MCA, Sebi look to ease transfer of unclaimed shares and dividends

The task force reviewing existing norms is expected to release draft proposal in September

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

 

A task force, set up to review existing norms and transmission procedures, is expected to release a draft proposal in the first week of September. The new framework is likely to “harmonise requirements” for shareholder identification and streamline the transmission process.

 

MCA secretary Deepti Gaur, addressing FICCI’s annual capital market conference last week, hinted at policy measures to make the system more uniform.

 

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

 

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

 

Emailed queries sent to Sebi on the proposed framework went unanswered till press time.

 

Earlier this year, Sebi launched the Mutual Fund Investment Tracing and Retrieval Assistant (Mitra), a searchable database of inactive and unclaimed mutual fund folios. It has also partnered with Digilocker to let investors fetch and store mutual fund and demat account statements.

 

According to Sebi’s annual report, unclaimed mutual fund redemption amounts rose 10.1 per cent to ₹1,128 crore in the financial year 2025 (FY25), from ₹1,024 crore in the previous year. Unclaimed dividends increased more sharply by 26.5 per cent to ₹2,324 crore in FY25, compared with ₹1,838 crore in FY24.

 

During the last financial year, the regulator also conducted nomination-awareness campaigns through depositories to ensure smoother identification of investors.  

What happens if dividends remain unclaimed  

After a dividend is declared, if it remains unpaid or unclaimed for 30 days, the company must transfer the total unpaid amount to an “unpaid dividend account” within seven days after the 30-day period. 

The company must disclose and try to notify shareholders about unclaimed dividends to facilitate claims. 

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

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

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