How can NRIs claim their dividends ?

blog, NRI

Unclaimed dividends are the dividends that have been paid by the company but have not been taken or claimed by the shareholder. The Ministry of Corporate Affairs (MCA) proactively introduced Section 125 of the Companies Act, 2017, deals with declaration and payment of dividends.

There are several reasons for shareholders not being able to claim their  dividend

➢          Lost track of funds owned to you

➢          The Company might have failed to locate the shareholder

➢          you were not aware of the investments

➢          Change of address

➢          Close of bank account

➢          Mismatch of signature

Shareholders or now NRIs need to claim their dividends, not only to receive the payment but also to accurately disclose that additional income on their tax return. If the dividends are not claimed within 30 days of the declaration date, the company puts them in a special unpaid dividend account with it being liable to additionally pay interest at the rate of 12% p.a. If the dividend is not claimed till the next seven years, the company is supposed to transfer the money to an “investor education and protection fund”.

NRIs can claim their dividend by making an application in online Form IEPF 5. A request letter should be made to the company’s register and transfer agent (RTA). The request letter should mention the folio number in case of physical shares, or depository participant ID and client ID, and the period for which dividend has not been received. The NRI or claimant shall after making an application online Form IEPF-5 under rule (1) send the same duly signed with below mentioned documents:

➢          Copy of Acknowledgement

➢          Indemnity Bond

➢          Advance Stamped Receipt

➢          Copy of Aadhar

➢          Canceled Cheque

➢          Original Certificate

➢          Proof of entitlement

➢          Copy of Passport

Company will send a verification report to IEPF Authority within 15 days of the receipt of the claim form and after verification;

➢          to the amount claimed: The authority shall present a bill to the Pay and Accounts Office for e-payment as per the guidelines.

➢          To the shares claimed: Authority shall issue a refund sanction order with the approval of the Competent Authority and shall either credit the shares which are lying with depository participant in IEPF suspense account

Application received for the Authority shall dispose of refund of any claim duly verified by the concerned company within 60 days. If the claimant is a legal heir or successor or administrator or nominee of the registered security holder, he has to ensure that the company completes the transmission process before filing any claim with the Authority. The claimant shall file only one consolidated claim in respect of a company in a financial year.

If by any chance the company fails to comply with any of the requirements of the claimant’s request for their divined, the company shall be punishable with fine which is not less than five lakh rupees; may extended to 25 lakh rupees. It should be noted that every officer of the company who is a part of this negligence should be punished with fine up to one lakh rupees but which may extend to five lakh rupees.