Unclaimed Equity Investments and Related Assets

It is often the case that registrars will over time lose contact with shareholders and members, and will only become aware of this when undelivered post starts being returned to them, or when dividend payments are not banked. The registrar will mark the shareholder as ‘dissenting’ after a set number of returned letters or unpaid payments, and the equity investment, along with any related income such as dividends, may be considered unclaimed from then on.

What are unclaimed equity investments?

The term equity investment commonly refers to the buying and holding of shares of stock (a shareholding) on a stock market (such as the FTSE 100) by individuals in the expectation of future income and/or capital gains. An unclaimed equity investment is therefore most often a shareholding in a public company that has been forgotten or lost track of over time by its legal owner(s).

Types of unclaimed equity investment?

These almost exclusively take the form of a shareholding in a public company that has, over time, been lost or forgotten about by the registered owner(s) or their living heirs. Alongside these unclaimed investments, other related assets may also lay unclaimed, such as cash offers, capital payments, cash or scrip dividend payments, or (bonus) share issues in the company invested in or another by association (as a result of a demerger for example).

When is an equity investment considered unclaimed?

The listed public company in which the shareholding is in has a legal obligation to maintain an accurate register of its members (i.e. shareholders). These registers can be inspected at any time by shareholders, and typically the public company will appoint a registrar to act on their behalf. The registrar will carry-out many routine functions on behalf of their client (the listed company), such as keeping a record of who buys and sells their shareholding, circulating literature on behalf of the listed company (such as annual or interim reports, and notices of general meetings) and ensuring cash payments due to members and shareholders are paid.

Equity investments may go unclaimed because:

The registered owner fails to inform the company or custodian of a change of name
The registered owner passes away without leaving a Will and their living heirs are unaware of their entitlement
An individual may be in control of all financial dealings of a spouse/partner, and details of the equity investment are unknown by other person
An individual may simply forget about an investment that may have been made a long time ago

It is often the case that shareholders and members will have been lost contact with over time, and the registrar will know when this has happened when undelivered post starts being returned to it, or when dividend payments are not banked. The registrar will mark the shareholder as ‘dissenting’ after a set number of returned letters or unpaid payments, and the equity investment, along with any related income such as dividends, may be considered unclaimed from then on.

What happens to the funds associated with an unclaimed equity investment?

There are presently no general rules on how an unclaimed equity investment should be dealt with (or when) by either the company or institution the investment is in, or the custodian of the investment (such as a registrar). The treatment of each unclaimed investment (and any associated unclaimed funds) is therefore dependent on the memorandum & articles of association or other governing documents of the company or institution invested-in.

Normally the entitlement of the registered owner remains preserved until a valid claim is made and accepted. However, events over an extended dormant time period can have an (often adverse) effect on the investment, as a result of a merger or demerger, a share split or share issue, or simply by forfeiting unclaimed dividends after a set period of time. It is also possible that the equity investment can disappear altogether if, for example, the public company or institution goes into administration.

Why have I not been notified of my unclaimed equity investment?

In most cases the company or institution, or their agent, will have made efforts to contact the registered owner(s) without success. Correspondence will often be re-sent to the last known address, but as the registered owner(s) may have moved away a long time beforehand (possibly causing the breakdown in communication in the first place), this approach will not always work. Some public companies or institutions will then take further steps to trace their missing members (or their beneficiaries) by partnering with tracing agents such as ourselves.

How can I find out whether I can recover an unclaimed equity investment?

There are a number of online databases that provide limited search facilities for either the public in general or for practitioners (such as solicitors). These can be of use if you believe you are entitled to an unclaimed equity investment, but must be treated with caution. Firstly the cost and time it takes to conduct each search varies; if you intend to carry out a thorough search (using more than one provider) the cost can increase rapidly. And second, as they are restricted in the data they have available to check your search against, and also prescriptive in the search criteria (for example, if you type your address slightly differently, or use your existing address instead of your old one, the search will probably fail) so that misleading results may arise.

A definitive search for any unclaimed entitlement to equity investments that you or someone related to you might have, is not easy to do independently, which is one of the reasons why we exist. By working closely with the public company or institution, we will only trace and make contact with individuals that have an entitlement and have not been able to locate it themselves beforehand.

It should be noted that not all the people we contact are owners or beneficiaries (i.e. you may be contacted in the process of tracing the individuals that are entitled. If you are (one of) the individual(s) we believe is entitled to an unclaimed equity investment however, we can help you to take the steps necessary to reunite you with your unclaimed entitlement(s) quickly and easily, as we will be working closely with the public company or institution in question.

For enquiries, contact our Resources Manager, David Amblin on +44 (0) 20 8914 8317 or email direct d.amblin@treethorpe.com