SEC DG speaks on why unclaimed dividends are on the rise in Nigeria

Due to the provision of inadequate proof of ownership of shares by investors, the acting Director General of the Securities and Exchange Commission (SEC), Mary Uduk, said the capital market continued to record high incidence of unclaimed dividends.

Ms Uduk, who spoke at a one-day seminar in Ibadan on reducing the incidence of unclaimed dividends, said investors find it difficult to regularize and harmonize their accounts because of inadequate proof of ownership of such accounts.

The acting DG, represented by SEC’s Director, Lagos Zonal Office, Stephen Falomo, highlighted the benefits of regularizing investors ‘ registration of multiple accounts and e-dividends.

She said a forbearance window has been opened by the capital market to allow investors with multiple subscriptions / applications to regularize public offers under a single account name.

“It will allow investors who provide sufficient proof of ownership to regularize their accounts into one. On December 31, 2019, the forbearance window closes.

She lamented companies ‘ continued retention of dividends. She said that this has the potential to distort the company’s true financial position and mislead investors and other investment public members.

“The enormous amount of unclaimed dividends could discourage foreign investment and discourage public members from placing their funds on the market.

“Dividend non-receipt discourages stock market investors and encourages them to search for alternative investment outlets such as the real sector and the money market. Consequently, the opportunity of a cheaper source of finance is denied to public companies,” she said.

Ms Uduk revealed that e-Dividend (otherwise known as Electronic Dividend) is a secure online means of paying dividends directly to the shareholder’s account rather than printing and sending dividend warrants, as was the case before.

“It requires a shareholder who has a bank account (Savings or Current Account) with any bank to provide his / her accurate account details, including the Biometric Verification Number (BVN), to be paid directly to the company’s registrar and his / her dividend.”

“Each investor must enroll in the e-dividend scheme by completing an e-dividend ‘ Mandate Form’ and submitting it to the nearest branch of their bank or registrar’s office for identity validation using the NIBSS BVN platform. Successfully validated mandates from BVN will be approved and passed to dividend payment registrars, “she added.

In his remarks, Eric Akinduro, chairman of the Ibadan Zone Shareholders ‘ Association, urged the SEC to step up efforts to encourage investors to embrace the registration of e-dividends.

“SEC must intensify activities to encourage investors to embrace registration of e-dividends to reduce the volume of unclaimed dividends within the shortest possible time frame. It is important to introduce standardization of registrar operations, across the board,” Mr Akinduro added.

The Group Managing Director, Odu’a Investment Company Limited and the event’s chairman, Adewale Raji, charged the association with taking the lead in ensuring that their members were properly registered.

“I want to urge the association to take this unique opportunity into consideration in order for us to reap maximum benefits from the e-dividends mandate.”

“We must encourage members to take advantage of this opportunity as a matter of responsibility.”

“We need to put in place a proper process at the zonal or state-level meeting whereby we enlist people who respond and see them through the e-dividend registration process and also address other issues related to dividend access,” Mr. Raji said.

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