Unclaimed property impacts and affects almost every aspect of the financial world – from accounts payable to accounting to investor relations. While on the surface it may not seem that unclaimed property directly involves the IRO; it does in fact have an impact when looked at more closely. Recently, Dorothy Flynn, CEO of Keane Unclaimed Property, wrote an article for IR Alert about the two major reasons why those in the investor relations function should pay attention to unclaimed property.
The first reason is Risk Management. IROs are constantly focused on the reputational risks that exist for their company should a state decide to audit. Unclaimed property audits – and unclaimed property in general – often are overlooked, as IROs don’t consider the damage that could occur to the company’s reputation and, in most cases, don’t realize it could be material to their company’s balance sheet in the first place. For example, Delaware recently audited Staples and calculated that the company owes $3,962,750 in past due unclaimed property claims. That doesn’t look so good for the office supply chain – or its investors.
The second reason is Shareholder Data. State unclaimed property audits can extend beyond a company’s general ledger and into the registered shareholder data. For companies that have managed their own shareholder data, this risk has always been evident. However, for companies whose records lie with an external transfer agent, this is often difficult to manage. Now more than ever, states are targeting dormant stock accounts, un-cashed dividends, un-exchanged shares from mergers and acquisitions and inactive accounts.
In order for IROs to reduce the risk of audit, they need to familiarize themselves with unclaimed property and be aware of common red flags. This way, they can proactively manage compliance to prevent their shareholders’ accounts from becoming accidently caught up in state laws.
No industry – and no company – is “safe” from an unclaimed property audit. By putting these procedures in place, IROs will not only be able to minimize audit risk, but they will also be better able to maintain stock price, protect shareholder interests and preserve their organization’s reputation.
Our team is equipped to assist you with any specific questions you may have regarding unclaimed property. Keane Unclaimed Property is available at 800-848-8896 and over the internet at our contact form.
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