‘Unclaimed dividend redeemable within 12 years of issuance’
The unclaimed dividends, which arose from many shareholders’ failure to redeem the dividend warrants issued by the firms quoted on the Nigerian Stock Exchange, have been an issue in the news for many years. Recently, and owing to the spate of mergers and acquisitions that took place in the country, some shareholders have complained about the fewer shares that they got, post-merger, from the new firms that acquired their previous companies. To provide answers to this and others, The Guardian sought the views of Meristem Registrar Limited, a key capital market operator under whose purview fall the issues of unclaimed dividends and shareholders’ matters. The Registrar and Chief Executive of the company, Mrs. Mubo Olasoko spoke to Mr. Godfrey Okpugie.
Functions of Registrar in the Capital Market:
A registrar keeps the register of all the shareholders and their records. It is the duty of registrar to pay dividends, issues bonuses and implements any corporate action that the company declares for shareholders. The registrar relates with shareholders of the company and ensures that shareholders do not have problems about their investments in a company.
The registrar is an agent to the company and manages the records of the shareholders and at the same time also acts as an agent to the shareholders who invested in the company. When a shareholder sells his shares in a company, it is the function of the registrar to ensure that the name of the shareholder who sells his shares is removed from the company’s register and replaced with the name of the person who bought the shares and to ensure that it is the new shareholder that will be getting the dividend and any other entitlements from the company.
Some shareholders complain that they were cheated after the merger of their company with another company and that the company that survived the merger issued them less shares than they held before the merger. What do you think was responsible for this?
When companies merge, there is usually a merger document, which specifies the condition attached to that merger. In most mergers the target company usually gets lower number of shares than the acquirer. In order words, the surviving company is usually stronger than the company that is the target (to be acquired). When that happens there is usually a conversion ratio from the target company to the company that is going to survive.
Unless investors (shareholders) take time to study that document to find out the reasons for the ratio, this problem will always arise. But we here as registrar are always available to answer shareholders queries regarding such issues. We keep copies of merger documents to be able to provide answers to shareholders’ enquiries.
How can the registrar assist in tackling the nagging issue of unclaimed dividends?
The major service provided by the registrar is the payment of dividends to the shareholders of the company. That should be done properly because it is the rewards or benefits the shareholders get for their investments. The registrar ensures that the benefits or returns reach the beneficiary.
From our common experience, we discovered that some shareholders provided the addresses that they were using at the time they acquired shares from the company but when they moved from or discontinued the use of those addresses or changed the address, they never bothered to come to the registrar to inform them about the movement or change. And because the registrar does not have the movement information they will keep sending any information meant for the shareholders to the known address; but the shareholders will keep on complaining that they do not get the information or whatever. Unless they provide the current and up-to-date address, there is no way the registrar will know.
In Nigeria, we do not have the culture of returning undelivered letters or mails to the sender. So, the dividends that have been lost through such a process or unclaimed by their owners are what amounted to the huge amount in unclaimed dividends.
Another reason is that, some shareholders have died and their family members did not even know that such deceased people had investments. So, their dividends keep piling up as unclaimed and this is how you come about unclaimed dividends. There are also some people who feel that the amount involved in the dividend is so small, like N8, N100, etc, and so they just dumped the dividend warrants somewhere; and before you know it, such little amount summed up to become the huge amount you now have as unclaimed dividends.
What can be done to address the issue?
The Securities and Exchange Commission SEC) has taken it very seriously and they are doing everything possible to address it. But in all the efforts, unless the shareholders respond to the call that is being made out to them, the issue will remain a problem. Right now, it has been decided that we should go e-dividend so that there are no more cases of wrong address or that this or that person does not have his dividend. Even the calls to the shareholders to fill in bank mandate forms that will enable us to pay into their bank accounts have not been yielding an encouraging response. The response has been very poor. The result we have got so far is not commensurate with the effort that we have put into it. But SEC is unrelenting and it is still going about doing road shows all over the place encouraging people to see the need for them to come out and embrace the e-dividend payment option. The e-dividend is the way to go to solve the unclaimed dividend issue. If the dividend is paid direct to your account and you do not go there to withdraw it, it will remain there in your account.
The response so far?
It is the same circle of shareholders who are active in attending AGMs that have responded to the call. If you look at the percentage of those that have responded in relation to the total number of shareholders you have in the country there are about five million shareholders in the country but only about 500 or 1,000 are active of the five million. In the register of shareholders, where there are 100,000 shareholders, rarely you find 10,000 shareholders, who have signed for the e-payment system. So, there is a great need to create more and more widespread awareness to move people out there to embrace the option. The media need to assist in spreading the awareness.
Where can shareholders go to enroll for the e-dividend transfer to their accounts?
There are about 22 registrars in the capital market and any of them is willing to provide answers to enquiries from investors. There are different companies under each registrar. If you go to the registrar with a query that relates to the companies under them, they will not hesitate to handle such.
The purpose of the registrar is to make investors happy, handle their problems and ensure they are happy and encouraged to invest more. That is why we are here. Any investor can come and we will provide them with the answers they need on any question that they may have about their investments.
How can investors know the companies under you as a registrar?
The list of the companies are there on our website. All registrars have the list of the companies they serve on their websites.
What can shareholders who have unclaimed dividend warrants that have become stale do to reclaim such dividends?
If the dividend is not up to 12 years, the shareholders can still claim it if they go to the registrar of the company to represent the warrant or complain. Part X111, Section 385 of Companies and Allied Matters Act provides that dividends are special debts due to, and recoverable by shareholders from a company within 12 years. You can come with the warrant or if you suspect that your dividend should be in any company, go to the registrar to present your case and they will attend to you. But if the dividend is more than 12 years old, the money involved would have been transferred to the company and as such the shareholder cannot get it again. All the details about your investment in a company are with the registrar from the time you bought the shares till now. All the dividends you have collected and those you have not collected are there too. But what you need to do is to write a letter stating your case.
How can retail investors (those with small amounts of shares) and who live far away from Lagos, be attended to since they may find it difficult to come to Lagos for a dividend not up to N1,000 or less?
At Meristem registrar, there are staff whose duty it is to attend to shareholders online and on phones. If you email us, in less than 10 minutes, someone will attend to that email. As far as you can use a computer or have access to an email, you can communicate to us and we will treat your case swiftly. Our telephone numbers are also there on our website.