With unclaimed dividend standing at over N90 billion as at November last year, the Securities and Exchange Commission (SEC) has decided to meet with the leadership of the National Assembly to review the statute bar on dividend payments.
The statute bar provides that after 15 months, any unclaimed dividend returns to the coffers of the paying company.
Worried by this development, which has led to many retail investors losing their unclaimed dividends, SEC launched the electronic or E-Dividend registration to guarantee that no investor loses his money after registering.
Investigations by The Nation reveal that some banks were charging money for the E-dividend registration as against free registration from December last year to April this year before a token of a N100 would be charged for late registration after the deadline.
Confirming this development, the Director of Banking and Payment Systems, Central Bank of Nigeria (CBN) Mr. Dipo Fatokun said a meeting of the stakeholders in Lagos, set a date to discuss the bank charges on e-registration.
The SEC had made a formal complaint to the CBN on the activities of some banks which the capital market regulator said “posed a significant threat to the desire to pay out unclaimed dividends to their owners.”
At the end of the Lagos meeting between the banks and CBN on the controversial e-dividends charges, it was gathered that Mr. Fatokun wrote individual letters to the banks reminding them that it is illegal to charge any fees for e-registration exercise within the grace period granted.
Attempts to get the banks to speak on the illegal charges at the end of the Bankers’ Committee meeting in Abuja did not yield any results as the three bank Managing Directors presently failed to answer reporters’ inquiry on the development.
The capital market regulator has held sensitisation programmes in Abuja and Lagos on the benefits of e-dividend, and it has disclosed that it has received about 1,500 complaints from retail investors since the e-dividends registration campaign kicked off in Abuja.
Speaking on the expected benefits of e-dividends registration, SEC Director-General, Mounir Gwarzo said: “For the first time in the history of any capital market in Africa, investors in the Nigerian Capital market are now to get dividend payment within 24 hours through the e-Dividend Payment Platform.”
According to him, the proposed system will automatically allow dividends to be credited directly into shareholders’ accounts (whether savings or current) within 24 hours of payment by the company.
“We have achieved something that is very unique, even South Africa they have t+5, when you do transactions you cannot get payment until after five days. But with this system, we are going to achieve t+1 settlement system. You sell shares by today, payment are effected within 24 hours which is going to be the first capital Market in Africa. No market in Africa has experienced that before and we are determined to ensure that it is achieved.
He added: “One of our strategy is to target the retail investor, the only way we can deepen the market and ensure that the market is within our own grip is to ensure that the retail investor comes into the market. It is only the domestic investor that no matter the condition of the market, will stay with us, what we have been experiencing in the market is the dominance of the foreign investor where anytime they want to move out of the market they get out and anything they want to come in they do so. Seeing what happens in the market, we decided that the best thing it to get the retail investor and our approach is not to go to them and be telling them to come back.”
Gwarzo noted that the SEC “approach is to identify the issues, why they are not in the market and deal with such issues. If you meet any retail investor, he is going to complain about not getting his dividend.”
He assured that once the e-dividend platform is fully operational the issue of stale warrant will be a thing of the past, the issue of travelling from one place to another to deposit the warrant will be a thing of the past; the issue of change of address will also be eliminated.”
The era of proceeds not being remitted for shares sold will be a thing of the past, Gwarzo said. “The e-dividend platform with the use of BVN (bank verification number) 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 (know your customer) to the operator.”
Gwarzo emphasised that the only way to attract retail investors back to the market is to ensure that concrete steps are taken to adequately address their concerns. “We have no other place to invest our little funds than in our market and that is why we are trying to cultivate your appetite and the only way to do that is to address some of these issues.
“The BVN platform that will be provided for the e-Dividend will also enable us to implement other initiatives in the market. For instance with the BVN platform everyone in this market that operates in this market as an investor will have his data within this system, so if anyone wants to defraud in this market, it cannot be done. People cannot impersonate others as the platform will expose them” He added.
SEC should investors by vigoriously pursuing dividend e-payment. A situation where you receive your dividend stale, and to revalidate same, you have to go through your bank, (at a cost), sometimes, you dont get the dividend paid to you account afterall. It happened to me, so I am talking from experience. Uptill now, I am yet to get my account credited with my dividend after going through the process of my bank confirming my signature with Sterling Bank, and requesting Sterling Bank to pay the proceed to my Bank, over a year now