The share. Market and stocks are not a simple piece of cake where everyone can just dive in, without any prior preparation. If you are planning to invest in the stock market, or wish to diversify into investments you have no prior experience with, then you must remember to do your research throughly before hand. The investment market is made up of many parts.
There are certain easy aspects like profits and losses, and there are more complicated ones such as Unclaimed Dividends from IEPF authority. If you are not well versed with the ins and outs of the market, then you might find that statement to be nothing more than a random bunch of words put together. However let us take a minute to understand what these words actually are?
What are dividends and how are they a part of the stock market?
Shares refer to a part of company that it wishes for the public to acquire, this means that they get a share in their profits and losses as well. Dividends refer to a part of profits that the companies share with it’s share holders. The better, a company performs and the more it generates sales, the higher are it’s dividends. Many a times, companies offer higher dividends even when they themselves have incurred losses, only to protect the reputation of the company and maintain good faith among the people and share holders.
What are unclaimed dividends?
Unclaimed dividends mean those dividends that have not been claimed by the shareholders. The concept may seem crazy right? The sole reason why people invest money into the stock market is to make profits, basically earn dividends. Then why would someone not claim the profit if they are getting it? The answer is simple, they would not. Not intentionally that is. Many times, investors either shut down their entire portfolio, or pass it on to someone else or unfortunately die before they are able to claim the dividend. The recipient of the portfolio, is unable to claim the dividend.
What happens to unclaimed dividend?
There are thousands, if not millions of companies which are public and have their shares listed for trade in the market. Companies as well as the government recognise this fact. They understand that for people who choose to trade or invest as a side hustle, it might be a bit difficult to keep constant track of their gains or losses. This is why the stock market had enormously large deadlines. In case of unclaimed dividend, a person gets 7 years. 7 whole years to file for the dividend that is either rightfully theirs or has been passed on to them. After that the unclaimed dividend automatically gets passed on the company’s dividend account.
How often does a dividend go unclaimed?
With 7 years as the deadline for an unclaimed dividend to return, you might think that it would be a once in a blue moon occurence that a company receives back it’s unclaimed dividend. Hate to break it to you, but it happens more often than one can count. Especially with companies that operate at a medium or small scale.
Many times, dividends remain unclaimed, due to a person’s carelessness or forgetfulness, but many times it happens due to incorrect filing or the proper procedure not being followed. Stock market investors are always advised to hire a trustworthy and experienced broker. However no matter how skilled a broker might be, they are at the end of the day humans only and can certainly make mistakes, especially if they operate at a large scale and deal with multiple clients. This is why it is very important for investors themselves to know the basic workings of the market they invest in.
