When have you not Received any Dividends, Bonuses or Rights?

Minakshi Bindhani

06 Apr, 2023

Investing in stocks or shares allows individuals to grow their wealth over time. One of the benefits of owning stocks is the potential to receive returns on the investment in the form of dividends, bonuses, or rights. When an investor has yet to receive any dividends, bonuses or rights from their investments, it helps investors understand the potential reasons for not receiving returns on their investments and take appropriate action to resolve any issues. By understanding the various reasons, investors can ensure that they meet the eligibility criteria set by the company, keep their contact details up-to-date, and stay informed about any changes or updates related to their investments. Ultimately, the objective is to help investors maximize their investment returns and achieve their financial goals.

However, there could be various reasons why an investor may not receive any dividends, bonuses or rights from their investments.

• The company has not declared any dividends, bonuses or rights: An investor may not receive dividends or bonuses because the company has not declared any. A company may only distribute dividends or bonuses if they have sufficient profits or if they choose to reinvest profits back into the company. In such cases, investors may not receive any dividends or bonuses, even if they have held shares in the company for a long time.
  For example, a startup company in the early stages of growth may choose to reinvest profits into the business to fund research and development or expand operations. In this case, the company may not have any profits to distribute to shareholders^[1] as dividends or bonuses.
• The investor is not eligible for dividends, bonuses or rights: An investor may not receive any dividends or bonuses because they need to be eligible. Some companies may have specific eligibility criteria for shareholders to receive dividends or bonuses, such as a minimum shareholding period or a minimum number of shares held. If an investor does not meet these criteria, they may not be eligible to receive any dividends or bonuses.
  For example, a company may require shareholders to hold a minimum of 1,000 shares for at least six months before they are eligible to receive dividends or bonuses. An investor must hold 500 shares or hold them for the minimum required period to be eligible to receive any returns on their investment.
• Incorrect bank account details: If a company has declared dividends, bonuses or rights, but an investor has yet to receive them, it could be because they need to provide the correct bank account details to the company. In such cases, investors should contact the company’s investor relations department to update their bank account details. Investors need to keep their contact details up-to-date with the company to ensure they receive all relevant communications and returns on their investment. Sometimes, companies may have a deadline for updating bank account details, and investors who miss this deadline may not receive their dividends or bonuses.
• Shares are held in a nominee account: When shares are held in a nominee account, such as with a broker or investment platform, the dividends, bonuses or rights may be paid to the account and not directly to the investor. In such cases, investors should check with their nominee account provider to see if this is true. Nominee accounts are often used by investors who want to hold shares in multiple companies and prefer to have all their investments managed in one place. However, investors should know that dividends or bonuses may take longer to be credited to their account if held in a nominee account. The provider must process the payment and allocate it to the correct investor.
• The rights issue is oversubscribed: In the case of a rights issue, where existing shareholders are given the right to purchase additional shares in the company at a discounted price, the issue may be oversubscribed. It means that the share demand is greater than the supply, and some shareholders may need help to exercise their rights to purchase additional shares. In such cases, the company may allocate the shares pro-rata, meaning each shareholder is allocated a percentage of the shares they applied for. An investor’s application must be fully subscribed to receive the total amount of shares they applied for, and therefore, they may not receive the full benefits of the rights issue.
• The company has suspended dividends or bonuses: In some cases, a company may suspend the payment of dividends or bonuses due to financial difficulties or other reasons. In such cases, investors may only receive dividends or bonuses once the company resumes payments.

In summary, there could be various reasons why an investor may not receive any dividends or bonuses from their investments. Suppose an investor is still determining why they have not received any returns on their investment. In that case, they should contact the company’s investor relations department or broker/investment platform for further information.

Conclusion

In conclusion, there could be various reasons why an investor may not receive any dividends, bonuses, or rights from their investments. The company may have yet to declare any dividends or bonuses due to insufficient profits or if they choose to reinvest profits back into the business. Additionally, investors may not be eligible to receive dividends or bonuses if they do not meet the eligibility criteria set by the company. Incorrect bank account details, shares held in a nominee account, and oversubscribed rights issues are possible reasons for not receiving investment returns. Investors need to keep their contact details up-to-date and check with their nominee account providers or the company’s investor relations department to ensure they receive all relevant communications and returns on their investment.

Also Read:
What is the Procedure for Shares Issue through Bonus Issue?
Overview of Bonus Stripping & Tax on Bonus Shares under ITA 1961