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Unclaimed dividends to reduce as SEC, CBN collaborate on e-Dividend payment

By on July 23, 2015

The Securities and Exchange Commission (SEC), the Central Bank of Nigeria (CBN) and other stakeholders in the financial system are collaborating to facilitate the electronic dividend (e-dividend) payment for shareholders.

E-dividend, which is the direct payment of dividends into investors’ accounts,  was introduced by SEC  as part of efforts to  tackle unclaimed dividends and encourage patronage of the market.
But  shareholders have not embraced it as expected due to some challenges involved in the process of obtaining e-dividend mandate forms.

However, THISDAY checks revealed that  SEC, CBN in collaboration with Bankers Committee and other stakeholders are working  to facilitate  e-dividend registration. It was gathered that  the regulators  put together a market wide technical committee, which has come up with a platform that will make it easy to register for e-dividend payment.

It was gathered that the subcommittee worked with Central  Securities  Clearing System (CSCS) and Nigerian Interbank Settlement System (NIBSS) and came out with modalities to create a portal where all e-dividend mandate form can be generated, filled and submitted online.

“The major issue of the e-dividend s data gathering. The portal will enable  the gathering of the data of shareholders submitted by the shareholders themselves online. Once the data are filled in the form, through the NIBSS system, the information would be generated for the purpose of know your customer (KYC).  It is being done in a way that the form can be either be submitted through the shareholder’s bank branch or registrar and at any point in time, the shareholders would be attended to and get results,” a source close to the committee told THISDAY on Monday.

It was gathered that  the details of the  committee’s proposal will be unveiled at the Capital Market Committee (CMC) coming up next week in Lagos, where it would be approved by all market stakeholders for it to become operational afterwards.

The poor acceptance of the e-dividend  has partly contributed to the growth in unclaimed dividends in the  capital market. THISDAY  had reported that  unclaimed dividends returns filed by 112 companies  as at December 2014 stood at  N55.22 billion.

The Director General of SEC, Mr. Mounir Gwarzo, last February called on Registrars to ensure 100 per cent compliance on e-dividend  as one of the ways of reducing unclaimed dividends. He also charged them to ensure efficient service delivery, and  total support for dematerialisation.
Besides the call, SEC had given a directive that unclaimed dividends be returned to companies after 15 months of declaration.

Gwarzo  said the directive was in compliance with the existing law on dividend declaration, had also urged  Company Secretaries and Legal Advisers of Manufacturing Companies, to be in the vanguard of supporting the directive to Registrars to return unclaimed dividends to the companies after the stipulated period, insisting that there is no reason why Registrars should keep the unclaimed dividends beyond the period stipulated by law.

He said the companies should be in the vanguard  of supporting the position of the law on dividend return, insisting that SEC is interested in the movement of the funds from the Registrars to the companies
According to him, the Commission would soon embark on massive a public enlightenment programme to educate the public at the grass root so as to ensure that they get the full benefits of their investment.
He said the public enlightenment will not be limited to dividend payment alone, but will include other recent issues in the market, like dematerialisation, straight through processing and Complaints Management Framework.

 

[ThisDay]