South Africa has a whopping R4.5 billion in unclaimed dividends, representing missed financial opportunities for thousands of shareholders. Many investors are unaware they are entitled to these payouts, leaving significant funds in limbo. To address this, the Johannesburg Stock Exchange (JSE) has partnered with listed companies to launch the potentially life-changing “Claim It” campaign, designed to help investors track down their missing funds.
If you or someone you know has ever held shares in a JSE-listed company, you could be among those with money waiting to be claimed. Intrigued? Let’s spill the tea on unclaimed dividends in South Africa.
Why are dividends left unclaimed in South Africa?
Dividends go unclaimed and accumulate for several reasons:
- Outdated contact details: A common culprit is investors who change addresses or email addresses without updating their information with the relevant companies. This results in missed notifications about dividend payments.
- Unclaimed inheritances: Tragically, many shareholders pass away without informing their heirs about their investments. This leaves unclaimed dividends in their name, often unknown to their beneficiaries.
- Banking issues: Closed or incorrect bank accounts can lead to failed payment transfers, causing dividends to remain uncollected.
- Investor unawareness: Some investors may not realise they own shares that generate dividends, particularly in old employer stock schemes, demutualisation, or simply forgotten investments.
Why is there a problem with R4.5 billion in unclaimed dividends in South Africa?
The fact that there is such a staggering amount of unclaimed dividends in South Africa is a big deal for several reasons, impacting both individuals and the broader economy:
- Lost financial opportunity for individuals: This represents a substantial loss of potential income for individual investors. This money could be used for essential needs, savings, or further investments contributing to financial well-being. Especially in a country with high levels of economic inequality, these unclaimed funds could make a significant difference in the lives of many individuals and families.
- Economic inefficiency: Unclaimed dividend money is essentially “trapped” and not circulating within the economy. It cannot be used for investment, consumption, or other economic activities that would stimulate growth. When dividend funds remain unclaimed, they cannot contribute to the nation’s overall economic health.
- Administrative burden for companies: Companies holding unclaimed dividends incur ongoing administrative costs associated with tracking and managing these funds. This diverts resources that could be used for core business operations and growth.
- Erosion of investor confidence: The existence of such a large sum of unclaimed dividends can erode investor confidence in the financial system’s efficiency and transparency, raising questions about the effectiveness of communication and record-keeping practices.
- Potential for misuse or fraud: Unclaimed dividend funds can be vulnerable to misuse or fraudulent activity. While measures are in place, the sheer volume of unclaimed money increases the risk.
- Negative impact on economic inclusion: Many of the people who have unclaimed dividends may be from less financially literate backgrounds and previously disadvantaged groups. The fact that the money is unclaimed points to a failure of the financial systems to properly include these individuals. So, the unclaimed dividends contribute to the financial exclusion of parts of the population.
Long story short? This R4.5 billion in unclaimed dividends signifies a large-scale systemic inefficiency and loss of potential economic and individual benefits.
The JSE’s ‘Claim It’ initiative – the investor’s solution to claiming unclaimed dividends in South Africa.
The JSE is taking steps to see unclaimed dividend funds returned to their rightful owners to build a more equitable and reliable financial system by addressing these issues. The ‘Claim It’ initiative aims to streamline locating and claiming these funds. The process involves:
- Checking the JSE’s database: Investors and their heirs can use the JSE’s official website’s online portal to check if their names appear on the list of unclaimed dividend holders.
- Providing identification and verification documents: To process a claim, individuals must submit a valid South African ID, proof of address, and any supporting documentation related to their investment. This helps listed companies ensure the rightful owner receives the funds.
- Receiving payment: Once the verification process is complete, payments will be processed, and shareholders can receive their rightful funds directly into their bank accounts.
How to check if you are owed money from unclaimed dividends
To find out if you have any unclaimed dividends waiting to change your life, follow these simple steps:
- Visit the JSE’s official ‘Claim It’ website: Go to jse.co.za/claimit.
- Enter your details and check: Enter your personal information and check if you have unclaimed funds listed.
- Follow the verification steps: Follow the instructions provided on the website to verify your identity and claim your dividends.
Don’t be caught unaware of dividend tax.
It is essential to understand that windfalls rarely come without tax implications. Dividends in South Africa are subject to a 20% tax deduction before they are paid to investors, so when claiming unclaimed dividends, ensure that you factor tax into your equation.
Read more:
- Dividends tax exemptions in South Africa: the facts and figures.
- Capital Gains Tax on shares held in South Africa by individuals.
FinGlobal: helping South Africans to make their money moves
If you are entitled to unclaimed dividends, pension funds, or insurance policies in South Africa, we can help. We partner with all South African insurance providers to locate and reunite beneficiaries with their owed funds, including the encashment of South African retirement annuities post-emigration. After confirming your eligibility, we offer comprehensive support for international fund transfers, handling all tax and foreign exchange considerations on your behalf.
To learn more about our convenient and trusted cross-border financial services, contact FinGlobal today.