Registrars indicted over unclaimed dividends as figure rises by 94% in 24 years
Shareholders have lamented the rising unclaimed dividends in the capital market currently put at N190 billion, stating that unless the parties involved in the processing of the claims adopt robust technology infrastructure that would enable investors to process their unclaimed dividend at the comfort of their homes, the menace may not be eliminated in the capital market.
Unclaimed dividends figure in the Nigeria capital market has risen by over 94 per cent in the last 24 years. Efforts to stem the rising figure have continued to hit bricks. In 1999, it was about N2 billion, rising steadily to N8 billion in 2008, N41 billion in 2011, N60 billion in 2013, and N80 billion at the end of 2014.
At the end of September 2015, the value of unclaimed dividends stood at N90 billion. As of 2019, it stood at N158.44 billion but rose to N170 billion in 2020.
At the virtual post-Capital Market Committee (CMC) press briefing held at the weekend, the Director General of the SEC, Lamido Yuguda, disclosed that the figure currently stands at N190 billion despite measures put in place by the commission to check the incidence in the local bourse.
The trend, according to shareholders, highlighted not only the apathy of the Nigerian shareholders but also a regime of poor technology adoption and data management in the country.
Dematerialisation, which is the conversion of a share certificate from physical to electronic form, and credited to the investor’s Central Securities Clearing System Limited (CSCS) account adopted fully by the regulator in 2015 to help tackle the problem, has not helped much, as the failure of registrars to fully adopt the electronic processing technology is another disincentive to market investors. The move has, instead of boosting transaction processes, heightened delay, accompanied by irregularities that also encourage fraud.
The shareholders argued that a good number of beneficiaries abandon their dividends with the registrars during processing because in most cases, the cost of processing the claims is higher compared with the value of the share.
Therefore, they suggested that the regulators should collaborate with other market stakeholders on how to make the process less stringent to find a lasting solution to the rising rate of unclaimed dividends.
President of the New Dimension Association of Nigeria, Patrick Ajudua said the shareholders’ particular focus should be in the areas of simplifying letters of administration for the deceased family and making the process of claims less cumbersome and rigorous.
“We are not surprised that the figure has not been reduced. The reason is the lack of political will and sincerity by major players in the industry in confronting the issue, especially in probate issues and the cumbersome process of claim. Matters are made worse when investors realise that the cost of procuring a letter of administration, publication, registrar charges and bank charges are higher than the value of the dividend to be claimed.
“There is a need to simplify the process of claim and deploy more technology to ease claims. This will ensure that investors do not need to come to the registrar for unclaimed dividend claims but can sit in the comfort of their homes/offices and process their applications with little or no cost. NIBSS should also upgrade its portal to ease e-dividend mandate claims and ensure quick verification and prompt claim processing. Most times the portal experiences more downtime that discourages investors.”
In addition, Ajudua suggested enhancing SEC’s collaboration with key stakeholders in the value chain; the registrar, CSCS, NIBSS, CAC and banks to improve processes and enhance efficiency.
“SEC should also work closely with shareholders association leaders so that these leaders would help in reaching out to their members who have unclaimed dividends. Also, more advocacy is needed via social media, print and electronic media on unclaimed dividends.”
President of the Ibadanzone Shareholders Association, Eric Akinduro blamed the rising figure on SEC’s failure to ensure that parties responsible for the processing of the unclaimed dividends adhere strictly to regulatory rules and requirements.
“Honestly, we are not getting it right in this country and because we have failed to get it right, the figure will continue to rise. SEC as the apex regulatory authority should that all parties responsible for the processing of the unclaimed dividend adhere strictly to regulatory rules and requirements.
“We believe it can be reviewed and made less cumbersome in this era of IT, BVN, among others. Some people are discouraged by this complex process, which results in more unclaimed dividends. Regulators should call a stakeholders meeting and review the present modality for better and more modern ways of resolving it such as the use of the next of kin, BVN, biometric details among others.
“Also, the bureaucratic nature created by the registrars in claiming dividends is always discouraging. Many investors’ signatures are not regular again because the stocks were bought a long time ago but BVN validation should suffice. Registrars should be meant to live up to their responsibilities.
“The regulator should adopt a robust technology infrastructure that would link all the parties in the value chain to monitor the activities of each party. This would help them to know how many requests of dividend claims are processed from time to time.
Honestly, on the part of the CSCS, they are trying to synchronise the investors’ portal. As of today, no CSCS account can be opened when such an act is not linked to BVN. This is expected to help in this regard.
“Likewise, banks should educate their contract staff as some of them are not enlightened when it comes to the submission and processing of e-dividend mandates to NIBSS portal. Shareholders also should regularise their account with BVN to enable registrars to process,” he said.
National Coordinator of the Independent Shareholders Association, Moses Igbrude, said: “If for so many years that we have been talking about unclaimed dividends, and with all the various initiatives, money and resources put in place to tackle the problem, the figure keeps increasing, there is a fundamental problem that needs urgent attention in the process.
“There is an urgent need to reassess and investigate the unclaimed dividends value chain to identify what the issues are. SEC should work closely with stakeholders involved in the processing and deploy the right technology to tackle the problem. Why should newly listed entities like MTN, Airtel or SAHCO have unclaimed dividends list,” he queried.
For the 2022 audited full-year result, a total of nine listed companies posted N20.9 billion outstanding unclaimed amounts compared to N20.08 billion in the 2021 financial year.
The nine companies are Nestle Nigeria Plc, Nigerian Breweries Plc, Seplat Energy Plc, Dangote Cement Plc, MTN Nigeria Communications Plc, Lafarge Africa Plc, BUA Cement plc, Dangote Sugar Refinery Plc and Nascon Allied Industries Plc.
The 2022 audited result showed that Nestle Nigeria recorded N7.58billion unclaimed dividend higher than N6.6 billion in 2021, while Nigerian Breweries reported an N4.8 billion unclaimed dividends in 2022 as against N4.6billion in 2021.
Dangote Cement announced N4.4 billion unclaimed dividends within the period from N4.6 billion in 2021 while Lafarge Africa’s unclaimed dividend figure stood at N1.64 billion unclaimed dividends compared to N1.4 billion in 2021.
Also, NASCON Allied Industries recorded an increase in its unclaimed dividend to N695.8 million up from N658.16 million in 2021.
BUA Cement’s unclaimed dividend rose from N474.7 million in 2021 to N689.54 million while MTN Nigeria Communication posted an N632 million unclaimed dividend in 2022 from N688 million.
Seplat Energy reported N448.55 million in unclaimed dividends in 2022 from N939.25 million in 2021, while Dangote Sugar’s figure rose to N39.27 million from N88.34 million in 2021.
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