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Saturday, Oct 03, 2009
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Business Daily from THE HINDU group of publications Saturday, Oct 03, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Dividend Announcement Markets - Investor Protection Government - Policy Amount lying unclaimed in the IEPF likely to be Rs 500-900 crore Annual accretion used to be Rs 50-70 crore, but now are at Rs 25-30 crore due to direct bank credit Arun S. New Delhi, Oct. 2 In a move that will bring smiles to investors, the new Companies Bill will allow shareholders get dividends they have not claimed even after the stipulated period of seven years, and with interest too. Now, companies are obliged to transfer unclaimed dividends to the Investor Education and Protection Fund (IEPF) after seven years from the date it first became due for payment. Currently, after the seven-year period no claims shall lie against the fund or the company and no payment shall be made regarding such claims. Estimates of the amount lying unclaimed in the IEPF range from Rs 500 crore to Rs 900 crore with an annual accretion of Rs 25-30 crore. The logic was that after seven years investors are not interested in the dividend, therefore the amount can be used for constructive purposes. There are around 70 NGOs registered with the IEPF to help create investor awareness and protection, with the Corporate Affairs Ministry in-charge. The new Bill proposes to refund unclaimed dividends after seven years by taking it out of the IEPF, official sources told Business Line. To bring accountability, the IEPF would be audited by the Comptroller and Auditor-General. According to Mr Prithvi Haldea, Chairman and Managing Director of Prime Database, the annual accretion used to be Rs 50-70 crore, but has fallen due to dividends being directly credited to the shareholders’ bank accounts. Earlier, companies had to send the dividends by registered post to the shareholders. However, the cheques would come back if shareholders had moved or when there was no one to receive the letter. There were also instances of malpractice by some companies that showed on their books that the dividend had been sent to the shareholder, but actually pocketed the amount, Mr Haldea said. With the electronic transfer of the dividend to the shareholder’s bank account, such instances had become fewer. Though ideally there should not have been any dividend lying unclaimed with the e-transfer option becoming available, in certain cases the amount was still not claimed if the shareholder did not provide accurate bank account details or due to death of shareholder or if they were benami shares. “Some investors have contacted us to help them in claiming the refund after the seven-year period saying they were abroad. Such investors will now be benefited,” Mr Haldea said. He said the companies must make pro-active effort in returning the dividends of investors in the first seven years itself as it will not only keep shareholders happy but also help the company generate goodwill. Unclaimed dividends transfer: DCA urged to be lenient Unclaimed dividend: Panel pitches for bonafide shareholders More Stories on : Dividend Announcement | Investor Protection | Policy
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