N90bn Unclaimed Funds: SEC Floats e-dividend Campaign

General Editor, COBHAM NSA reports that years of sustained agitation by stakeholders have yielded the desired results as the Securities and Exchange Commission (SEC), moves to resolve all issues relating to the ever-growing mass of unclaimed dividend in the nation’s capital market. Taking its reforms a notch further, the Commission recently embarked on a four-day robust enlightenment programme on the e-dividend to curb the rising incidence of unclaimed dividend among shareholders

From every indication, many readily agree that the Securities and Exchange Commission (SEC), has upped its ante game in recent times with the well-publicized Abuja Road Show and Town Hall meeting among innovations meant to boost market operations and further enhance investors’ enlightenment on the recently launched e-dividend platform With plans to cover all the 36 states in the nearest future, the programme, which had the road show holding from Monday, January 11 to Wednesday, January 13, 2016, culminated in a town hall meeting on January 14, 2015 at the International Conference Centre (ICC), Abuja. Expectedly, the SEC Director General, Mounir Gwarzo led the Commission’s charge for its e-dividend initiative at the meeting where industry operators and stakeholders roundly described the e-Dividend platform as a game changer in the market with the aim of curbing and reducing infractions to the barest minimum. Energized by gains so far made in its market reform process that was applauded as a welcome development by industry operators, Gwarzo said success of the enlightenment programme means investors must take full benefit of the service by visiting their registrars or banks to register. The SEC boss, who fronted the Town Hall Meeting as a forum to further sensitize the investing public on the ongoing nation-wide e-Dividend registration, explained that with the e-dividend in place, the issue of stale warrant will become a thing of the past. For him, shareholders will no longer have the need to travel from one point to another just to deposit their warrant, even as he maintained that the development will also do away with the burning issue relating to change of address by beneficiaries. According to Gwarzo, all stakeholders are in agreement on the way to go, stressing that; “it is now left for investors to go and register. We have agreed with all the stakeholders that for the first 90 days, the registration is going to be free. After 90 days, anyone that wants to register will pay N100.” The Director General is upbeat about a successful completion of the registration process with the next phase expected to consider claims by investors that have dividends in the region of less than 12 years old. Assuring that the issue of unclaimed dividend now in excess of N80 billion will also be a thing of the past, Gwarzo said the worrisome development arose from dividends of small stakeholders which have been outstanding over the years. According to him, “Once we are able to get through with the registration process, those dividends that are less than 12 years, once the registrars can certify that the people are the owners, they should be able to pay them. Gradually we should be able to address their problem of unclaimed dividends.” Gwarzo said an express benefit to investors from the e-dividend listing is the Direct Cash Settlement (DCS) because anytime their shares are sold, they would get the proceeds directly posted in their bank accounts. “Once we get through with the e-dividend thing, we will be able to deal with other issues in the market. The entire market has commenced Direct Cash Settlement from this month”, the Commission boss posited, adding that the era when shares are sold and the proceeds handed over to the broker for onward payment to clients is gone for good. At present, once individuals’ shares are sold, the proceeds are paid directly into their bank accounts and Gwarzo believes that, “With this, once the client has authorized the broker and provided all his details, the proceeds will be paid into the client’s account. The era of proceeds not being remitted for shares sold will be a thing of the past. The e-dividend platform with the use of BVN is what will give us that. Once we register for e-dividend, we will also benefit from the Direct Cash Settlement. Another advantage of the e-dividend is that it will provide a very robust KYC to the operator.” He blamed KYC’s inefficiency for the numerous market infractions but assured that with the e-dividend leveraging on the BVN platform, KYC will become more robust with fraudulent people unable to exploit all kinds of identifications to access what is not theirs. Interestingly, the Town Hall meeting effectively rounded up activities of the four day package by SEC preceded by the Abuja Road Show where an excited Head, Market Development Department of the Commission, Mr. Henry Rowlands was upbeat about the importance of the e-dividend portal and enlightenment campaign, given that current investors as well as potential ones eyeing the Nigerian capital market are at liberty to enjoy their investments as fruits of their hard-earned invested funds. Against mounting complaints among shareholders, Rowlands said; “We discovered that when dividends are declared by the companies where they invest, they are sent by post which takes time and sometimes they do not even come at all. Because investors change addresses, some of the dividend warrants do not even get to them.” According to him, having looked at the situation as at September 30, 2015, the Commission realised that unclaimed dividends amounted to about N90billion, adding that with such huge funds left unclaimed, SEC’s resolve to address the development once and for all informed its decision to launch the electronic dividend portal. The Market Development Head explained that “Electronic dividend simply refers to an online system of paying dividends to inventors whereby when companies declare dividends which are the profits meant for investors, rather than send it by post, they will just wire it to the investor’s bank account and that is what informed this exercise.” He also said unclaimed dividends would no longer take the centre stage of major discourse in the Nigerian Capital Market and therefore pledged that SEC is desirous to ensure investors’ funds “hanging as unclaimed dividends get paid to them with ease.” Also speaking at the carnival-like show, the Commission’s Head of Corporate Communication, Nasif Abdussalam, said directives have gone to “all registrars of public companies to return all unclaimed dividends, which have been in their custody for 15 months and above, to the paying companies.” He said similarly, the public has already been notified that enrolment for e-dividend payments would now be efficiently conducted at bank and registrar branches nationwide through the online platform launched on July 29, last year, saying; “We want to make sure that we take the message down to the grassroots; we want every Nigerian investor within this period of 90 days which is free to get registered because immediately after the 90 days, a fee of N100 will be charged. All you need to do is walk into a bank or Registrar’s office and you will be registered. Once you are registered, you will start getting alert for your dividends.” Abdussalam maintained that the e-Dividend scheme “has been a priority initiative for the entire capital market in a bid to curb the growth of unclaimed dividends and improve the overall efficiency of Nigeria’s equities markets.” He therefore expressed SEC’s determination to implement the Capital market master plan, meant to transform the market for the overall benefits of all stakeholders. SEC recently urged market shareholders and investors to approach their banks or registrars to complete the e-Dividend Mandate form for immediate processing and upload to the e-Dividend Mandate Management System (e-DMMS). In partnership with the Central Bank of Nigeria (CBN), and the Nigeria Inter-Bank Settlement System (NIBSS), SEC had in July 2015 launched the e-payment platform as part of measures to eliminate difficulties encountered by retail investors in claiming their dividends through their savings account. Before now, some shareholders have cried foul that they do not receive their dividend, especially in an event where they may have changed place of residence without notifying their registrar. This is because the registrar would have posted the dividend warrant to their former addresses. By December 2013, the unclaimed dividends reportedly stood at between N60 billion and N80 billion, a figure that continues to grow each fiscal year. In 1999, it was around N2 billion, and it grew to N8billion in 2000; N18 billion in 2008; and now the figure is over N90 billion. Interestingly, figures from SEC indicate that this amount is largely by the four companies with large holdings of unclaimed dividends. These are Nigerian Breweries’ holding, former Bank PHB, former Intercontinental Bank and Diamond Bank.