Union Minister of Finance Nirmala Sitharaman had announced in her Budget Speech in Parliament on February 1, 2023 that an integrated IT portal would now be set up for investors to help them reclaim their unpaid dividends and unclaimed shares.
“In order to boost investor protection and further solidify the financial sector and allow investors to reclaim unclaimed shares and unpaid dividends from the Investor Education and Protection Fund Authority with ease, an integrated IT portal is proposed to be established,” she had said.
So, what are unpaid dividends and what happens when dividends go unclaimed?
UNPAID AND UNCLAIMED DIVIDENDS
Dividends refer to the share in profits made by a company which is distributed to the shareholders.
When a company pays dividends, but the same is not taken by the shareholder, it is considered as unclaimed dividend.
Similarly, when the company does not distribute dividends to the investor after dividends have been announced, these are known as unpaid dividends. It is important to note that when shareholders do not claim their dividends for seven years, these are transferred to the Investor Education and Protection Fund (IEPF) Authority, after which the shareholder must claim these dividends from the IEPF Authority.
In September 2016, the Government of India had set up the Investor Education and Protection Fund Authority, under Section 125 of the Companies Act, 2013. The IEPF Authority, among other things, works to promote awareness among investors.
Additionally, in her Budget Speech, Sitharaman had further noted that “to improve bank governance and enhance investors’ protection, certain amendments to the Banking Regulation Act, the Banking Companies Act, and the Reserve Bank of India Act are proposed”.
She said: “Our vision for Amrit Kaal includes technology-driven and knowledge-based economy with strong public finances, and a robust financial sector,” adding that digital payments continue to find wide acceptance across sectors of the economy, as well as sections of society.
While sharing data for the last year, she added: “In 2022, they showed an increase of 76 per cent in transactions and 91 per cent in value. Fiscal support for this digital public infrastructure will continue in 2023-24.”
Meanwhile, to further build capacity of functionaries and professionals in the securities market, the Budget has also proposed that the Securities and Exchange Board of India (Sebi) “will be empowered to develop, regulate, maintain and enforce norms and standards for education in the National
Institute of Securities Markets. It will be further empowered to recognize award of degrees, diplomas and certificates.”