Unclaimed dividends

Editorial

WHEN in 2015, the Securities and Exchange Commission (SEC) introduced the e-dividend portal for investors in the capital market, one of the assurances was that the matter of unclaimed dividends would become a thing of the past. Instead, it has been on a steady climb. Going by the latest figures from SEC, the value of the 2019 unclaimed dividends stands at N158.4 billion – a quantum leap by 32 percent from the 2018 value of N120 billion. The value for 2017 was N100 billion.

Our immediate observation is to say that the problem of uncleared dividends will simply not go away by mere deployment of the latest technological tools. The truth of the matter is that many of the investors may have either abandoned or lost track of their investments, not so much for lack of interest but to factors not unrelated to the nature of our environment. To begin with, it is not hard to imagine the value of the unclaimed dividends being in itself, a reflection of the record number of unclaimed shares floating about whose owners cannot be traced, either because the address on the prospectus has either changed, or wrongly filled at the point of purchase. Indeed, many investors during the banking consolidation were known to have bought shares with different names as well as other people’s names, which they are yet to, or unable to rectify since.

We must say that these problems are neither new nor entirely unexpected. Worthy of note is that SEC had in the past afforded the different categories of investors a window of forbearance to enable them correct the anomalies, and by so doing, put the matter to rest. Unfortunately, if the results are anything to go by, the measures would appear not to have gone far enough, let alone address the problems to any appreciable extent. Yet, it goes without saying that the matter of the unclaimed dividends needs to be put to rest one way or the other, for which the burden lies squarely with SEC to discharge.

One consideration in the search for a way out is not to make the hurdles so impregnable as to make the investor to prefer a walk. As far as possible, the process of validating the dividends should be made simple, shorn of the usual frustrations that such exercises have come to be associated with. Indeed, what the current situation suggests is a broader approach that takes the peculiarities of our environment into consideration, to ensure that the investor is not unduly punished for factors that are not necessarily of their own making.

Put in another way, there should be room for greater flexibility by SEC in the verification process, particularly by those in the category of so-called multiple identities. In the same way that owners of dormant bank accounts are not made to forfeit their savings for inactivity, we do not accept the so-called verification window after which the investor could be made to forfeit the shares. In short, the exercise should not be time barred. Being able to discharge the burden of proof of ownership at any point should suffice for the registrars to verify and bring their records up to date. That way, trust is further boosted and market deepened, for the good of all.

A sure way to ease the process is for SEC to consider publishing a directory of unclaimed shares. With some luck, majority of those on the list would step forward to do the needful.