The Dividends are declared by the company to rewards its shareholders on a yearly basis depending upon the performance of the company. These days’ dividends are directly credited into the bank account of shareholders as every broker do E-KYC which enables them to maintain a record of a correct and active bank account.
However, in old days when shares were held in physical form and bank account numbers are not properly maintained with the company then the declared interest/redemption amount distributed by the Company to its share/debenture-holders remains unclaimed and gets accumulated with the Company. Most of the time investors were even not aware of such dividends being declared and the dividend money were kept with companies until someone claims it. There is a chance of misuse of the dividend money or not keeping record of such unclaimed dividend by company which may resulted into loss to an investor.
To address this issue the Ministry of Corporate Affairs (MCA) proactively introduced Section 125 of the Companies Act, 2013, thereby making it compulsory to deposit unclaimed dividend, Interest/Redemption amount lying with the Companies for a period of seven years to the Investor Education and Protection Fund (IEPF), administered by the Central Government. After 7 years, the investors can claim their unpaid dividend directly from the IEPF Authority.
Initially only unclaimed dividend money was transferred to IEPF. However, later on with the introduction of Section 124 of the Companies Act, 2013, all shares in respect of which dividend has not been paid or claimed for seven consecutive years or more shall also be transferred by the company in the name of Investor Education and Protection Fund (IEPF).
For this IEPF Authority have a Demat account and company will transfer shares within 30 days of its getting due.
For Example, An Investor bought 100 shares in 1996 and first time company declared dividend in 2009-10. If the investor does not claim it, then from 2017-18 onwards it will become eligible to transfer to IEPF.
Process of Claiming
The Corporation on receipt of the complete set of documents will submit its verification report to IEPF Authority.
The whole process of claiming is not easy as most of the claims are done by family of deceased investors which involved court intervention and proving of legal heir in the court to release the dividend or share money.
We at IEPFZone have helped hundreds of clients across India to claim their investment from IEPF. We have the team of expert to help investors gets their claim on time without any legal hassles.