to you or family lying unclaimed, here is the step by step process for claiming refund from IEPF:
Step 1) Submit IEPF-5 e-form on MCA portal
First, visit the MCA portal and login with your credentials. Search for ‘IEPF-5’ form and fill in the specific details sought to make your claim.
Attach necessary supporting documents like PAN card, canceled cheque leaf etc. Make sure to keep print outs of the filled e-form and acknowledgement receipt generated.
Step 2) Print and sign form, prepare documents folder
Take print outs of the filled IEPF-5 e-form and acknowledgement. Sign the documents manually along with PAN copies, canceled cheques etc. Maintain an organized folder of documents.
Step 3) Courier documents to Nodal Officer
Identify the nodal officer details for the company whose unclaimed shares/dividends you are targeting. Courier the physical documents folder to the nodal officer to process your refund claim.
Step 4) Follow procedures and comply to queries
Patiently follow procedures set out by the nodal officer and IEPF authority. Respond promptly if they raise any additional queries on your application by providing extra information or documents as needed.
Step 5) Monitor claim status online
Keep logging into the MCA portal using your credentials to check application status updates. Track it diligently to ensure no delays due to any shortfalls from your side.
Step 6) Receive approval notification from Authority
If your claim is approved after a verification process by IEPF authority, you will receive the approval intimation directly via email and portal update.
Step 7) Get payment and share transfer
Finally, wait for the unclaimed dividend amounts to get credited to your bank account as claimed. The unclaimed shares will get automatically transferred to your Demat account.
Unclaimed Asset Refunds – Challenges Involved
While the procedures for claiming unclaimed dividends/shares is well defined, investors do face difficulties getting back their rightful money.
For starters, lack of awareness among small investors about such assets and the claim process is the biggest hurdle. Despite digitization, verification and approval processes also tend to be painfully slow.
Sometimes, investors are unable to establish the connection clearly between their identities today vs the name registrations in old certificates. Changing names after marriages, death of original holders etc. also causes problems.
Moreover, tracking down decades old records to substantiate your claims adds to the complications in an otherwise straightforward refund process. All in all, it can be excruciatingly tiresome.
This is where wealth management firms like Muds with expertise and resources can help greatly in not just discovery of unclaimed assets but also smooth facilitation of refunds. We assist clients end-to-end.
What Does the 2023 Budget Say?
Realizing such difficulties faced by investors, the 2023 Union Budget has stressed on establishing a unified IT portal for easy discovery and claiming of unclaimed dividends, shares and insurance policy proceeds.
Towards this, the proposed portal aims to deliver:
1. Seamless consolidation of unclaimed amounts data across various sectors
2. Easy search tools for quicker tracing of unclaimed money
3. Simplified claim processes using paperless KYC and single forms
4. Real-time tracking of verification and payments
Once implemented, this unified portal is expected to significantly improve the refund rates which languish at less than 2% currently. But until then, do reach out to us for assistance.
Through various examples like Tarun, Rajiv, Suresh covered earlier, we hope readers are now aware of what constitutes unclaimed dividends and shares. Also understood probable reasons why investments lie dormant for years and automatically transferred to IEPF.
Most importantly, you now know what to look for, where to check online by name for any unclaimed amounts belonging to you or family based on past investments in companies.
In case you do discover any such assets worth claiming, follow the step guide shared to file for refund from IEPF. Reach out to us at Muds Management for expert assistance with the form filling, documentation and smooth facilitation of your rightful claims.
With some diligence, you can unearth a monetary goldmine just waiting to be unlocked!