SEBI, MCA Propose Easier Rules for Transferring Unclaimed Shares and Dividends

The Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (Sebi) are preparing a framework to simplify the transfer of unclaimed shares and dividends, as per news reports. A task force reviewing existing rules and transmission procedures is expected to release a draft proposal in the first week of September 2025. 

The framework is for harmonising requirements for shareholder identification and streamlining processes.

Current Practice

At present, dividends that remain unpaid or unclaimed for 7 consecutive years are transferred to the Investor Education and Protection Fund (IEPF) Authority. The associated shares are also moved to the IEPF. Companies, however, follow varied procedures to verify shareholder claims. While some firms insist on affidavits, others have different requirements, creating difficulties for investors trying to reclaim holdings.

Remarks from MCA

Addressing FICCI’s annual capital market conference, MCA Secretary Deepti Gaur stated that the current system has made the identification of shareholders unnecessarily complex. The effort is to simplify the process and encourage companies to conduct outreach campaigns to locate missing shareholders.

Rising Unclaimed Amounts

As per SEBI’s annual report, the unclaimed mutual fund redemption amounts rose by 10.1% to ₹1,128 crore in FY25, compared with ₹1,024 crore in FY24. Unclaimed dividends increased more sharply by 26.5%, reaching ₹2,324 crore in FY25 against ₹1,838 crore in the previous year.

Steps by SEBI

In early 2025, 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, enabling investors to access and store mutual fund and demat account statements. In addition, nomination-awareness campaigns were conducted through depositories during the year.

Read more: SEBI Proposes New Rules for RTAs, Separate Units for Listed and Unlisted Services!

Process for Unclaimed Dividends

If a dividend remains unpaid for 30 days after declaration, the amount must be transferred to an “unpaid dividend account.” If it continues to remain unclaimed for 7 years, the funds and linked shares are transferred to the IEPF. Investors or legal heirs can later claim them by submitting the required documents.

Conclusion 

The joint framework from MCA and SEBI is expected to bring consistency to existing rules. It will outline a uniform process for handling unclaimed shares and dividends.

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