What to do if dividend is not received by a shareholder of the company?
Every wondered what happens to unclaimed dividends? Want to know what you as a shareholder should do to get a dividend not sent by the company? Know some facts about unclaimed dividends from this article and the procedure to follow on non-receipt of dividends.
Unclaimed dividends remain with the respective companies as unclaimed for seven financial years, after which the unclaimed dividends are transferred to Investor Education and Protection Fund with the central government and no shareholder can claim the unclaimed dividend beyond a period seven financial years.
First of all the shareholder should check his/her Demat-linked bank account as dividends land automatically in bank accounts linked with Demat and trading accounts offered by the banks as a 3-in-1 facility. In case of non-receipt, the shareholder can take up with the registrars and share transfer agents of the company by providing DP ID and client ID from Demat Account. However, if the share is held in physical form then the shareholder needs to send a bank mandate form to the company registrar and transfer agents.How to obtain duplicate dividend warrant in case of non-receipt?
First of all, the shareholder has to wait till the expiry date of dividend warrants after seeking the information from company registrars. The company registrars will issue, on request on the prescribed form, duplicate dividend warrants after verifying from the company's bank accounts specially maintained to pay the dividend warrants only. After the expiry dated of dividend warrants residual amount in such bank accounts is kept by the company under the head "Unclaimed Dividend". Duplicate dividend warrants or bank drafts are paid/issued from this account only in favour of the shareholder.What happens to such residual unclaimed dividend lying with company's bankers?
The companies retain such unpaid dividends for a period not exceeding seven financial years and thereafter the unclaimed dividends are transferred to "Investor Education and Protection Fund" with the Central Government. Unclaimed dividend prior to seven financial years cannot be withdrawn by the shareholder. However, the shareholders, who had been bonafide owners of shares, can claim the dividend from the registrar and transfer agents of the company for immediately preceding seven years by following the same procedure as above.Precautions to be taken by the shareholders
In case the shares are held in physical form then the shareholders will have to contact the registrar and transfer agents of each company, whose shares are held in physical form, and obtain bank mandate form so that the dividend from the companies directly land into the bank account of the shareholders. In case the share is held in electronic form in Demat account then the shareholder needs to submit bank account details to the Depository Participant with whom the shareholder is having the Demat account. While providing bank account details to registrars of the company or depositor participants the shareholder should provide the correct bank account details along with IFSC code of the bank branch and MICR code of the Bank. The shareholders should also see that Bank Account is exactly in the same name as mentioned either on the share certificates in physical form or in the Demat Account client ID. It is always better to have a 3-in-1 account linked to Bank account, Trading account and Demat account and the individuals should avoid multiplicity of account. What are you thinking now? Just convert all your physical shares, bonds and securities into one and only one Demat account so that you can track all your dividends, interest on bonds and securities and do the costing exercise yourself. The 3-in-1 account also allows you to trade in commodities, gold and gold ETF, mutual funds and even foreign currencies subject to certain foreign exchange regulations.
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Good and informative article. It was helpful as I could get back by undelivered dividend warrants reissued by the company.