SEBI and Corporate Affairs Ministry set to ease transfer of unclaimed shares and dividends

SEBI and Corporate Affairs Ministry set to ease transfer of unclaimed shares and dividends

While addressing FICCI’s annual capital market conference, Deepti Gaur, Secretary, MCA, hinted at policy measures to make the system more uniform

The Securities and Exchange Board of India (SEBI) and the Ministry of Corporate Affairs (MCA) are working on a framework to simplify the transfer of unclaimed shares and dividends.

To review existing norms and harmonise the need for shareholder identification and streamlining the transmission process, the task force will release a draft proposal in the first week of September.

Recently, while addressing FICCI’s annual capital market conference, Deepti Gaur, Secretary, MCA, hinted at policy measures to make the system more uniform.

Urging companies to actively run outreach campaigns to locate missing shareholders, she stated, “Companies, along with registrars and transfer agents, have made the process of identifying shareholders very difficult. The effort is to simplify transmission of shares and dividend claims.”

Currently, if dividends remain unpaid or unclaimed for seven consecutive years, the shares are categorised as ‘unclaimed’ and transferred to the account of the Investor Education and Protection Fund (IEPF) Authority. However, companies follow varied practices in verifying shareholder claims, with some insisting on affidavits and others not, creating hurdles for investors.

Early this year, SEBI launched the Mutual Fund Investment Tracing and Retrieval Assistant (Mitra), a searchable database of inactive and unclaimed mutual fund folios. It also partnered with Digilocker, so that investors could fetch and store mutual fund (MF) and demat account statements.

As per SEBI’s Annual Report, unclaimed MF redemption amounts rose 10.1 percent to Rs.1,128 crore in the FY 2025, from Rs.1,024 crore in FY 2024. Similarly, unclaimed dividends increased sharply by 26.5 percent to Rs.2,324 crore, compared with Rs.1,838 crore.

During the last FY, the market regulator conducted nomination-awareness campaigns through depositories to ensure smoother identification of investors.

Meanwhile, if dividends remain unclaimed or unpaid for 30 days, the company must transfer the total amount to an ‘unpaid dividend account’ within seven days. The company must disclose and try to notify shareholders to facilitate claims.

However, if the dividend remains unclaimed for seven years consecutively, the amount, along with any interest earned, is transferred by the company into the IEPF Authority’s account.

The underlying shares linked to such unclaimed dividends are also transferred to the IEPF.

Still, investors or their legal heirs can claim these funds from the IEPF by following the prescribed procedures and submitting the required documents.