Managing the unclaimed property challenge

I recently attended a social gathering with a group of lawyers I know personally, and we were talking about a subject no one really wants to discuss: Estate Planning. Once we got through the question of whether or not people had a Will, one of the lawyers asked if any of us had ever received a notice about a share certificate that was recently found, and he did not realize (or remember) he had it. As it turned out, he had unclaimed property.

What is unclaimed or “lost” property?

Every year in Canada, there are millions of dollars in unclaimed property due to lost shareholders. There are several ways these assets can become "lost".

• Shareholders move and forget to contact the transfer agent to update their address.
• In some jurisdictions, if there is a merger or acquisition, reverse stock split or other corporate action, or an insurance company has demutualized, and individuals neglect to exchange their old certificates and/or submit their claim for the new shares or cash entitlements.
• A shareholder passes away without including their investments as part of the estate, and family members are not aware of these holdings.

My lawyer colleague is based in Québec where the unclaimed property regulations were updated in 2023. The existing legislation, in place since 2011, requires the holders of unclaimed property to remit the uncashed dividend payments of lost shareholders to Revenu Québec. The changes, which took effect in 2023, allow Revenu Québec to also take possession of certain types of shares when, inter alia, Québec residents fail to cash their dividend cheques, after a three-year dormancy period. To learn more about the unclaimed property regulations, read “Unclaimed property regulatory changes”. 

Unprecedented wealth transfer

The amount of unclaimed property could potentially increase in the next few years. An article published by the Chartered Professional Accountants (CPA) Canada states that Canadian baby boomers are set to leave as much as CA$1 trillion in inheritances to their Generation X and millennial heirs between 2023 and 2026, predicted to be the largest generational transfer of wealth in Canadian history.¹

With that much in assets at stake, it is more important than ever for people, like your clients, to ensure they have a current Will. In fact, I recently updated my own Will. Having your estate in order, with a detailed record of assets, is one of the most important things you can do for your family and loved ones, who will be left to sort it all out after you are gone.

With shares and other holdings, people may “set it and forget it”, not logging into their accounts regularly or staying on top of their share certificates. When working with clients, consider asking them about their shares and other assets, reminding them to check their contact details are up to date, they have exchanged any old certificates, and that these are part of the asset list. Taking time to review these items can help prevent these assets from being lost.

Unclaimed property and good corporate governance

While it is important for individuals to track their personal assets, your issuer clients can also take steps to help reduce the amount of unclaimed property for their shareholders.

If your clients have completed a corporate action, M&A, reverse stock split or other event that could result in shareholders becoming lost, they may want to consider an ASSET REUNIFICATION® program. This service is designed to search and locate holders of lost assets to reunite them with their rightful cash or share entitlements. An ASSET REUNIFICATION® program is a socially responsible initiative that can go a long way to promoting shareholder goodwill.

If you have any questions about unclaimed property or asset reunification, please contact me at Mike.Tuff@computershare.com and I can put you in touch with one of our experts in this area.

 

¹ The next wave of trickle-down wealth is upon us - CPA Canada