Ms. Mary Uduk, Acting DG, Securities and Exchange Commission

By ADEBAYO OBAJEMU

Many Nigerians investors are going through harrowing experience over the issue of unclaimed dividends, and the process of e-dividends. Apart from having their dividends withheld because of the new condition of the technology-driven process, migrating to their new dividend platform has proved a daunting task for many shareholders.

It is not good enough to say you are an investor when you are financially illiterate. You cannot wholly rely on your stockbroker to do everything for you. Part of the beauty of investment is the ability to understand the process and procedure of investing in stocks. This is why as an investor in shares it is most likely you may have come across incidences of unpaid dividends.

The issue of unclaimed dividends has been long unresolved in the market but has been exacerbated by the introduction of e-dividends, where everything is now digital processing. Technologically savvy shareholders may have lost. As at the last count, unclaimed dividends in the country have reached over a trillion naira.

This may be due in part either to the dividend warrants getting expired or shareholders not ever seeing the dividend warrant. There have been stories of many rookie investors not getting their dividends at all. Some of these unclaimed dividends may have dated back to up to five or more years. A new investor needs to understand the process. The process is quite simple and straightforward.

First of all, have a list of all your shares. And the best way to go about it is paying a visit to your stock broker, then request from him an up -to -date list of all the stocks that you own in the Central Securities Clearing System (CSCS). The bottom line is that you can get this printed online yourself if you have earlier registered with the CSCS. Then take an updated list of all the share certificates in your possession just to be sure your entire portfolio is accounted for, and nothing is missing out.

You can as a matter of fact search for your name using this CSCS link.

This process will bring up a list of companies that you have unclaimed dividends in, as well as the registrars involved. This will help you to secure a list of the respective registrars for the stocks you own. Note that company on the floor of the Nigerian Stock Exchange has a different registrar that manages their outstanding shares on their behalf.

You understand that the registrars are, as a matter of duty, mandated to manage all shareholder issues such as public offers, dividends, share certificates, bonus issues etc. on behalf of companies. It becomes important for you to know your registrar if you are to get back your dividends. The next step is to ask for a Share Transfer Form, which you will sign.

The form consequently gives your stockbroker the mandate to act as your agent, thus giving them the powers to process your unpaid dividends with your respective registrars. This service involves a token fee which in the main depend on the stockbroker. The fees can be a flat amount or percentage of the dividends you are expecting.

These all depend on the value of your dividends. The alternative will be for you to approach the registrars one by one by yourself just to get your unpaid dividends sorted out. This can be time-consuming if you do not have the luxury of time for this. However, it does save you some fees which you would have paid to your stockbroker.

This process can last within a month or more depending on the efficiency of the registrar and the commitment of your stockbroker. You will also need to follow them up very often to ensure that you get your dividends on time.

Processing E-Dividends

Processing e-dividends registration is also not rocket science. Without mincing word, the best solution to dividend problem is E-dividend registration. By registering for E-dividends, your registrars simply credit your bank account whenever dividend is paid out by any of your companies. This process eliminates the arduous process associated with the more common paper dividends and has the added benefits of ensuring that you never lose your dividends and that they get paid to you on time.

If you are the type that still receives some paper dividends, and you want to switch to E-dividends you inform your broker. You will be given a set of E-dividend forms of the respective registrars for each of the companies you own shares.

A typical E-dividend form will contain the name of the bank which you intend your dividend to be paid into, the address of the bank,   Bank account number, sort code, the name and address of the shareholder, name of a stockbroker, email address, company seal (if it is a registered company) etc. Registrars typically have various formats but contain the same information.

The next step after filling and signing the forms is that you take a copy to the banks as well for them to sign. Without the bank’s signature on your forms, the e-dividend form will not fly. You can prefer to use one bank only for your e-dividends if you do not like the stress of having to visit multiple banks and going through the same process all over again.

Another advantage one bank gives you is that it makes dividend monitoring very easy as you only have to check one bank statement when it’s time to reconcile your dividends.

Once you are done with signing the e-dividend forms take it to your stockbroker, if you had mandated them to process your e-dividend on your behalf. Remember, you may have to give them a power of attorney to do that. Otherwise, you take the forms to the respective registrars yourself for them to complete the final leg of the registration. Again, the timeline for this depends on the registrar and how efficient they are in processing e-dividends.