What is Unclaimed Dividends?

What is Unclaimed Dividends?

Through our earlier blogs we have seen about History of Shares, Demat, Transfer of shares. Let us have an understanding about the “Unclaimed Dividends”. Most of the time Unclaimed Dividends are misunderstood with Unpaid dividends. As a ritual / practice, before dwelling deeper into any of these lets quickly recap with few other basic terminologies that are closely related. There are many websites that give elaborated explanations to all of these, but seldom was ever any content that would help understand basics easily.

Why do public invest in company shares?
Everyone chases money. Everyone needs additional money. No penny should remain idle without multiplying itself. People resort to additional revenue generation by parking their hard-earned surplus funds. Various levels of returns are generated based on the individuals’ risk-return profile.

What is a Dividend?
In simple terms it a share in the profits made by company distributed to every share holder. The company’s Board of Directors declare the quantity / quantum of dividend. It could be at the end of each financial year (Final) or interim dividend (Quarterly / Half yearly).

Dividends are paid on pre-determined date. Declared dividend not paid until the payout date is called Un-Paid Dividend.

Four Key dates are involved in the process of dividend disbursement

Declaration or Announcement Date Date of announcement of Dividend by BOD
Ex-Dividend Date The date to ascertain the actual owner’s eligible for Dividend
Record Date The date between Ex-date and Payout date to ascertain the owners of shares.
Payment Date The date on which the Dividends are disbursed among the ascertained share holders

Un-Claimed Dividends:
Un-claimed Dividends are the dividend amount not claimed by the respective owners. Before the year 2000, Dividends were sent as cheque / dividend warrants to the address mentioned in the record book. Most of the unclaimed dividend results due to Change of address, incorrect address. Decease of a shareholder. In such case either the warrants are returned to the company or left unnoticed. These dividends are pooled for subsequent disbursements to the rightful shareholder on claims later. If the dividends are not claimed for more than 7 years, the respective companies must move both the un-claimed dividends and the corresponding shares of the shareholder to IEPF account. Shareholder can always claim the same from IEPF any given point of time. But the catch is the cumbersome documentation process involved in re-claiming of dividends. Only a professional organization can ensure the claims to be successful in first attempt. SMB Enablers Pvt Ltd, in Chennai is a professionally managed highly experienced team who has successfully claimed un-claimed dividends to all its customer till date and would continue to do so at competitive service charges.