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Tag: e-dividend

  • SEC to extend deadline for e-dividend

    SEC to extend deadline for e-dividend

    Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC) may today announce the extension of the deadline for the registration for the electronic dividend (e-dividend) payment system, providing opportunity for a large number of shareholders to register.

    SEC had extended the initial December 31, 2017 deadline to February 28, 2018 to encourage shareholders to embrace the initiative. However, the larger number of shareholders has not been able to register due mainly to poor harmonisation by registrars and low level of awareness.

    Sources in the know told The Nation yesterday that authorities at the apex capital market regulator have decided to extend the deadline in order to give room for shareholders to cross over to the new payment system.

    Many shareholders’ leaders had called for extension of the deadline, citing the need for an inclusive approach and mass mobilization for the success of the scheme.

    Stakeholders who spoke with The Nation were unanimous that SEC needs to improve on its sensitization and awareness programmes beyond the cities to cover the nooks and crannies of the country.

    According to them, there is the need to deepen the mobilization and awareness function of SEC as a core driver to encourage Nigerians to embrace the capital market. Less than seven per cent of Nigerian population is participating in the capital market.

    President, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr Faruk Umar said the e-dividend initiative is a commendable initiative that should be embraced by all shareholders, noting that direct payment of dividends will be beneficial to all stakeholders.

    He however called for extension of the deadline till the end of this year to ensure that more shareholders are captured under the scheme.

    “The e-dividend project has been very successful as all one needs to do is to walk into a bank and complete the form. With regard to the deadline, I think SEC should extend it to December 31, 2018, but shareholders may be asked to bear the cost,” Umar said.

    He noted that the cessation of dividend warrants and full commencement of e-dividend will help to address many issues that had bedeviled the dividend payment in the past including stealing of dividend warrants, delayed payment, problem of revalidation of warrants and the huge costs being paid by companies to process and post dividend warrants.

    Shareholder Activist and Co-Founder, Nigeria Shareholders Solidarity Association (NSSA), Alhaji Gbadebo Olatokunbo said SEC should reconsider the deadline and allow investors to continue to register without any hindrance.

    “SEC setting deadline on the right of investors was misdirection, because no rule can deny investors the returns on their investments.

    He noted that registrars were the major culprits hindering the success of the e-dividend scheme as they have perfected ways of engaging in selective execution of mandated accounts.

    “The registrars were in the habit of selective execution of mandated accounts, discriminating against stocks bought through Nigerian Stock Exchange (NSE). They will never treat such mandated-form despite due process on the account if the stocks were acquired through the secondary market. It will not be treated like that of primary offer and you have to get back to your stockbrokers for some documentation before it could be accepted unto the e-dividend scheme,” Olatokunbo.

    According to him, SEC should direct registrars to use shareholders’ Bank Verification Number (BVN) for e-dividend processing rather than the recourse to the archaic requests for signature verification and multiple processes.

    Former General Secretary, Independent Shareholders Association of Nigeria (ISAN), Mr. Adebayo Adeleke, noted that adoption of technology and automation of the processes at the Nigerian capital market would bring the Nigerian market at par with other advanced markets.

    According to him, the world is now technology-driven and Nigeria has to move with the time.

    “SEC must endeavour to reach and enlighten all shareholders, not only in Lagos and other cities, but also in nooks and crannies of the country. I doubt if that has been achieved,” Adeleke said.

  • E-dividend

    •Good times here for investors

    THAT more than nine million investors are yet to key into the electronic dividend payment (e-dividend) system shows that they are yet to appreciate the essence of the new arrangement. There are more than 12 million investors in the stock market. However, only about 2.2 million of them have keyed into the new scheme. Under it, dividends are to be paid directly into the investors’ accounts, as against the former practice of sending dividend warrants that they then pay into their accounts.

    One issue, however, is that many investors do not bother to lodge the dividend warrants, obviously because they feel the dividends are often small and therefore not worth the trouble. Another issue is that dividend warrants in the past could only be paid into the current accounts of investors. Not all investors had the patience to go through the stress of opening such account.

    These challenges led to the huge amount of unclaimed dividends, which, as at December 31, last year, stood at N117billion. About N86billion of this was in the custody of the paying companies and N13.7billion in the custody of the registrars. A situation where abouN117billion is lying fallow is unhelpful to the economy even as it leaves room for corruption, as some unscrupulous officials could be feeding fat on other people’s sweat.

    Indeed, this explained why the Securities and Exchange Commission (SEC), in collaboration with the Central Bank of Nigeria, Nigerian Interbank Settlement System (NIBSS) and other stakeholders flagged off the E-Dividend Mandate Management System (E-DMMS) in November 2015.

    Between then and February this year, about N42.2billion had been paid into investors’ accounts from the backlog of unclaimed dividends. “The advantage of the e-dividend is not only to enable investors collect subsequent dividends electronically, but it allows all accrued dividends to be credited to investors’ bank accounts. This will stem the rising unclaimed dividend in the capital market,” SEC stated.

    Obviously, the large number of unregistered investors for the e-dividend payment had led to the extension of the June 30, 2017 deadline for the cessation of dividend warrants and adoption of the full e-dividend option by SEC, to December 31, 2017. “All investors in the Nigerian capital market are therefore advised to take advantage of this extended grace period by approaching their bankers or registrars for enrolment before the deadline,” SEC said.

    Characteristically Nigerian, we may not  witness a rush for the exercise unlike the Bank Verification Number (BVN) and other initiatives, again due to the small amounts that most of the investors reap as dividend. Even for the BVN, most bank customers waited till the tail end of the time permitted before registering. And this was due to the fact that they knew they would not be allowed to do full banking transactions on their accounts unless they registered.

    However, it is good that signing on to the e-dividend portal is a continuous process because even after the expiration of the December 31, 2017 deadline, those who intend to key into the system can still do so; the difference being that they would have to pay as against the present arrangement where SEC picks the bill. We urge SEC to continue to enlighten the investors on the need to register for the e-dividend scheme now and even after the expiration of the deadline.

    As noted by SEC’s Director-General, Mounir Gwarzo: “In this country, we have never had this kind of initiative that has reduced unclaimed dividends like we have today. Apart from the investor getting his dividends wherever he is, that investor will be able to get dividends that in the last five years he has not been able to get. The e-dividend is for the interest of retail investors.”

    It can only get better. With time, investors will see the need to join such a commendable initiative.

  • E-Dividend and the Capital Market

    E-Dividend and the Capital Market

    Nigeria’s Capital Market operations are changing, and nothing symbolises this better than the electronic dividend payment (e-dividend) initiated since last year. By end of June this year, the Security and Exchange Commission, SEC, has said that issuing of dividend warrants would stop.

    Before registration for e-dividend started, over N90 billion was said to be unclaimed dividends. This fund was either just lying there idle, or some smart people were taking advantage of it and using it for personal or corporate gains. But since the commencement, over N30 billion unclaimed dividend has been credited to investors’ bank accounts.

    An elated Munir Gwarzo, Director General of SEC, told a press conference recently: “In this country, we have never had this kind of initiative that has reduced unclaimed dividends like we have today. Apart from the investor getting his dividends where ever he is, that investor will be able to get dividends that in the last five years he has not been able to get.”

    E-dividend is an electronic means of posting shareholders dividend directly into his or her bank account. So it doesn’t matter where an investor is located, his dividend goes straight into his bank account. At this year’s first post Capital Market Committee (CMC) news conference in Lagos, Gwarzo disclosed that a total of 2.2 million investors have registered for the e-dividend payment platform as at the end of April. That represents about 48 per cent of investors in the market.

    The electronic registration is expected to help investors receive from the banks unclaimed dividends from their investments in stock and equities in the capital market valued at over N90 billion. Companies listed on the stock exchange have been encouraged to help in sensitizing their shareholders on the need to embrace the new dividend platform within the deadline.

    The introduction of the e-dividend is designed, according to SEC, to curb the growth of unclaimed dividend in the capital market and allow investors collect dividends electronically. It also allows all accrued dividends to be credited to investors’ Bank Accounts.

    The e-dividend has the potential to further deepen the capital market and ensure security of returns on investments. It has the added benefits of ensuring that you never lose your dividends and that they get paid to you on time. The e-dividend form could be obtained and properly filled at bank branches or in the office of a registrar and stock broking firms, or could be downloaded and filled by individuals

    But as desirable as it is, beneficiaries of the old order are determined to frustrate it, or at worst delay the stoppage of dividend warrants to investors. While there has been a rush by investors to migrate to the new dividend platform, some banks are working against it success.  These are banks, according to some officials of SEC and the Central Bank of Nigeria, CBN, bent of frustrating the capital market regulator’s effort to ensure that the issue of unclaimed dividends was finally resolved and the monies paid to their rightful owners.

    The unscrupulous activities of some of these banks are the reason why SEC announced the extension of the free registration period to June. Registration was initially expected to close by end of March. Registration is free but some of the banks are said to be charging money for the registration so as to discourage customers seeking to migrate to the platform.  But it is gratifying to learn that the CBN had intervened in the matter, and had promised to sanction any erring bank.

    One other development that is set to change the capital market is the proposed launch of a N5 billion Nigerian Capital Market Development Fund (NCDMF) in the next few weeks. The fund is meant to promote infrastructural development of the capital market and help to curb some of the sharp practices perpetrated by market operators.

    SEC has said it would provide the N5 billion seed fund to demonstrate its commitment to the special fund. The NCMDF was conceived as a trust fund to enhance the development of the market and support efforts to achieve market stability.

    The NCMDF will also take custody of statute-barred and unclaimed dividends of 12 years and above so that the “free funds” could be put to the collective use of the market to enhance future returns to investors. The fund is expected to be by a board and an independent fund manager without interference from SEC. A proposal to this effect has been sent to all capital market stakeholders for consideration before a final decision is made.

    Under the laws, unclaimed dividends will remain available for collection by beneficiaries up till 12 years when they become statute-barred and are returned to the companies that paid them. But the new rule seeks to change the return of the unclaimed dividends to companies that issued the dividends.

    SEC is now proposing a change to the rule. Companies and registrars in custody of dividends which remain unclaimed by shareholders 12 years after the date of declaration or subsequently attain the 12 years threshold shall upon the coming into effect of this rule transfer such monies into the Nigerian Capital Market Development Fund (NCMDF).

    “All companies and registrars shall not later than 30 days after the end of every calendar year forward to the Commission a report of unclaimed dividends in their custody, which shall specify compliance with Sub Rule (1) of this Rule. Companies shall disclose details of compliance with this Rule in their annual reports,” SEC stated.

    Expectedly major retail shareholders’ groups have risen against the plan and described it as a ploy to divert private funds into the control of the regulator. Some of them want the 12-year limit removed to enable shareholders and their beneficiaries collect their dividends at any time.

    But it is obvious that those against the proposed rule are among beneficiaries of the old order who engage in sharp practices with unclaimed dividends. For this category of stakeholders, the proposed fund is bad business. Patriotic stakeholders see the proposed rule as healthy and necessary to protect and deepen the Nigerian Capital Market.

    • Johnson wrote in from

    The Whistler Newspapers; 

    www.thewhistler.ng

  • Oba of Lagos urges investors to embrace e-dividend

    The Oba of Lagos, Oba Rilwan Akiolu has urged investors to embrace the ongoing efforts at automating dividend payment by registering for the electronic dividend initiative of the Securities and Exchange Commission (SEC).

    He advised investors to take advantage of the free e-dividend registration exercise to ensure that they receive returns on their investments in the capital market without undue delay.

    Oba Akiolu stated this in Lagos yesterday when management and staff of SEC visited him in his palace as part of the e-dividend sensitisation campaign in Lagos.

    He said Nigerians who invested in the capital market have suffered years of no returns due to the cumbersome nature of getting their dividends and urged them to register immediately to correct the anomaly.

    The Oba also lamented the practice by some stock brokers who sell off shares without the knowledge of the owners and commended SEC for instilling discipline in the market.

    “Many Nigerians have lost money in this market and that is why I am appealing to you to regulate well. Any operator that runs foul of the rules should be disciplined appropriately, and I know that with discipline and prayers we will get to the promised land”

    “I am also a victim of unclaimed dividends and I will do all I can to support SEC in this initiative. I will mobilise my people to ensure that everyone is aware of how to get their dividends electronically” he said.

    Oba Akiolu commended the DG and his team for the bold steps the Commission is taking to restore confidence in the market adding that e-dividend will reduce incidence of fraud in the market.

    Speaking earlier, Director General of SEC, Mounir Gwarzo informed the Oba that the purpose of the visit was to receive Royal blessing on the e-Dividend registration campaign and to solicit his support on the exercise.

    He said the essence of the campaign is to enlighten Nigerians on the need to register electronically so that when dividends are declared by the various companies such can be transferred directly to the bank accounts of the shareholders.

    “What we have experienced in the Last 50 years is that people have not been opportune to enjoy their dividends due to various issues

    “e-dividend is very important because I believe it is going to be a major game changer, it is an issue we have had since the inception of this market whereby people buy shares and are unable to claim their dividend either because the warrant becomes stale, they change address or are living in an area that is quite far and it will take more than what the dividend warrant is worth and they will not want to go and collect it” he said.

    Gwarzo emphasised the need for Nigerians to go out and register with their banks or registrars so as to eradicate the issue of unclaimed dividends.

  • e-dividend: Shareholders, operators flay June deadline

    e-dividend: Shareholders, operators flay June deadline

    Shareholders and capital market operators have kicked against the Securities and Exchange Commission’s (SEC’s) June 3, 2013 deadline for investors to provide bank accounts for electronic payment of dividend or risk forfeiture of such dividend.

    SEC had issued a circular directing shareholders of quoted companies to forward bank account details to their registrars and stockbrokers on or before June 3, 2013 to facilitate the electronic payment of future dividends.

    According to SEC, shareholders that fail to comply with the June 3, 2013 deadline may automatically forfeit future dividends as warrants would cease to exist as from the deadline except in the case where a shareholder specifically request in writing for continued issuance of dividend warrants.

    Shareholders and market operators expressed dismay at the directive, describing at ill-timed and draconic. Shareholders said they would resist the deadline and mobilise against any company that fails to pay dividend as enshrined in the Companies and Allied Matters Act (CAMA).

    They said SEC had been foot-dragging on several issues that could have assisted investors to promptly claim their dividends and also encourage electronic dividends including the Commission’s inability to persuade the Central Bank of Nigeria (CBN) and the Bankers, Committee to allow shareholders to pay dividends into their savings account.

    They said SEC failed in its cardinal objective of investors’ education by not channeling adequate resources to educate and galvanise all stakeholders into forming a collective front for key market initiatives.

    General Secretary, Independent Shareholders Association of Nigeria (ISAN), Mr Adebayo Adeleke, said SEC demonstrated poor judgement with the directive as it placed the horse of enforcement before the cart of public enlightenment.

    He described the directive as unfortunate, saying it is capable of heating up the market as shareholders would resist attempt to frustrate their legal rights to receive returns on their investments.

    “Our position is that the extant law of the capital market, especially the Companies and Allied Matters Act (CAMA), has not been amended and any directive that is inconsistent with the law is null and void,” Adebayo said.

    He warned companies from taking any action that will jeopardise their interests as shareholders would not sue SEC but the companies, which are statutorily required to issue dividend warrants.

    A shareholders’ leader and activist, Alhaji Gbadebo Olatokunbo, said SEC has no powers to direct forfeiture of dividends or cancellation of dividend warrants.

    He said SEC should have worked on the efficiency of share registration operations to remove several hurdles being faced by shareholders, which have been the underlying causes for rising unclaimed dividends.

    Olatokunbo said Sec should have engaged in serious enlightenment to encourage shareholders on the benefits of going electronic by completing the e-dividend form.

    He noted that in spite of several appeals in the past, banks have not allowed shareholders to deposit dividend warrants in savings accounts, which most of the small investors have.

    SEC had recently put the value of unclaimed dividend by investors at N60 billion by December 31, 2012; representing N19 billion or 46 per cent rise over the N41 billion recorded at the end of 2011.