Term of the Week Unclaimed Dividends We’ll talk about unclaimed dividends this week. Let’s begin with an interesting statistic – The ministry of corporate affairs data showed unpaid and unclaimed amounts with companies stood at INR 700 crore at the end of FY2013. Let’s first understand how we receive dividend: The company either sends a cheque to the shareholder or the amount gets credited to the shareholder’s bank account (if he/she has shared his account details with the company and is KYC compliant). Now, in case the cheque doesn’t reach the shareholder or the account doesn’t get credited (due to change in address/bank account etc.) within 30 days of announcing dividend, the company has to transfer the funds into unclaimed dividend account (which is a separate bank account). Investors can claim the amount from this account anytime in the next seven years. After that, it goes to the Investor Education and Protection Fund (IEPF) managed by the corporate affairs ministry. Note: Investors can’t claim the dividend amount once it gets transferred to IEPF. These funds are shown under current liabilities in the liabilities section of the company and are incorporated under bank balances in the current assets section. Companies like Reliance Industries Limited (RIL) hold more than INR 100 Crores in their unclaimed dividend accounts. The government wants to strengthen the penalties framework around this, to ensure that these funds are not misused.
Posted on: Sat, 01 Feb 2014 13:31:02 +0000
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