What Happens to Forgotten Dividends?

When people don’t claim their dividends for 7 years, the money goes to something called IEPF (Investor Education and Protection Fund). Here’s an Example of IEPF Unclaimed Dividend: Let’s say you owned shares in ABC Company in 2015, and they declared a dividend of Rs. 1000, but you never got it. Maybe you moved houses and didn’t tell the company, or maybe the check got lost in the mail. In 2022, this money would’ve gone to IEPF. And it’s not just small amounts – some people have lakhs of rupees waiting to be claimed!

Ways to Check for Your Missing Money

There’s several ways to Check for Unclaimed Dividends. Let’s look at each one proper:

1. Using Company Websites

• Go to the investors section of company website
• Look for something called “unclaimed dividends” tab
• Put in your folio number or DPID (you’ll find this on your share certificate)
• Sometimes they also ask for PAN number
• The website will show all dividends you haven’t claimed
• You can usually download forms right there
• Some companies even let you submit claim online
• They might also show dividend history for last few years

2. Through Stock Exchange Websites

• Visit NSE or BSE website – both got special sections
• Find the part about unclaimed amounts
• Enter your PAN or name – some need both
• They’ll show dividends from all companies
• You can sort by date or amount
• Download the list if you want
• Get contact details for claiming
• Check both exchanges cause sometimes info different

3. IEPF Website Method

• Go to IEPF portal website
• Click on “Check your Status” button
• Put in your details like PAN, name, company name
• See everything that’s been sent to IEPF
• Not just dividends – also shares and interest
• Download your claim status
• Get forms for claiming
• Find contact details for help

4. Using Your DEMAT Account

• Log into your trading account proper
• Go to portfolio or account statement section
• Look for dividend history or corporate actions
• Check which ones show as unpaid
• Compare with your bank statements
• Make list of missing payments
• Note down all reference numbers
• Keep track of dates carefully

Step-by-Step Guide to Claim Your Money

If Dividend is Still with Company

1. Finding Your Details

• Get your folio number from share certificate
• Keep PAN card ready – they always ask
• Find original share certificates if you got them
• Get your bank account details right
• Make sure your signature matches records
• Keep address proof ready
• Get your latest mobile number updated
• Email ID should be working one

2. Contacting the Company

• Write to company secretary or RTA
• Send proper letter with all details
• Include copy of PAN card – both sides
• Give new bank details with proof
• Ask them nicely to reissue dividend
• Keep copy of everything you send
• Note down when you sent it
• Get acknowledgement if possible

3. Filling Up Forms

• Get dividend claim form from company
• Fill all details super careful
• Don’t leave anything blank
• Sign exactly like your specimen
• Attach all papers they ask for
• Make sets of everything
• Keep one set for yourself
• Get everything attested if needed

4. Following Up

• Keep record of what you sent and when
• Note down all reference numbers
• Call them after 2-3 weeks
• Send reminder if needed
• Check your bank account regular
• Keep track of processing status
• Ask for updates politely
• Don’t give up if it takes time

If Money Gone to IEPF

1. Getting Ready

• Download IEPF-5 form from website
• Keep scanned copies of all these:
• PAN card both sides
• Aadhar card
• Original share certificates
• Old dividend warrants if you got
• Bank passbook or statement
• Cancelled cheque leaf
• Address proof
• Any other documents they ask 

2. Filing the Form

• Go to IEPF website portal
• Fill form IEPF-5 very careful
• Double check all details
• Upload all documents proper
• Save the form number they give
• Print everything out
• Keep digital copies safe
• Make note of all dates

3. Sending Papers

• Print filled form nice and clear
• Get it signed by all holders
• Add all document copies – proper attested
• Make full set of papers neat
• Keep one complete set yourself
• Make cover letter explaining everything
• List all documents you’re sending
• Put everything in proper order

Common Problems People Face

1. Wrong Bank Details

• Old account closed or dormant
• Wrong account number given somewhere
• Bank merged with some other bank
• IFSC code changed after merger
• Branch got closed or shifted
• Account holder name spelling different
• Joint account issues
• Bank mandate problems

2. Address Issues

• Moved to new house without telling company
• Company don’t have new address updated
• Post office returns dividend warrant
• Communication problems with old address
• Pin code changes not updated
• Wrong society or building name
• Changed city or state
• Address proof not matching

3. Document Problems

• Lost share certificates somewhere
• Signature don’t match their records
• PAN card not updated with company
• Bank proof missing or old
• Address proof expired
• Identity proof not clear
• Attestation missing on copies
• Forms not filled complete

Tips to Never Miss Dividends Again

1. Keep Records Updated Always

• Give right bank details to all companies
• Update address as soon as you move
• Link PAN with everything proper
• Check mail regular – both post and email
• Keep phone number current
• Make sure name spelling same everywhere
• Update nominee details
• Check company websites sometime

2 .Use Technology Proper

• Register for ECS (Electronic Clearing Service)
• Give email ID to company and keep it working
• Use online banking and check regular
• Check demat account every month
• Set up alerts if possible
• Use company investor portals
• Keep software updated
• Save everything digital also

3. Make Calendar for Following Up

• Note down all dividend dates
• Check account on these dates proper
• Follow up if money not come in week
• Keep track of all your shares
• Note annual meeting dates
• Remember record dates
• Set phone reminders
• Make yearly schedule

How MUDS Management System Helped Recover Lost Dividends: A Success Story

In 2022, XYZ Corporation faced a big problem – over 10,000 shareholders hadn’t claimed their dividends worth Rs. 15 crores. That’s when they decided to try the MUDS (Multiple Unclaimed Dividend System) management approach.

The Starting Problem

The company was dealing with:

• Thousands of outdated shareholder addresses
• Wrong bank details everywhere
• Old dividend warrants returned by post
• Confused shareholders calling everyday
• Too much paperwork getting lost
• No proper system to track claims

How MUDS Changed Everything

The MUDS system worked like this:

1. Digital Records

• Scanned all old documents
• Made digital database of shareholders
• Put everything on cloud storage
• Connected it with bank systems

2. Smart Tracking

• Every unclaimed dividend got unique number
• System tracked each claim status
• Auto-reminders to process claims
• Red flags for delayed cases

3. Communication System

• Auto-emails to shareholders
• SMS alerts about pending dividends
• Regular status updates
• Easy way to update details

Real Results

Within 6 months:

• Found 7,000 shareholders through new system
• Updated 5,000 bank accounts
• Cleared Rs. 9 crores of old dividends
• Reduced processing time from 45 to 5 days

Big Success Stories

1. Senior Citizen Case

• Mrs. Sharma, 75 years old
• Hadn’t got dividends for 8 years
• System found Rs. 2.5 lakhs due
• Helped her get money in 1 week

2. NRI Recovery

• Mr. Patel in USA
• Lost track of 12 years dividends
• MUDS found Rs. 8 lakhs pending
• Processed everything online

3. Family Settlement

• Late Mr. Kumar’s family
• Dividends stuck since his death
• System helped trace Rs. 5 lakhs
• Guided family through legal process

What Made It Work

1. Technology Use

• Cloud based system
• Mobile app for staff
• Auto-update features
• Quick processing tools

2. Better Communication

• Clear instructions to shareholders
• Regular updates on claims
• Easy contact methods
• Helpful support team

3. Organized Process

• Step-by-step tracking
• Clear responsibilities
• Regular monitoring
• Quick problem solving

Future Plans

Company now plans to:

• Add AI features to system
• Make shareholder app
• Connect with more banks
• Help other companies use MUDS

The MUDS success shows how good management systems can solve big problems. Now other companies are copying this model to help their shareholders too!

Important Things to Remember

1. Time Limits

• Only 7 years to claim from company
• After that everything goes to IEPF
• IEPF claim takes much longer
• Some money might get lost if too late
• Different rules for different things
• Have to be quick with claims
• Don’t wait too long to check
• Start process as soon as you find out

2. Document Safety

• Keep all papers super safe
• Make extra copies of everything
• Save digital copies in cloud
• Store in proper place at home
• Get fireproof box if possible
• Keep backup at different place
• Scan everything important
• Tell family members where papers are

3. Regular Checking Habits

• Look at everything few months
• Check all your shares proper
• Verify bank accounts regular
• Match amounts with records
• Keep track of corporate actions
• Note down all payments
• Follow up on missing ones
• Make checking routine

Remember, it’s your hard-earned money! Don’t let it sit somewhere just cause you forgot about it. Use these ways to Check for Unclaimed Dividends and get your money back. The Example of IEPF Unclaimed Dividend shows how easy it is to lose track, but now you know how to find and claim it!

Keep all your papers updated, check regularly, and don’t forget to tell companies if anything changes. With these tips, you won’t miss your dividends again, and you’ll know exactly what to do if you find any unclaimed ones!

Some Extra Tips for Success:

• Don’t feel shy to follow up
• Keep trying if first try fails
• Get help if you need it
• Stay organized with papers
• Be patient but persistent
• Keep good records of everything
• Learn from any mistakes
• Help others who might have unclaimed dividends too

Remember, lots of people are in the same situation. Companies and IEPF know this happens and they have systems to help you. Just follow the steps proper, keep all your papers ready, and don’t give up till you get your money back!

The post How to Check and Claim Your Dividend appeared first on MUDS.

Preference shares as the term implies are the shares that rank at a priority above the equity shares. These shares contain a preferential right to receive the dividend as are declared by the company on first priority order. During the course of dividend declaration, these shareholders are entitled to receive the dividend first as against the normal equity shareholder.

The preference shareholders not only have a preferential right to receive a dividend on the preliminary basis but they also have preferential right to receive the proceeds that are realized from the sale of the company’s assets during the course of liquidation of the company after payments having been made to the secured creditors of the company.

As per Explanation(ii) to section 42 of the Companies Act, 2013, the term preference shares mean and includes that part of the share capital the holders of which have a preferential right overpayment of dividend (fixed amount or rate) and repayment of share capital in the event of winding up of the company.

In other words, preference shares are the shares that carry or would carry a preferential right with respect to:

1. Payment of dividend, either fixed or an amount calculated at a fixed rate
2. Repayment of the amount of paid-up capital share capital paid up or deemed to have been paid up, in the scenario of winding up of the company or repayment of capital.

Preference shares generally pay a higher rate of dividend however at a fixed rate or a fixed amount as a dividend. The preference shareholders are also privileged and entitled to receive all dividends i.e. current as well as an accrued dividend at priority before equity shareholders.

It is evident to highlight that a company can issue preference shares only if these shares form part of the authorized share capital of the company as per the Memorandum of Association. It is important to verify the Articles of Association as to whether they grant authorization to issue preference shares.

In the scenario where the Memorandum of Association or the Articles of Association of the company do not bestow the requisite power to issue preference share then in such a state, necessary amendments would be required to be made in these documents prior to issuing such preference shares.

It is widely known that the equity shareholders are regarded as the owners of the company. The equity holders have the major decision-making power in their hands while granting limited decision-making power to the preference shareholders. On this note if a company which has equity shareholders is in need of additional funds may fulfill its additional fund requirement by opting for either of the below-mentioned alternatives :

1. By issuing more shares: this is an easy alternative but it ultimately leads to the dilution in the value of equity shares as held by existing equity shareholders.
2. By taking Loans: This is a cumbersome option as it means paying back the money borrowed along with interest irrespective of the fact that the venture for which extra funds were required is making profits or not.
3. By issuing preference shares: This alternative is a mixture of the above-mentioned two alternatives. Vide this alternative the shareholders are granted preferential right to receive dividends as well their share in the assets of the company in the event of liquidation of the company.

The choice of an above-discussed alternative depends on the fund needs and size of the company.

Having gained an insight into the preference shares let’s head towards a detailed analysis of the preference shares.

Preference shares are a safe and lucrative alternative to raising additional capital requirements. On this note, it is crucial to analyze the pros and cons of preference shares.

Pros of preference shares

The advantages of preference shares are as follows:

From a company’s point of view:

Fixed Return:

• The dividend payable on preference shares is fixed that is usually lower than that payable on equity shares. Thus they help the company in maximizing the profits available for the dividend to equity shareholders.

No voting Right:

• Preference shareholders have no voting right on matters not directly affecting their rights hence promoters or management can retain control over the affairs of the company.

Flexibility in Capital Structure:

• The company can maintain flexibility in its capital structure by issuing redeemable preference shares as they can be redeemed under terms of issue.

No burden of Finance:

• Issue of preference shares does not prove a burden on the finance of the company because dividends are paid only if profits are available, otherwise, no dividend has to be paid.

No charge on assets:

• Non-payment of dividends on preference shares does not create a charge on the assets of the company as is in the case of debentures.

Widens Capital Market:

• The issue of preference shares widens the scope of the capital market as they provide safety to the investors as well as a fixed rate of return. If the company does not issue preference shares, it will not be able to attract capital from such a moderate type of investor.

From an Investor’s point of view;

Regular Fixed Income:

• Investors in cumulative preference shares get a fixed rate of dividend on preference share regularly even if there is no profit. Arrears of dividends, if any, are paid in the years of profits.

Preferential Rights:

• Preference shares carry preferential rights as regard to payment of dividend and as regards repayment of capital in case of winding up of the company. Thus they enjoy the minimum risk.

Voting Rights for Safety of Interest:

• Preference shareholders are given voting rights in matters directly affecting their interest. It means their interest is safeguarded.

Lesser Capital Losses:

• As the preference shareholders enjoy the preferential right of repayment of their capital in case of winding up of company, it saves them from capital losses.

Fair Security:

• Preference shares are fair securities for the shareholders during cyclic market corrections and depression periods when the profits of the company are down. Also, in the case of startup companies, preference shares are the first choice of investors, and usually, the dividend payment is allowed to accumulate until the company becomes profitable. This is done in order to reduce the already high risk that investors take when they invest in early-stage companies.

Preference shares often pay a higher rate of dividend as against other categories of shares. The preference shareholders are also entitled and empowered to receive their accrued as well as accumulated dividends. Preference shareholders also have the privilege to enjoy the surplus profits of the company which are left over after payment of dividend to the equity shareholders.

Cons of preference shares

The main drawback of preference share is as follows:

From Companies’ point of view

Higher Rate of Dividend:

• Companies pay a higher dividend on these shares than the prevailing rate of interest on debentures of bonds. Thus, it usually increases the cost of capital for the company and debt may be preferred.

Financial Burden:

• Most of the preference shares are issued cumulative which means that all the arrears of preference dividend must be paid before anything can be paid to equity shareholders. The company is under an obligation to pay dividends on such shares. It thus reduces the profits for equity shareholders.

Dilution of Claim over Assets:

• The issue of preference shares involves dilution of equity shareholders’ claim over the assets of the company because preference shareholders have the preferential right on the assets of the company in case of winding up.

Adverse effects on creditworthiness:

• The creditworthiness of the company is seriously affected by the issue of preference shares. The creditors may anticipate that the continuance of dividend on preference shares and suspension of dividend on equity capital may deprive them of the chance of getting back their principal in full in the event of dissolution of the company because preference capital has the preference right over the assets of the company.

Tax disadvantage:

• The taxable income is not reduced by the amount of preference dividend while in the case of debentures or bonds, the interest paid to them is deductible in full.

From Investors’ point of view:

No Voting Rights:

• The preference shareholders do not enjoy any voting right except in matters directed affecting their interest.

Fixed Income:

• The dividend on preference shares other than participating preference shares is fixed even if the company earns higher profits.

No claim over surplus:

• The preferential shareholders have no claim over the surplus. They can only ask for the return of their capital investment in the company.

No Guarantee of Assets:

• The company provides no security to the preference capital as is made in the case of debentures. Thus their interests are not protected by the assets of the company.

Commonly the equity shareholders are conferred with the right to vote on all resolutions that require the approval of shareholders. Also, the equity shareholders have the privilege to appoint and remove the directors and auditors and also to approve the company’s financial statements. Majorly, the control of the company is in the hands of the equity shareholders.

The preference shareholders possess limited voting rights which can be utilized only in situations which significantly affect the rights of preference shareholders. Hence the preference shareholders have minimal control over the affairs of the company.

After having discussed the pros and cons of preference shares, let’s gain an overview of the target audience for preference shares.

Preference shares are suitable for which type of investors?

Preference shares are a viable and suitable option for risk-averse equity investors. These are less volatile than normal shares. The best distinguishing factor for preference shares is that they offer a steadier flow of dividends. Also, the preference shares are redeemable i.e. they can be called back at any time. Therefore to sum up the preference shares are a lucrative option against the equity shares.

Abhishek Jain at MUDS suggests that

“Investment in preference shares will not only grow your wealth but you will also enjoy fixed regular income. As proactive investor, next time when you plan to buy a share don’t forget to consider preference share for your portfolio inorder to seek benefit of both equity and debt instrument.”

Hope that this article was informative, interesting in providing an in-depth insight about the preference shares. Stay connected with MUDS for updates.

The post Preference Shares appeared first on MUDS.