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Checking rising incidence of unclaimed dividend in capital market


Dividends are the distributable earnings of a company, which are determined by its board of directors. However, when declared, it becomes a liability on the company, CAMA (1990).

When a dividend is not claimed by the shareholder for any reason, it contributes to the incidence of unclaimed dividends. According to CAMA (1990), dividends are considered unclaimed after 15 months from the date of declaration.

Regrettably, the incidence of unclaimed dividends remains one of the perennial issues that have continued to remain a challenge in Nigeria’s capital market. This issue has remained on the front burner of public discourse in the past few years, especially amongst stakeholders.

From as little as over N2 billion in 1999, the figure has since risen sharply to N158.4 billion at the end of 2019, representing an increase of 32 per cent from N120 billion recorded in 2018.

To contain the rise, the market regulators introduced the process of dematerialisation, which is the conversion of a share certificate from physical to electronic form that is credited to an investor’s Central Securities Clearing System Limited (CSCS) account.


The move, rather than boosting transaction processes, instead heightened the delay; accompanied by irregularities that also encouraged fraud, with attendant loss of share certificates, delay in receipt of dividend warrants, notice of meetings, and companies’ annual report.

As a result, many shareholders are not aware of the true status of their shareholding in many of the companies listed on the Nigerian Stock Exchange (NSE), NASD Plc, or Over-the-counter (OTC), also called the off-exchange trading market.

Shareholders often say they have lost their investment or that their company has shut down because they have not heard from them for a long time, just as many have shares in companies that closed shop due to failure, merger or acquisition.

To reduce unclaimed dividends to the barest minimum, a Professor of Economics, Babcock University, Segun Ajibola, who noted that the main cause is traceable to identity management, insisted that registrars must evolve a seamless process of updating the details of shareholders from time to time to be current with the contact details of shareholders.

Aside updating their details, the University Don also suggested that shareholders should also be made to provide details of beneficiaries of the dividends to the registrars in the case of death.

“The Problem of unclaimed dividends has been with us in Nigeria for a while. There are occasions when shareholders would have changed postal addresses unknown to the registrars of the companies paying the dividends; hence dividend warrants cannot get to the shareholders.

“It is worse when the shareholders are dead and no beneficiaries are named or traceable, or the process of change from the dead old shareholders to the new ones is cumbersome.”

Furthermore, he stressed the need for the registrars to also mount a campaign to encourage shareholders to open CSCS accounts, to help warehouse the shareholders’ details, which can be updated from time to time.


“Shareholders should be encouraged to embrace e-dividend platforms. Payment of dividends directly to the bank accounts of shareholders by the registrars would reduce the problems posed by changes in the contact addresses of shareholders. Registrars and SEC and other regulatory bodies in the Nigerian capital market should mount regular training to this effect.”

He also advised that accounts of companies and registrars should be audited by the regulators regularly to determine the quantum of unpaid dividends, and impose sanctions if found to be above certain thresholds.

Currently, many shareholders are still holding on to share certificates issued to them many years ago, whereas the underlying shares have been posted in their electronic form to an unknown CSCS account or registrars department in the aftermath of a capital restructuring scheme.

In other cases, the shares have ‘evaporated’ as the business they invested in had been officially liquidated like the Nigeria Bottling Company Plc, Nigerian Tobacco Company Plc, Trade Bank, Afribank, International Merchant Bank, Savannah Bank, and a host of others.

Consequently, such shareholders are virtually cut off from the companies and do not know what is going on with their investment nor can they participate in the company’s activities, as envisaged in the Companies & Allied Matters Act 1990, and Investments & Securities Act 1991.

If dividends remain unclaimed for whatever reason, they become a disincentive to investment, and may erode investors’ confidence in the local bourse.

Indeed, there has been a lot of worry among regulatory authorities, company executives, registrars of companies, and the general public in Nigeria, regarding the rising incidence of unclaimed dividends.


Despite the measures put in place by the Securities and Exchange Commission (SEC), to stem the rising figure and contain the cankerworm, investors’ returns on investment have continued to accumulate on a yearly basis without being claimed.

The Commission, saddled with the primary responsibility of investor protection has repeatedly introduced initiatives to ensure that investors are not denied their right of investing in the capital market.

The e-registration platform was launched in efforts by the market regulators to eradicate the difficulties encountered by retail investors in claiming their dividends through their savings accounts.

The initiative was undertaken by SEC in collaboration with the Central Bank of Nigeria (CBN), and the Nigeria Inter-Bank Settlement System (NIBSS).

The former Acting DG of the SEC, Mary Uduk, at a meeting in Abuja last year, had also linked the incidence of unclaimed dividends to poor identity management.

She said: “Right now, you will not get unclaimed dividends from new issues. Part of the problem of unclaimed dividends has to do with identity management, and we are doing all we can to educate the public, and engaging the various stakeholders to be able to get a lot of the information that we require.”

“Since then, items like the Bank Verification Number (BVN) have been added to help in identity management; the capital market is also taking advantage of it. The Central Securities Clearing System, and the registrars are working together to ensure that more information from the legacy shareholders are being collected to be able to update their information and get them to claim their dividends.”


She added: “The registrars don’t have direct interface with shareholders, they deal directly with stockbrokers. But there is a committee comprising the SEC, the registrars, the stockbrokers, the issuing houses, the CSCS, and NSE working on that in addition to the e-dividend management committee.

“The committee has come up with a resolution which was adopted at the last Capital Market Committee meeting. Part of the resolutions was that stock brokers will update information in respect of their client.

“Before 2008, we had a lot of Nigerians who bought shares in the capital market, and at that time we did not have BVN numbers. Even some of them did not provide their account numbers. What was agreed was that we would update information of such shareholders. That information will be transmitted to the CSCS, who will update their own information and send them to the registrars.”

With the rule on electronic offering, “We believe that by the time we commence that, it will address the issue of unclaimed dividend. Before you can complete the application, the system will validate your account number; the system will not accept incomplete applications. We believe that in addition to the e-dividend mandate, these other initiatives that the Commission is doing with other stakeholders will address the issue of unclaimed dividends,” Uduk said.

To also reduce the quantum of unclaimed dividends, the new Director-General, SEC, Lamido Yuguda, said the Commission will introduce a forbearance window to enable investors that bought shares with different names to regularise their accounts.


“We have told them that there is no penalty for doing so, as the SEC is not prosecuting anybody. All we want is for them to be able to get the benefits of their investments. However, many people have still not been able to claim their dividends because some of them have forgotten the names they used while others have not been able to prove to their stockbrokers that they are the owners of the shares.

“The SEC has given such shareholders amnesty to go and claim their shares and as people are claiming those shares, unclaimed dividends number will go down. On our part, we will continue to persuade investors to regularise their accounts in order to curb the problem of unclaimed dividends.”

Recall that a former Director-General of SEC, Mounir Gwarzo, had said at the formal unveiling of the e-mandate registration platform that it would address the lingering problem of unclaimed dividends in the market, and part of the 10-year Capital Market Master Plan, would address the issues of non-payment of dividends into customers’ savings accounts.

“The era of stale dividends and huge unclaimed dividends in the market will be a thing of the past with the launch of an e-dividend payment platform. The Commission will conduct intensive training for bankers and registrars on the usage of the new portal.”

The Commission had urged investors to approach their relevant banks and registrars to process and upload their mandates to the e-Dividend Mandate Management System (e-DMMS) free of charge for 90 days, effective December 14, 2015.

At the expiration of the deadline, the Commission said subsequent registration for such documents would attract a fee of N100.


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