With the arrival of electronic trading and other electronic platforms in the Nigerian stock market, specifically the introduction of the electronic dividend payment which requires all shareholders to open bank accounts or update their bank account information and forward same to their registrars, the incidence of rise in unclaimed dividend is expected to reduce.
In view of the volume of unclaimed dividend which has been on the rise over the past few years following declaration of considerably good dividend by companies, one may wonder if the e-dividend has achieved the desired result. Some shareholders who spoke with Vanguard Investors Forum on the issue attributed this to low level of literacy in the country. Excerpts:
ANTHONY Omojola, Invest ment analyst, Credible Associates Ltd: I happen to be a member of the technical committee that set up the e-dividend platform. As at the time the platform was launched, we expected a drop in the level of unclaimed dividend, but with the poor level of education in the country and the level of information technology know-how, coupled with people’s resistant to change, not much has been achieved. People who are used to receiving their physical dividend warrants and going for extraction even directly from the registrars still want to continue to do that and that has made the expected result slow in coming.
This not withstanding, e-platform has come to stay, but rather than reducing the volume of unclaimed dividend,it has contributed in increasing it.
Another reason is that some of the companies that have been performing well after the financial meltdown have started to declare good dividends and that has also added to increase the quantum because when certain percentage of such dividends are not claimed up till a particular time, definitely, they will result to large chunk of unclaimed dividend. That is why you see the level still increasing because people are not embracing e-platform.
For this reason, it is important that we continue to educate ourselves and investors generally so that we do not continue to accumulate dividends.
On whether we envisage an end to the problem, we don’t really have data to say when specifically we are going to get over this problem and if anybody suggests any time frame, that person is not being truthful.
Most of the local investors that we have currently in the market are not literate and are used to the old idea and will not change over night.
Even the operators too are not helping matters, I mean the stockbrokers because they should have a way of clearing their dividend from the registrars and not always allow them to accumulate. The same thing applies to many companies that are operating staff share scheme that still have a lot of names in the unclaimed dividend list. Such names should not come up. That is why companies’ secretariat department should wake up and ensure that as soon as dividends are declared, they add them to the money they are giving to the registrar instead of allowing them to accumulate.
The same thing with the trustees and other corporate investors whose names are still in the list of unclaimed dividend. Their names are not supposed to be there. Names that should be found in the list are those of people living in the remote villages and not cooperate bodies which have understanding of how this thing works and have access to information.
If this category of people can wake up to this reality and clear their own share of the unclaimed dividend, the aggregate amount outstanding will come down. Even if the number of people involved increases, that does not really matter because over time, we are going to get over it.
William Adebayo, Chairman, Greenwich Shareholders Association of Nigeria:
The problem with controlling the volume of unclaimed dividend as we have it today in the Nigerian capital market started from the period before the market meltdown when some Nigerians who were opportuned to be in government embezzled so much money, directed it to the equity market because they could not afford to put such money in the bank.
Many of them were not clever enough to open account with those names. What they were most interested in was for them to get a place where they can put that ill gotten money which made them to buy equities with them.
The shares they bought with such money have fictitious and fraudulent names which many of them cannot even remember and that is the genesis of the unclaimed dividend problem that now face most companies that are declaring dividend after the market melt down.
As an investor who invested with your hard earned money, you should know that such investments are appreciating and companies are declaring dividend, why won’t you go and claim them?
Another category of people that contribute to the growth in level of unclaimed dividend are those Nigerians that have travel out of the country and since they have found greener pasture in those countries, they have forgotten about their investment, and because they did not provide account details where those money could be paid in when dividend are declared, the quantum keeps increasing.
Lately, there are some elderly people who bought shares, but did not inform their children of such investment and when they die, their children and other relatives will not be able to claim such dividend because they are not aware of the invetsment.
E-dividend platform as we have it now provides relief to that problem and what the Securities and Exchange Commission (SEC) needs to do is to mandate every stockbroker to ensure that anybody opening a CSCS account with them must accompany it with an account detail. That is the best way to stop the issue of the unclaimed dividend.