Are you curious to know what is unclaimed dividend? You have come to the right place as I am going to tell you everything about unclaimed dividend in a very simple explanation. Without further discussion let’s begin to know what is unclaimed dividend?
When a company pays dividends to its shareholders, it is a sign of financial strength and success. However, sometimes shareholders do not claim their dividends, and these unclaimed dividends become known as unclaimed dividend. In this blog post, we’ll take a closer look at what unclaimed dividend is, its causes, and its implications
What Is Unclaimed Dividend?
An unclaimed dividend is the amount of money that is paid by a company to its shareholders as a dividend but remains unclaimed. This can happen for various reasons, such as the shareholder not receiving the dividend payment due to a change in address, or the shareholder being unaware of the payment. In some cases, the shareholder may have passed away, and the legal heirs may not have claimed the dividend.
Causes Of Unclaimed Dividend
There can be various reasons for unclaimed dividend. Some of the common causes include:
- Change In Address: Shareholders may move to a new address without updating their address with the company, leading to non-receipt of the dividend payment.
- Lack Of Knowledge: Shareholders may not be aware that they are entitled to receive a dividend payment.
- Death Of Shareholder: If a shareholder passes away, the legal heirs may not be aware of the dividend payment or may not have the necessary documents to claim the dividend.
- Incomplete Documentation: Sometimes, shareholders may not have provided complete documentation, such as bank account details, to receive the dividend payment.
Implications Of Unclaimed Dividend
Unclaimed dividend can have several implications for both the company and the shareholders. Some of the implications include:
- Financial Loss: Unclaimed dividend can result in a financial loss for the shareholder who has not claimed the dividend payment.
- Legal Issues: Unclaimed dividend can lead to legal issues for the company, as they are required to follow the regulations set by the government on the payment of dividends.
- Negative Impact On Company Reputation: Unclaimed dividend can have a negative impact on the reputation of the company as it reflects poorly on their management of shareholder communication and payment.
- Decrease In Shareholder Confidence: Unclaimed dividend can lead to a decrease in shareholder confidence as it can indicate a lack of trust in the company’s management and communication.
Conclusion
In conclusion, unclaimed dividend is the amount of money that is paid by a company to its shareholders as a dividend but remains unclaimed. It can happen for various reasons, including a change in address, lack of knowledge, death of the shareholder, and incomplete documentation. Unclaimed dividend can have several implications for both the company and the shareholders, including financial loss, legal issues, negative impact on company reputation, and a decrease in shareholder confidence. Companies should take necessary measures to ensure proper communication with shareholders and timely payment of dividends to avoid the occurrence of unclaimed dividends.
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FAQ
What Is Unclaimed Dividend With Example?
The information regarding dividend remaining unpaid to the shareholders are mentioned below: The dividend shall be transferred to Investor Education and Protection Fund after the date mentioned against each year. Thereafter there shall be no claim on the said unclaimed dividend.
What Is Unpaid Dividend And Unclaimed Dividend?
(1) Where a dividend has been declared by a company but has not been paid or claimed within thirty days from the date of the declaration to any shareholder entitled to the payment of the dividend, the company shall, within seven days from the date of expiry of the said period of thirty days, transfer the total amount
How Do I Claim Unclaimed Dividends?
How to claim unpaid, unclaimed dividend
- Form IEPF–5. The rightful claimant or legal representative of a deceased person needs to fill the IEPF-5 form on the IEPF website (https://www.iepf.gov.in/IEPF/refund.html).
- Documents.
- Process.
- Verification and processing of the refund.
- Points to note.
Unclaimed investments are investments in different financial forms, and the legal owners are unable to claim for years due to any reason. Usually, the unclaimed investments are found in lapsed insurance policies, unclaimed dividends, mutual funds, split shares, bonuses, etc.
What Is Unclaimed Dividend Class 12?
The dividend which is declared by the company but has not been paid by it or claimed by a shareholder within 30 days of its declaration is termed as Unpaid and Unclaimed Dividend.
Are Unclaimed Dividends Liabilities?
Unpaid dividends have certain implications on a company, so also are unclaimed dividends. Both unpaid and unclaimed dividends are recorded as current liabilities on a company’s balance sheet. The current liabilities account is cleared when the unpaid and unclaimed dividends are paid.
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