The shares provided to each shareholder from the profit received by the company are known as dividends. Different types of dividends are termed final or interim, where the terms refer to the amount of time after which the shareholder receives the dividend.
These are cleared on a predefined date, and until the final pay-out date, they are officially termed unpaid dividends. When the dividend has been paid by the company but has not been claimed by the holders, they are termed as IEPF unclaimed dividends.
What are dividends?
Any dividends are a liability for the company and are paid from the company earnings to the shareholders. It is an official payment made by the company to the owners or stockholders that are a part of the current earnings for an active session by the firm. It may depend on the circumstance whether the payments are made only from the current profit or from the retained earnings or asset sales achieved by the total assets owned by the company.
Differentiating between unpaid and unclaimed dividends
As mentioned above, the terms unpaid and unclaimed provide information about the status of the dividends. If a company is liable to pay dividends to its shareholders, they are also liable to claim them to complete the transactions.
If the firm fails to make the payments, the pending dividends are known as unpaid dividends, and if a shareholder fails to claim the dividends provided by the company, they are termed unclaimed dividends. Any presented dividends need to be claimed by the stockholders within a predefined time, or they shall be transferred to an Investor Education and Protection Fund account. The holder is allowed to claim the iepf unclaimed dividends whenever they wish from the designated account.
What is the iepf?
The iepf refers to the Investor Education and Protection Fund, an authority that the Government of India has established to support the investors and shareholders in any company. The authority has been entrusted with keeping a check on the shares refunding and unclaimed dividends. It also encompasses the transfer of matured deposits and related processes for investors by creating awareness among the investors and stakeholders.
Since the shares and dividends involve assets and money, it can be difficult for companies to retain information regarding them for a very long time. Therefore, they are transferred to a trusted authority. This also makes the process of claiming the stakes easier for the investors as they have all their pending dividends in a single place.
Recovering the funds from IEFP
The process of claiming the pending funds from the IEFP is easier and can be completed quickly by taking the right help and guidance from an expert. The whole recovery process is done by following certain rules and regulations which are guided by the organization. Whether it is a transaction of matured funds or sale proceeds concerning fractional shares, the redemption of shares, etc. The IEFP provides a completely guided and regulated process for the same. All you have to do is to follow all the steps, and voila, you will recover the funds you want to.
Claiming unclaimed funds
You could not be more wrong if you think making a claim for the unclaimed funds is challenging. Instead, the entire process is a lot easier than it sounds, as the unclaimed funds and dividends crossed the seven-year mark are transferred to the organization entirely.
The authority gains complete control of the shares and checks the details for clarity. Later it issues the receipts to the said firm as proof and provides them with the slip indicating the completion of the transaction.