The Nation Newspaper

Tag: Dividends

  • What to do with unclaimed dividends

    What to do with unclaimed dividends

    Yearly, billions of naira that should have been paid to shareholders as dividends are not claimed. With more than N50 billion of such funds unclaimed, stakeholders are exploring options for managing the funds, reports Capital Market Editor Taofik Salako.

    Unclaimed dividend’s a thorny issue in the capital market. Nearly every stakeholder is an expert on why there are billions of naira in unclaimed dividends yearly. As at the last count,  the unclaimed dividends stood at over N50 billion.

    The electronic-dividend (e-dividend) payment system being spearheaded by the Securities and Exchange Commission (SEC) has led to investors reclaiming N29.27 billion from outstanding unclaimed dividends between November 2015 and last October. The reclaimed amount represented nearly one-third of the estimated total unclaimed dividends of N90 billion by November 2015.

    The e-dividend platform is structured to automatically credit the bank accounts of the registered investors once the recommended dividend is approved. Registration for e-dividend has enabled investors with backlog of unclaimed dividends to automatically trace and receive such dividends.

    A dividend warrant becomes statute-barred, that is, unclaimed and due for return to the originating company after 12 years. But before this, it only becomes temporarily invalid after six months and this could be solved by simply taking it to the Registrars for revalidation, which can be for as many times as possible. With e-dividend, Registrars automatically revalidate and pay unclaimed dividends to the registered bank account  under the e-dividend platform.

     

    What is at play

    There have been many reasons for the menace of unclaimed dividends. Dividend is used in generic sense as well as specific sense to refer to Return on Investment (RoI). In generic sense, dividend refers to all gains that accrue on an investment including cash payouts, scrip or bonus shares and capital gain. But dividend is usually used in relation to cash dividend-the periodic distribution of net profit from the business to shareholders.

    One of the crucial roles of the Registrar to a company is the distribution of cash dividends to shareholders.The board of the company recommends possible cash payout, closure date for register of members and payment date to shareholders, who usually approve these recommendations at a general meeting and thereafter, the gross value of the dividend is deposited with the Registrar for onward distribution to shareholders. Unfortunately, the problem of unclaimed dividends has made the process of dividend payment not as straight as enunciated.

    There have been accusations and counter-accusations between shareholders on one side and registrars and companies on the other. Shareholders’ poor attitude to dividend generally encourages bad corporate practices, which in many instances have compounded failures of some companies. Companies have been alleged to borrow certain sum to pay dividend with mindset that certain percentage may not be claimed by their owners.

    Shareholders have also alleged that some companies and their registrars collude to delay dividend payment or create unclaimed dividend for them to trade with the money. Unclaimed dividend attracts no interest and it is theoretically assumed that the unclaimed part or the gross dividend is in the account of the registrar “lying fallow”.

    But it could also not be denied that many unclaimed dividends resulted from poor understanding of the intricacies and processes of dividend payment by shareholders. Being a “cheque,” the requirement of a “current account” to convert dividend warrant into raw cash had until recently been a major hurdle to many small investors, who were operating mostly “saving deposit account.”

    Financial services authorities only recently approved payment of dividend into non-current accounts. Besides, several shareholders have been known to dump their dividend warrants at home because of the seeming intangibility of dividend. For instance, a dividend per share of 10 kobo would result into a net sum of N90 on 1000 ordinary shares. With the cheque-like nature of dividend warrant and the intangibility of some dividends, many shareholders who received their warrant merely dump them somewhere.

    Changes in major personal details of the shareholder such as change of address, signature, incorrect entry and death, among others also contributed to the unclaimed dividend problem. Also, inefficient public utility had contributed to the huge bags of unclaimed and undelivered mails. Gone were the days when the post-office officials moved through the nooks and crannies of cities and towns to drop letters.

    Shareholders’ activist and one of the co-founders of Nigeria Shareholders Solidarity Association (NSSA), Alhaji Gbadebo Olatokunbo, said there were credible evidence to believe in the conspiracy theory of registrars and companies. SEC also cited alleged abuse of dividend payment process, including diversion, as one of the reasons why the apex capital market regulators sought to change the custody of unclaimed dividends from registrars.

     

    Multi-faceted approach

    Stakeholders have shown more commitments to resolving the unclaimed dividend problem in recent years. There have been many regulatory initiatives to ease the process of dividend payment and block the loopholes that could lead to sharp practices. The Nigerian Stock Exchange (NSE) will on January 1, 2017 start implementing new rules that impose sanctions on any company that makes spurious interim dividend payment without the fundamental basis to support such interim dividend distribution. According to the rules, any company that declares interim dividend during any financial year, and thereafter records accumulated losses at the end of that financial year shall, if it is discovered that the declaration of dividends was not justified by the availability of profit for distribution, be liable to pay a fine.

    Besides, no company or any other issuer shall declare interim dividends or bonuses without first preparing and filing accounts, which shall form the basis of such declaration or action. Also, no company shall declare final dividends without first preparing and filing audited accounts, which shall form the basis of such declaration or action.

    For any infraction under the new rules, companies shall be liable to pay fines of up to 100 per cent of the nominal value of the dividends or bonuses declared. The new rules seek to protect investors and forestall market manipulation through spurious dividend recommendation and false sense of strong earnings.

    Bogus dividend declaration had been fingered as one of the reasons for the large unclaimed dividends as companies sought to manipulate dividend payment and distribution in the absence of the adequate earnings to meet the payment.

    The implementation of the NSE’s rules will herald the discontinuance of dividend warrant as from June 30, 2017. Capital market stakeholders under the auspices of the Capital Market Committee (CMC) earlier this year reached the decision to stop issuance of dividend warrants as payments for dividends from June 30, 2017. Shareholders will thereafter fully receive their dividends through the e-dividend directly into their bank accounts. This, stakeholders had argued, will block many loopholes.

    SEC had earlier strengthened its rules on payment of dividends. SEC Rule 204 stipulates that a separate interest yielding escrow account shall be opened by a company within 24 hours of the approval of dividends at a general meeting in the case of final dividends or a board meeting in the case of interim dividends, and evidence of such opening must be forwarded to SEC and the company within 24 hours of the account being opened.

    Also, the rule provides that the total dividend declared by the company shall be paid en-bloc into the said escrow account within 24 hours after the opening of the account and evidence of such payment forwarded to SEC and the Registrar within 24 hours. Besides, the Registrar is expected to forward a monthly statement of account certified by the bank to SEC detailing the outflow and inflow into the accounts and the accrued interests on the dividend.

    Failure to open and fully fund the account by the dividend-declaring company within the stipulated timeline shall attract a penalty of N1million per day and a further penalty of five per cent above the Monetary Policy Rate on the amount declared. Also, in the event of failure to effect dividend payment either by electronic transfer or dispatch of dividend warrant to beneficiaries within the stipulated time, the Registrar shall be liable to a penalty of N1 million for every day of default.

    Securities and Exchange Commission (SEC) Director-General, Mr. Mounir Gwarzo, said the full automation of dividend payment will ensure that shareholders receive their dividends without delay. According to him, the e-dividend would stem the menace of unclaimed dividend and also ensure that the registrars can automatically pay the backlog of unclaimed dividends to verified shareholders’ bank accounts.

    Gwarzo, who declared the e-dividend payment process as a game changer, said e-dividend allows investors to reclaim outstanding unclaimed dividends of 12 years while the use of the Bank Verification Number (BVN) to authenticate account owners provides additional assurance against malpractices.

    He noted that while a total of 1.4 million bank accounts have been mandated for the e-dividend payment, SEC will consider further extension of the free registration period for the e-dividend pointing out that registration for the e-dividend can be done at any of the branches of Nigerian banks nationwide.

    Under the extended period, SEC would bear the cost of registration on behalf of any investor who registered. At the expiration of the grace period, subsequent registration of an investor would attract a fee of N100.

    “E-dividend is in the best interest of the retail investors, we are doing all these to encourage retail investors,” Gwarzo said.

    Head, Vertical Markets Group, Nigeria Interbank Settlement System (NIBSS), Mr. Samuel Oluyemi, said banks had reached agreements to ensure seamless registration and operation of the e-dividend. He noted that with BVN, shareholders can submit their e-dividend mandate by proxy. Oluyemi noted that 29 million bank accounts e-dividend in a market with less than five million retail investors should be easier.

    Head, Depository and Customer Care, Central Securities Clearing System (CSCS) PLC, Mr. Lateef Lawal, said the CSCS, the clearing house for the stock market, has the adequate framework to ensure seamless automation of all payments in the stock market. Besides the e-dividend, capital market stakeholders had decided to adopt direct payment system, known as direct cash settlement (DCS), for transactions on the stock market. Under the DCS, payment will be made directly by the CSCS into the investors’ accounts rather than the current practice of payment to the stockbrokers for onward disbursement to their clients.

    Many stakeholders have also called for amendment to provision of the Companies and Allied Matters Act (CAMA) that limits the lifespan of dividend in order to ensure that shareholders or their beneficiaries could claim their dividend at any point in time. Already, a committee of the CMC is working with the National Assembly on the amendment of CAMA and other capital market-related laws. A shareholder, Akeem Adeleke, noted that shareholders or their heirs and beneficiaries should be able to claim their dividends at any time once the ownership of such dividend has been established.

  • Wamakko: measures by Buhari’ll start yielding dividends

    Wamakko: measures by Buhari’ll start yielding dividends

    Senator Aliyu Wamakko (APC-Sokoto) has said measures put in place by President Muhammadu Buhari, will soon start yielding dividends.

    “Nigerians will, therefore, soon start reaping abundantly from these laudable measures,” Wamakko said in an interview with the News Agency of Nigeria ( NAN) in Sokoto, yesterday.

    Wamakko, who represents Sokoto Central, added that the Federal Government had brought insecurity under control.

    The lawmaker said: ”The hitherto complicated problems of security, especially the insurgency in Northeast, will soon be history.

    ”The region had been liberated by the military, and it is always a happy story there.

    ”… kidnapping, armed robbery, militancy and other related issues are also on the verge of being eradicated.

    ”The nation’s military and other security agencies really deserve a pat on the back, although complacency should not be allowed to set in.”

    Wamakko extolled the anti-corruption fight by President Muhammadu Buhari, regretting that the social pandemic robbed Nigeria of the development.

    He solicited the support of Nigerians in the ”intricate” anti-corruption crusade.

    Wamakko hailed Buhari for his efforts to revamp agriculture, curb unemployment and other problems bedevilling Nigeria.

  • Shareholders vow to resist SEC’s treasury for unclaimed dividends

    Major retail shareholders’ groups yesterday rose against the plan by the Securities and Exchange Commission (SEC) to establish a Nigerian Capital Market Development Fund (NCMDF) to take custody of unclaimed dividends of 12 years and above.

    SEC in a circular sent to capital market stakeholders on Tuesday, had called for a consideration of a new rule that will set up the NCMDF which will take custody of all unclaimed dividends of 12 years and above.

    Under the extant laws, unclaimed dividends will remain available for collection by beneficiaries up till 12 years when they become statute-barred and subsequently return to the companies that paid the dividends.

    Shareholders’ leaders across the groups said they would resist the transfer of statute-barred unclaimed dividends to any NCMDF, describing the plan as a wrong move and a volte face from the recent campaign by SEC for the removal of the 12-year limit to enable shareholders and their beneficiaries be able to collect their dividends at any time.

    National coordinator, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, said his group would mobilise shareholders to resist what he described as “very offensive” attempt to take their private monies.

    “I think it’s wrong, we will not agree and we will not allow that to happen,” Nwosu told The Nation.

    He said SEC and other regulators have sufficient funds and avenues to mobilise resources to perform their statutory roles of market development, noting that dividends belong to shareholders and the paying companies.

    Shareholders’ activist and one of the co-founders of Nigeria Shareholders Solidarity Association (NSSA), Alhaji Gbadebo Olatokunbo, said the plan would lead to corruption and discourage investors from the domestic market.

    According to him, SEC and other stakeholders should focus more on solving issues surrounding unclaimed dividend rather than looking for ways to start once again on how to acquire what does not belong to them under the guise of regulations.

    “Unclaimed dividends belong to shareholders who are the owners of companies and its going back to the companies after 12 years is legitimate. We respectfully call on the Federal Government to urgently call the regulatory agencies to order, before they add more damage to our already sick economy,” Olatokunbo said.

    President, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr. Faruk Umar, however described the plan by SEC as a healthy development noting that the trust fund would discourage sharp practices around the unclaimed dividends.

    “The truth of the matter is that bulk of the unclaimed dividend that is more than 12 years belongs to people who are dead, multiple applicants who do not have bank account in their names, or small amounts of money that is not worth claiming. Someone that has not claimed his or her dividend in 12 years is unlikely to do so now. So, the Trust Fund should be established as this will discourage people from benefitting from the unclaimed dividend,” Umar said.

    According to him, with the anti-corruption stance of President Muhammadu Buhari’s government, and with the kind of integrity and transparency being exhibited by the current Director General of SEC, Mr Mounir Gwarzo, retails shareholders would support the establishment of the Fund this time around.

    In his remarks, coordinator, Constance Shareholders Association of Nigeria, Mallam Shehu Mikhail, said the existing rule on return of statute –barred dividends to companies should be retained.

    He criticized the plan by SEC for lack of details on benefits of such initiative to shareholders and the quoted companies.

  • PZ Cussons declares N1.99b dividends

    PZ Cussons declares N1.99b dividends

    PZ Cussons Nigeria Plc will be distributing about N1.99 billion to its shareholders as cash dividends for the immediate past business year as the conglomerate struggled to curtail the negative impact of economic slowdown and foreign exchange constraint on its operations.

    The board of directors of PZ Cussons recommended that a dividend per share of 50 kobo be paid to shareholders in the book of the company by September 23, 2016. The dividend will become payable on October 7, 2016.

    Key extracts of the audited report and accounts of PZ Cussons Nigeria for the year ended May 31, 2016 showed that turnover stood at N69.53 billion in 2016 as against N73.13 billion in 2015. Operating profit dropped from N6.65 billion to N3.25 billion. Profit before tax also declined from N6.56 billion to N3.15 billion. Profit after tax declined from N4.57 billion to N2.13 billion. Earnings per share dropped from N1.02 to 47 kobo. However, the group’s total assets increased from N67.39 billion to N74.43 billion.

    Chairman, PZ Cussons Nigeria Plc, Chief Kola Jamodu, said the performance was a relatively fair performance when viewed against the background of the tough macroeconomic environment characterized by scarcity of foreign exchange, price hikes, weakening consumer demand and upheavals in some part of the country.

    He said the group has continued to implement strategic initiatives aimed at increasing shareholders’ value and sustaining long-term growth.

    According to him, the group continued innovative projects aimed at improving efficiencies in supply chain while increased attention was brought on its core brands.

    He added that the group streamlined its product portfolio to make the business more agile in an increasingly competitive and fast changing market.

    “Overall, the company did well to hold its position in the market restricting the negative impact of the prevailing adverse conditions and performed satisfactorily against peers in the sector,” Jamodu said

    He added that the group maintains a strong cash position which puts it in a flexible and agile position to fund its operations and exploit any emerging business opportunities.

  • Nigerians eager for dividends of democracy

    Sir: Can Nigerians confidently say that the change regime  has bettered their lots and that it has come to stay? Focusing the last one year of President Muhamadu Buhari in the saddle, the question is: has anything changed from the way it used to be?

    No doubt, President Buhari’s achievement in the last one year can’t be written off completely. Boko Haram’s activities have subsided largely, but these have been replaced by two other deadly killers – the Fulani herdsmen and the militants in the  Niger Delta. The introduction of Treasury Single Account through which the government was able to mop up N3trillion may be a good policy, but people are saying that it has not significantly improved the lots of the masses in the last one one year. Many Nigerians are certainly not comfortable with the President’s 30 trips in the last one year; in the opinion of many, there would have been a world of difference had the President devoted the same effort to  the economy.

    Going by the experience of the past and the symptoms of the present, one is tempted to say that it is hard to believe in the future of Nigeria. Nigeria in the  last 17 years have endured the rot in the  political system. The People’s Democratic Party,  PDP ended up their 16 years of enslaving Nigerians but thanks to the hand of  mercy from God who terminated their reign.  But here we are, one year into the new era of President Muhammadu Buhari, has anything changed?

    Expectations are high and the change mantra is not swinging into action; instead, it is a game  of hide and seek; it has been a show of power between the executive and the legislators. The budget of change has been comatose until few weeks  ago. From the delay in sending the budget to the National Assembly and when it was finally sent, it went missing; the padding and the rat stuff….

    Are we  really maturing or some people are deliberately playing on the intelligence of the masses?

    Things can no longer continue like this. The integrity for which the President is known must be demonstrated across every strata of government and the entire society. He must unite the country in respective of our religion,  tribe and political differences. Nigerians love for Buhari and the reason why he got the massive votes was basically centred on his ability to do the impossible by giving us the hope that the  previous leaders could not. Truth however is that things are not getting better; our daily bread is already slipping out of  our hands; tomato, Gari, beverages can’t be reached again. Instead of getting better, the president is saying Nigerians should  give him time and that he is feeling our pain.  We must enjoy what we have now and not in the grave.

     

    • Alifia Sunday,

    Ilorin, Kwara State.

  • Fidelity Bank sets priorities as shareholders get N4.6b dividends

    Fidelity Bank sets priorities as shareholders get N4.6b dividends

    Fidelity Bank Plc plans to focus on redesigning its systems and processes to enhance service delivery and deepen cost optimisation to ensure competitive returns to shareholders.

    Acting Managing Director, Fidelity Bank Plc, Mr. Mohammed Balarabe, outlined the bank strategic focus in the 2016 business year at the annual general meeting in Lagos as shareholders approved distribution of N4.6 billion as cash dividends for the 2015 business year. Shareholders will receive a dividend per share of 16 kobo.

    He outlined that the bank would pursue initiatives aimed at reducing operating expenses and cost-to-serve while enhancing it over all risk monitoring capacities to ensure both internal and external risks are identified and mitigated before they crystalise.

    “On the back of the evolving dynamics in the industry, we will continue to increase the adoption and migration of customers to our digital platforms and increase our retail banking market share through innovative products and services,” Balarabe said.

    He said the bank’s 2015 performance reflected the disciplined execution of the management’s medium term strategy and the resilience of evolving business models despite the extremely challenging business environment in 2015.

    Key extracts of the audited report and accounts for the year ended December 31, 2015, showed that gross earnings grew to N146.9 billion in 2015 from N136.1 billion recorded in 2014. Profit after tax rose marginally to N13.9 billion in 2015 as against N13.8 billion in 2014.

    He pointed out that the 2015 financial year was challenging due to the difficult operating environment, the tight monetary stance of the Central Bank of Nigeria (CBN), implementation of the Treasury Single Account (TSA) and currency devaluation concerns, which culminated in negative earnings headwinds in the banking industry.

    According to him, even with the prevalent economic conditions, the performance of the bank showed resilience as it was able to achieve sustained growth through income stream built on qualitative services, innovative products and clear understanding of the varying needs of customers.

    He said the bank would continue to focus on balance sheet optimisation, rebalancing of its loan portfolio in consonance with its medium term strategy and increased growth in retail deposit base.

    In his address, chairman, Fidelity Bank Plc, Chief Christopher Ezeh explained that the tough business environment reflected more on the fees and commission income of the bank which dropped by 20.8 per cent to N23.3 billion from N29.4 billion due to regulatory restrictions on foreign exchange transactions.

    “Despite the drop in fees and commission income, profit after tax grew by 0.8 per cent, which shows the resilience of the earnings base of the bank. Net interest income increased by 24.7 per cent to N60.9 billion on account of loan re-pricing and balance sheet optimisation towards higher yield sectors of the economy,” Ezeh said.

    He pointed out that the bank improved the earnings capacity of its balance sheet even in the face of decline in fee income precipitated by a N10 billion reduction in its foreign exchange income.

    “We continued to increase yields on earning assets faster than the growth in funding costs, which improved our net interest margin to 6.9 per cent in 2015,” Ezeh said.

  • GSK declares N965m profit, proposes N356, 761m dividends

    GSK declares N965m profit, proposes N356, 761m dividends

    Despite regulatory headwinds which rendered the economy almost prostrate, GlaxoSmithKline Consumer Nigeria Plc may have heaved a sigh of relief if the consolidated and separate financial statements for the year ended 31 December 2015 is anything to go by.

    Analysis of the statement prepared on behalf of the company by Akintola Williams Deloitte, an independent auditor and duly acknowledged by Edmund Onuzo Board Chairman and Dayanand Thandalam Sriram, its CEO, showed that its gross profit for 2015 was N10, 326, 243 as against N10, 801, 472 for the previous year.

    Revenue from the sale of goods and services for 2015 was N30, 634, 708 a five percent increase to the N30, 521, 127revenue recorded in the previous year.

    The profit before tax was N1,157, 514 and 2014 was N2,752, 216 while the profit for the year due to owners of the parent on 2015, N965, 047, while it was N1, 848, 842 in 2014.

    Besides, the profit after tax for the year end was N965, 047, which is over 50 per cent decrease of the previous year’s N1, 848, 842.

    The profit before tax was N358, 761m, which is 3.8 per cent less than 9per cent of the previous year of N717, 526.

    The cash flows from operating activities for the Group in 2015 was N965, 047, N1, 848, 842 for 2014 and N956, 315 for the company in 2015 and N1, 830, 533 for 2014.

    The group’s revenue for the year from continuing operations excluding investment income

    The segment revenue for the year end was N30, 634, 707, as against N30, 521, 127 for the previous year just as the segment profit was N1, 740, 308, for year end and N3, 536, 129 for 2014.

    The issued and fully paid share capital of the company N478, 350, 595 divided into 956, 701, 190 ordinary shares of 50 kobo

    A total of 512, 635, 649 shares equivalent to 53.6 per cent are held by Nigerian shareholders, while 444, 065, 541 shares equivalent to 46.4 per cent are held by GSK Plc UK through its wholly owned subsidiaries, Setfirst Limited and SmithKlineBeecham Ltd as at 31 December, 2015. The share capital of the company was increased from N480m to N750m by the creation of 540m ordinary shares of 50kobo each to bring the total number of shares to 1.5bn ordinary shares of 50 kobo each.

    The proposed dividend approved for shareholders as at 31 December 2015 was N356,761m as against the N717, 526m

    The proposed dividends for 2015 are to be paid out of the retained pioneer earnings for 2013-2014 at the Annual General Meeting scheduled to hold later this week.

     

  • SWF: State govts to get dividends in 2018

    SWF: State govts to get dividends in 2018

    State governments will have to wait till 2018 and pray that the three funds of the Sovereign Wealth Fund (SWF) make consistent profits before they can start receiving dividends on their Sovereign Wealth Investment (SWI).

    Addressing journalists on the financial performance of the National Sovereign Investment Authority (NSIA) in the last one year, Managing Director of the Authority, Uche Orji said: “the law says after five years of profitability in each of the three funds, that is when the state governments will start getting dividends.

    “If things continue like this in the next two years our anticipation is that we will start paying dividends to the states by the end  the of 2017 to 2018.’’

    He said the organisation only received the $250 million additional capital approved for it last year by the National Council of State, only in February this year, adding that the $250 million “will be invested within the new fiscal year using the existing deployment ratio of 40 per cent in Infrastructure Fund, 40 per cent in Future Generations Fund and 20 per cent in Stabilisation Fund.”

    He declared that 2016 is the year that the three hospital/health programmes would get funding, as well as the Second Niger bridge. “That is when you will now see other people coming along side us,” he said.

    Orji said as the first step towards ensuring that the states get returns on their investments as soon as required by law, NSIA is pushing to attract $1.6 billion co-investments into the country in the next four years.

    He said already, the initial $100 million co-investment fund of the NSIA, barring any last minute hitches, would bring in another $400 million by June this year, with investors ploughing these monies into real estate.

    “We felt it was time to go into co-investment funds which is meant to push our $100 million to attract $400 million of equity,” he said, pointing out that, “that vehicle will go ahead and take leverage of the real estate”.

    The NSIA chief said this is the first formalised way of saying to you “we are going to put $100 million to attract $400 million, the strategy is – once this is done and successfully launched, we are going to go on and do the same for power and industrials, agriculture and health. We are confident that we will raise the co-investment fund by the second half of the year (2016).

    Orji said 70 per cent of the $100 million investments will be dedicated to what is known as brown fields, which means buying existing real estate or rehabilitating existing ones and 30 per cent will focus on green fields, which is brand new.

    “We will focus mostly on commercial real estate.  70 per cent will be invested to make sure we are not taking a lot of development risks some of which will require some investments to upgrade it. We are looking at housing, but there is nothing right now that is developed to the point. When this fund is completed, some of the three or four projects will be announced and invested in this year. Office buildings, leisure property and housing will be the third stage of those projects” he said.

    Interest in the real estate vehicle, he said, “remains very strong and that is the one you will see this year. The idea is to bring 20 per cent of that vehicle and other investors will bring 80 per cent. The NSIA infrastructure fund will operate this way. We are hoping that at the time $400 million will attract an additional $1.6 billion as co-investment vehicle to be attracted to the country.”

  • Unclaimed dividends

    The N90 billion still in the SEC vaults reflects technology lag

    With about N90billion as unclaimed dividends, we support the sensitisation walk organised by the Securities and Exchange Commission (SEC), to encourage investors on the need to key into the e-platform created for the purpose of enabling them claim their dividends electronically. Addressing journalists at a function in Abuja, the Head Marketing Development, SEC, Mr. Henry Adekunle Rowland, who made the disclosure, put it succintly: the essence of the sensitisation walk was “to encourage investors to provide the necessary information so they could be able to claim their dividends electronically”. According to him “e-dividend means electronic dividend and dividend is the profit which an investor gets from the company which he has invested his money”.

    We join the SEC in imploring investors to go and register on the platform in order to collect their dividends electronically in their preferred banks. Investors are expected to go to their banks to fill a form which will contain certain information, account numbers (whether saving or current), their passport photographs, and Bank Verification Number (BVN). Not only that, Central Securities Clearing System (CSCS) number will be required “if you are already de-materialised”, but if you are not, “you will go with your share certificate number after which you will be validated using Nigerian Inter-Bank Settlement System (NIBSS) portal where the e-dividend form is actually located”.

    It is only after a successful validation that the completed forms would be sent to the registrars of companies who would then consolidate all the investors’ dividends before commencing payments. According to Rowland, “the objective of this initiative is to make sure that the N90bn unclaimed dividends are depleted within the next six months after the completion of this exercise”.

    Dividend warrants (DWs) are investors’ entitlements, so it is only fair that they  reap the fruits of their labour. But, because DWs are usually sent by post, they sometimes do not get to their owners, or get to them late. Apart from this, some investors would have changed their addresses so that when the DWs got to their former residences, the people there may not know their new residential addresses. The same is true for those using post office boxes. In some cases, these are changed or closed as a result of transfers or inability to pay the rent.

    In both cases, DWs are lost while in some cases postmasters may use their discretion by sending unclaimed dividends back to the companies. Sometimes too, the amount involved may be so small that investors simply put aside such dividend warrants which they do not think is worth the trouble of going to the banks to lodge.

    It is good that the SEC realised some of these challenges and therefore came up with the e-platform last year. However, the commission should do more by way of engagement and also simplify the cumbersome procedure for e-payment of dividend warrants. As it is now, it is very likely that many of the unclaimed dividends would remain unclaimed as many investors may not be disposed to the cumbersome procedures listed by SEC before an individual investor could claim his unclaimed dividends.

    The apathy that investors showed on their unclaimed dividends, which led to the whopping N90bn of unclaimed dividends, may not abate with the present procedures. Also, the idea of setting six months deadline for the cumbersome exercise is not necessary or helpful for, under the prevailing conditions and general apathy of investors concerning unclaimed dividends, it is unlikely that even 50 percent of the N90bn unclaimed dividends would have been fully claimed at the end of the day.

    The commission should do more by way of public enlightenment to make investors aware of the e-platform, especially as not many investors are aware of its existence as of today. If this succeeds or is made to succeed, it would be to the interest of investors. With the e-platform it would no longer be the business of an investor to take DWs to the bank as the warrants are automatically sent to an investor’s bank account once he keys into the platform.

  • Fed Govt, states to share $150m NLNG dividends

    Fed Govt, states to share $150m NLNG dividends

    CASH-STRAPPED states are to get some funds, with the National Economic Council (NEC) approving the sharing of $150 million from the $400 million Nigeria Liquefied Natural Gas (NLNG) dividend by the Federal Government and the states.

    The Council also approved that the balance of $250 million be invested in the Nigerian Sovereign Investment Authority to increase its capital.

    Osun State Governor Rauf Aregbesola briefed State House correspondents at the end of the meeting.

    With him were, Enugu State Governor Ifianyi Ugwuanyi, Minister of Budget and National Planning Udoma Udo-Udoma and Nassarawa State Deputy Governor Silas Agara.

    Aregbesola said: “The Managing Director of the Sovereign Wealth Fund Authority presented the status report on the Nigerian Sovereign Investment Authority (NSIA) to the council. After due deliberations on the report, the council agreed that $250m from the $400m NLNG dividend be invested in the Nigerian Sovereign Investment Authority to increase its capital.

    “Council resolved that the balance of $150 million of the said $400 million NLNG fund be shared accordingly in the prescribed formulae at the Federation Account.

    “Council directed the Minister of Finance to constitute an executive nomination committee and work in consultation with NEC to appoint appropriate persons to take over as board members of the NSIA if the current board is dissolved.”

    On government agencies generating revenues in foreign currency but remitting naira into the federation account, he said the Council mandated the Ministry of Finance to investigate the matter and report back.

    He also said that the Central Bank of Nigeria (CBN) was mandated to enlighten the public on the forex policy and relevant laws and regulations to guide traders and others who encounter challenges regarding the movement of foreign currency across the nation’s borders.

    “We understood that some traders, particularly in the East, encounter challenges at the airports when they intend to go about their businesses,” he added

    On the balance in the Excess Crude Account (ECA), Aregbesola said: “At the end of the NEC meeting today, the Accountant-General of the Federation reported that the balance of the ECA stood at $2.257 billion and that is not much change from the last report.”

    The governor also said that the International Monetary Fund (IMF) Senior Resident Representative made presentation at a workshop for governors during the Council meeting on Treasury Single Account (TSA).

    He said: “Presentations were made on the listed sub topics: Implementation of TSA in states”: lessons and experience; cash management and TSA reform: an overview of international practice; and budgeting reforms.