 "Fancy dividends? Keep an eye on these companies")
A company in which you own shares announces a dividend and you are happy of getting some tax-free income. But you don’t bother to check your account to see if the money has been credited or not. Another company that you are invested in announces bonus shares and again you don’t bother checking your demat account to see if the shares are transferred to your account, since you have no plans of selling them.
“Whenever there is any corporate activity, within 48 hours, the share, bond or money should be credited to your account. Many a time shareholders are not even aware of how much dividend is paid or due to them. People don’t even read emails,” says Hiren Dhakan, Associate fund Manager, Bonanza Portfolio.
Recently, Asian Paints filed a complaint against its share transfer agent, Sharepro illegally transferring dividends and shares of the company’s shareholders to other fraudulent accounts. Now the process is on appoint another share transfer agent. Companies like Aptech and Britannia Industries too have filed complaints against Sharepro.
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According to an investigation by the Securities and Exchange Board of India, funds to the tune of Rs 21.7 crore were transferred to the accounts of relatives of senior management of Sharepro and unauthorized entities over a period of 10 years. Currently more than 250 companies are employing the services of Sharepro.
The only way to keep track of such frauds is to be self vigilant and review your portfolio every to four months even if you are not trading actively.
“These days, whenever a company announces a dividend or bonus issue, the shares or money is electronically credited to the shareholders’ account. Always keep track of your demat account and the bank account linked to it,’’ says Shriram Subramanian, Founder and MD, InGovern Research Services
Once the record date is announced keep track of whatever the corporate action is-dividend, bonus issue, etc and how much money is supposed to come into your account, Subramanian adds. He cites the case of Max India, which split into three different companies, but shares of the new companies are yet to be credited to investors’ accounts.
Frauds include dividend not being credited or not being credited in full, transactions getting settled in other accounts, or fees being hiked suddenly without informing shareholders. In such instances, the first point of contact for complaint is always the company. Each company has a dedicated investor cell where you can lodge your complaint. Every company has to publish a list of complaints it receives from shareholders once a quarter. If the complaint is not resolved by the company, then you can lodge a complaint with the regulator. You can lodge a complaint through Sebi’s grievance redressal platform, SCORES, which is a centralised online system for lodging and tracking complaints.
“If the shares are not credited to your account they can even be misused by intermediaries for pledging or lending to someone else. Then there could be two people who have rights over the shares, the original shareholder and the person to whom it has been pledged,’’ says Feroze Azeez, deputy CEO at Anand Rathi Private Wealth Management.
Today you can get consolidated statements of all your demat accounts from depositories. This is a very useful feature and investors must keep track of it at least on a quarterly basis, if not monthly.
Many a time brokers don’t transfer the money or shares to their clients’ accounts and instead keep it in a pool account. The reason that is given it that this makes it easier to sell and the client can avoid the additional paperwork and documentation required for the transfer. “But this is not a wise thing to do and shareholders must always insist on the shares and money being transferred to their accounts,” Azeez adds.
In case of Sharepro, the matter came to light because it involved a big company like Asian Paints. But there could be several other cases involving smaller companies where such frauds of illegal transfer of dividend money or shares never come to light.
“The regulator has to impose severe punishment for such frauds. Right now there is still gap between the scam being discovered and the order being passed,’’ Dhakan says.
