…As 2.8m investors yet to register

By Chinenye Anuforo and Chinwendu Obienyi

Barely five months to the December 31, 2017, the second deadline given by the Securities and Exchange Commission (SEC) for the conclusion of  e-dividend registration in the capital market, indications show that only 2.2 million investors out of about five million Nigerians participating in the activities of the bourse have so far registered on the platform. This means that about 2.8 million are yet to key into the programme, a further indication that less than 50 per cent of registered investors are yet to come on board.

Some stakeholders who spoke to Daily Sun, fear the low registration could trigger another extension of its full implementation unless urgent steps are taken by regulators to get the critical mass.

The Commission had initiated the scheme in 2015 to curb the rising rate of unclaimed dividends in the capital market. By definition unclaimed dividends are return on investment, which have been paid by the company but are yet to be claimed by the shareholders, either due to ignorance, death or relocation without notifying the Registrar and, therefore, missed the dividend cheque.

On the other hand, e-dividend simply refers to an online system of paying dividends to investors when companies declare dividends, being the profits meant for investors in a given business year. But  under the e-dividend regime rather than send it by post, such will just wired to the investor’s bank account.

About one year ago, the SEC launched the e-Dividend Mandate Management System (e-DMMS) in conjunction with the Central Bank of Nigeria (CBN) and all Deposit Money Banks (DMBs) as a means of reducing the quantum of unclaimed dividends in the capital market, and to ease the direct cash settlement initiative while generally boosting capital market processes to enable investors get their returns without stress.

Briefing capital market correspondents recently on the current status of unclaimed dividends and e-dividend in the nation’s capital market, Mr. Mounir Gwarzo, the SEC Director General, said that only 2.2 million investors had mandated their accounts for the e-dividend payment policy as of April 30, 2017.

Gwarzo said it was unfortunate that a lot of investors don’t pick up their dividends warrants, a development, he said, gave rise to the problem of unclaimed dividends.

“The e-dividend is a major game changer in this market. A lot of people hardly collect their dividends and this huge problem of unclaimed dividends is a function of people not picking up their dividend warrants.

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“The reason could either be because they have changed their addresses or the amount of transport they are going to pay to collect the dividend is far above the amount contained in the warrant. It does not make sense using N8,000 to collect dividend of N3,000. So, we want to address that.

“That is why we are calling on Nigerians to register for e-dividend. We have posted on our website the list of investors that have not provided their accurate account numbers.”

Investigation by Daily Sun showed that unclaimed dividends rose from about N2 billion in 1999 to N8 billion in 2008, N41 billion in 2011, N60 billion in 2013, N80 billion in 2014, N90 billion in 2015 and N117 billion in 2016. But SEC, at a public hearing on the need to determine the status of unclaimed, said about N42 billion out of about N117 billion unclaimed dividends have been paid out to investors attributing the feat to the Commission aggressive sensitisation campaign.

“As of today, based on the reports we received from the registrars, almost N42 billion unclaimed dividends have been paid out of a total of N117 billion unclaimed dividends as of December 30, 2016, which means our message of unclaimed dividend is yielding positive results,” the SEC said.

Recall that SEC had in 2016 announced June 30, 2017, as deadline for issuance of physical dividend warrants to shareholders by quoted companies to tackle unclaimed dividends and mitigate the risks associated with warrants. But the commission extended that deadline to December 31, 2017 when it became obvious that more than half of investors were yet to register at the expiration of the earlier deadline.

Mr. Naif Abdussalam, SEC Head, Corporate Communications, said the deadline was extended to give room for investors to key into the e-dividend payment platform.

Speaking on the establishment of Nigerian Capital Market Development Fund (NCMDF) set up to address the issue of all unclaimed dividends that is above 12 years, the SEC DG noted that a committee has been set up to work out the modalities for the trust fund.

Meanwhile, Head, Vertical Markets Group, Nigeria Inter-Bank Settlement System (NIBSS), Samuel Oluyemi, had explained that the eDMMS portal utilises NIBSS’s robust document management system to which the e-dividend mandate forms filled by the investor can be uploaded.

“The e-dividend form, which can be obtained and filled at bank branches or in the office of a registrar or stockbroking firms, helps the registrars trace, combine and seamlessly enrol shareholders investments/portfolio, leveraging the robust know-your-customer feature of the Bank Verification Number (BVN) system.

system to ensure the payment of dividends directly into shareholders’ bank accounts.”