Summary of the Program at the Cincinnati NIRI Chapter Meeting on May 18, 2011
Understanding Escheatment Laws and How they Impact Shareholders
The Cincinnati Tri-State Chapter of NIRI held its sixth meeting of the season on May 18, 2011. Andrew Ranaudo, Vice President of Keane, provided insights on how companies can lower shareholder costs in addition to increasing data integrity of shareholder records. Some of the key points from Andrew’s presentation are summarized below.
Compliance with unclaimed property laws, which include provisions for escheating unclaimed or abandoned property – such as uncashed dividend checks – to states or other jurisdictions, can involve costs such as:
- Maintaining dormant accounts resulting in unnecessary recordkeeping,
- Expenses charged by the Securities Exchange Commission in searching of lost accounts.
- Fees related to reporting of lost or dormant accounts.
Using third party vendors for detailed research of researching new addresses of living shareholders or determining who is entitled to deceased shareholder assets can be more efficient than doing so on your own. There are legal aspects and numerous details that add to the complexity and due diligence requirements of what may seem like a simple task.
Establishing priorities based on escheat timing requirements, which can vary by jurisdiction, are also key to compliance and cost minimization. Reviewing registered accounts sooner to determine cases of deceased owners can help avoid problems later, and is another best practice.