As listed firms release 2020 full-year results, capital market investors have renewed calls on the Securities and Exchange Commission (SEC) to adopt all-inclusive approaches to curb rising unclaimed dividends.
According to the SEC, the value of unclaimed dividends and shares hit N158.44 billion at the end of 2019, while unclaimed shares account for over N100 billion.
Shareholders argued that the lack of synergy between stockbroking firms, the Central Securities Clearing House (CSCS), and registrars pose a serious threat to the Commission’s determination to ensure that problems associated with unclaimed dividends are resolved.
They pointed out that there is also the need to review the modalities of dividend claims of deceased persons, noting that the entire process, requirements (especially the aspect involving court process), and time lag are discouraging.
The President of the New Dimension Shareholders Association, Patrick Ajudua, stressed the need to adopt a holistic approach in resolving the issues. He argued that if the current stringent procedure of dividend claims of deceased persons was reviewed, it would reduce the problem.
According to him, several beneficiaries have abandoned their dividends with registrars because, in most cases, the cost of processing the claims is too high compared with the value of the shares.
Hence, he suggested that the regulators should collaborate with other market stakeholders on how to make the process less cumbersome.
He said: “Much as some unclaimed dividends result from legacy issues, we need to put in place an enduring mechanism to address future occurrences. There is a lack of synergy between stockbroking firms, CSC, and registrars. The broker is the first port of call for shareholders and has a database of the respective shareholders, their account details and those of beneficiaries in case of death must be duly filled before uploading data unto the CSCS.
“The legal process is another issue. Letter of administration, the attendance cost, time, and process of obtaining such are too cumbersome and discouraging. The cost of processing this is too much compared with the value of the shares. Also, the cumbersome nature of requirements needs to be simplified for the easy, timely, and convenience of the claimant while the cost associated with such needs to be reviewed.
“Finally the registrar, being the custodian of the dividend must ensure genuine commitment towards payment by not placing undue barriers on ways of shareholders in efforts to claim their money. In this era of technology, efforts must be made to digitalise their operation and enable shareholders to access their money from anywhere.”
The Publicity Secretary of Independence Shareholders Association of Nigeria, Moses Igbrude, said finding a lasting solution to the issue required a collaborative effort of all stakeholders.
He said: “If the various stakeholders in the value chain play their roles as expected, the issue of unclaimed dividends will be a thing of the past in the market.
“If investors execute documentation properly during share purchase and the registrar captures the information as expected while the registrars play their roles, the issue of lack of unclaimed will be eliminated,” he said.