Director-General, Securities and Exchange Commission, Ms. Arunma Oteh
The value of unclaimed dividends by investors in the Nigerian capital market hit N41bn by the end of last year.
The amount represents a reduction of seven per cent or N3bn compared to the N44bn that was recorded at the end of 2010.
Unclaimed dividends refer to dividends payable to shareholders but have remained unclaimed by the beneficiaries for a period of not less than 12 months.
The Director-General, Securities and Exchange Commission, Ms. Arunma Oteh, disclosed this to our correspondent on the sidelines of a media briefing by the commission on the Nigerian capital market in Lagos on Tuesday.
Oteh noted that SEC was not comfortable with the high volume of unclaimed dividends being recorded annually and was doing all it could to reduce the amount.
Usually, the reason for the accumulation of unclaimed dividends is ignorance or when shareholders change their forwarding addresses without informing the companies’ registrars thus, failing to receive the dividend warrants.
According to Oteh, there are ongoing interactions aimed at ensuring that unclaimed dividends are reduced by up to 50 per cent by the end of this year.
She said, “The registrars have informed us that there is N41bn outstanding unpaid dividends and this marks a reduction from the N44bn of the previous year. Last week, we took on the registrars on a radical solution to the problem and we jointly considered a number of options.
“I can say that by the end of this quarter, the results will be felt; our target is that in 2012, we shall reduce the size of outstanding dividends by 50 per cent and we also aim to finally dispose of the operational and regulatory bottlenecks that have led to the accumulation of unpaid dividends.”
The DG, who noted that a lot of issues had been contributing to the accumulation of unclaimed dividends, said SEC was collaborating with the Central Bank of Nigeria and stakeholders to explore other options that could help to reduce the amount.
The Executive Commissioner, Operations, SEC, Ms Daisy Ekineh, said that the electronic platform was introduced to reduce the issues of unclaimed dividends.
She said, “We have been talking about e-Dividend as an option to reduce unpaid dividends; however, we are aware that shareholders have some challenges regarding this, as it was originally stated that the dividend warrants would be paid into current accounts, which most of them did not operate.
“However, we have been talking to the CBN and the banks on ways that they can make it easy, and we hear that some banks are now allowing the warrants to be paid into savings accounts. We have ongoing interactions with all the stakeholders and we are sure these will yield clear results before the end of the year.”
The Managing Director, First Registrars Limited, Mr. Bayo Olugbemi, had told our correspondent that the problem of unclaimed dividends was of major concern to registrars, adding that that was why they came up with the e-dividend option.
“For a permanent solution, we encourage shareholders to subscribe to or embrace the e-dividend payment solution, which all the registrars have put in place. It is a product through which dividends due are credited same day to bank accounts vide electronic means and it is free,” he said.
Shareholders had recently expressed worry over the late delivery of dividend warrants to investors.
For instance, the National President, Renaissance Shareholders’ Association of Nigeria, Mr. Olufemi Timothy, said that it was becoming increasingly common for shareholders to receive their warrants very late.
He said that this was a problem that a lot of shareholders had to grapple with and that by the time the warrants would eventually reached them, the six-month lifespan of the warrant would have elapsed, a situation that posed further problems to the shareholders.
“Someone, somewhere is not doing his job and it is the shareholders that are suffering in this situation, it is not right. Our dividends are our right and anyone who invests in any business always expects and awaits returns; so, if we are denied our right, then perhaps the regulators are not doing their job,” he said.