As Deadline for e-Dividend Registration Expires Today…

As the deadline for capital market investors to register on the e-dividend platform expires today, the Securities and Exchange Commission has vowed that the deadline remains sacrosanct, reports Bamidele Famoofo 

After today, investors in the Nigerian capital market, who are yet to register to get dividend payment electronically, will have to part with a fee to be enrolled on the platform. 

And if eventually they refuse to follow the new trend of ‘e-dividend’ platform, which has come to replace the outgoing system of issuing ‘dividend warrant’, they may forfeit their dividends (cash received on share investment) to government. 

Since November 2015, the Securities and Exchange Commission (SEC), the highest regulatory authority of the capital market has encouraged stock investors to register with their respective registrar companies for them to get to receive dividend in their bank accounts.

E- dividend simply refers to an online system of paying dividends to investors when companies declare dividends, which are the profits meant for investors, rather than send it by post, they will just wire it to the investor’s bank account.’

The initiative, according to SEC, will help check the lingering problem of unclaimed dividend, which was estimated at about N90 billion as at January 2017.

By law, any money issued as dividend to shareholders that was not claimed within 12 years, will be forfeited to government.

Head, Corporate Communications, SEC, Mr. Naif Abdussalam,  earlier in the year, explained that the deadline was  set for June 30, 2017, but was later extended to give room for investors to key into the e-dividend payment platform.

Abdussalam disclosed that the extension became necessary to perfect the commission’s rules on issuance of dividend warrants.

He stated that the commission’s issuance of dividend warrants would be a thing of the past by the end of today with the amendment of the rules and keying into the e-dividend payment platform by more investors.

It would be recalled that SEC had in 2016 announced June 30, 2017, as deadline for issuance of physical dividend warrants to shareholders by quoted companies to tackle unclaimed dividends and mitigate the risks associated with warrants.

According to the SEC spokesman, forfeiture of dividends would be a thing of the past with the e-dividend payment platform.

Giving report on the e-dividend registration at the Capital Market Committee Meeting which held in Lagos in May 2017,   the suspended Director-General of SEC, Mr. Mounir Gwarzo, said 2.2 million investors had mandated their accounts for the e-dividend payment policy as of April 30, 2017.

But the enthusiasm shown by investors in the early part of the year to register for e-dividend slowed as the deadline date gets closer. According to the SEC, only about 147,176 registrations were recorded in the last three months between August and October 2017. 

Gwarzo, who gave the report at the fourth quarter post Capital Market Committee (CMC) media briefing in Lagos, however said the low registration would not make the commission to change its decision to stop the free e-dividend registration exercise by today.

“Investors who are yet to take advantage of the free registration exercise will therefore mandatorily pay a sum of N150 to register after December 31”, SEC said.  

“We realise that there is a slow pace in terms of the implementation of the e-dividend. In the last three to four months, there has not been appreciable increase in terms of number of people registering. By 31st of December, 2017, any Nigerian that does not register for e-dividend will now have to pay N150 for registration. We have been pursuing this initiative since last year and SEC has been underwriting this cost. The moment you start extending, people will think that they have 100 years to do it”, Gwarzo reiterated. 

Head, Vertical Markets at Nigeria Inter-Bank Settlement System (NIBSS), Mr. Samuel Oluyemi, gave a breakdown of registration by investors between August and October, 2017.  According to him, “In August, what we were able to get was  50,819 people, who registered. In September, we got 59,204 registrations and in October 2017, we got 37,153 registrations. This shows that there is a dip in the month of October”.

Oluyemi said a continuation in that trend would be interpreted to mean that investors don’t trust the system. He said the remedy will be for SEC to increase awareness of the deadline for the closure of the exercise.

“There is no way we will have the much-needed jump that government expects in the Gross Domestic Product (GDP) except all of us work together as one”, Oluyemi lamented.

Similarly, former President of the Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, believed it will not be realistic for SEC to close the free registration exercise on the appointed date, arguing  that the commission had not done enough awareness programmes to reach minority shareholders scattered over the six geo-political zones in Nigeria.

Nwosu, who claimed to be speaking the mind of shareholders, said the SEC must have to extend the registration exercise for another six months while it engages in far-reaching awareness programme to sensitise shareholders of companies that reside in remote places in the country. “What the SEC has done so far was to reach investors who reside in the urban areas but forgetting that minority shareholders which accounts for about five per cent of the total shareholdings in the Nigerian capital market are scattered over the nooks and crannies of the country. They all must be reached besides the institutional and foreign investors who are very much aware of events in the market”. 

In its bid to boost registration before the December 31, deadline, SEC, apart from encouraging investors to visit their respective registrar companies to get registered also provided a portal in which unregistered investors could register for payment of their dividends electronically.

In a statement released on SEC’s website in April, 2017, the commission noted that it had provided a platform for investors who were yet to register for payment of the e-dividend and for those who were yet to participate in the registration exercise, adding that a link had been provided to ascertain an investor’s registration status.

According to SEC, all listed companies were encouraged to participate in the enlightenment campaign on e-dividend by informing their shareholders at Annual General Meetings (AGM) on the processes put in place to increase the registration figure.

Also, 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.

Meanwhile, operators in the capital market have listed the numerous benefits of the e-dividend platform. 

First Registrars & Investor Services Limited (formerly First Registrars Nigeria Limited) said the e-dividend system was safe and convenient for investors, saves time and resources as shareholders are notified right on their mobile phone once payments are made into their respective bank accounts (applicable to shareholders on e-Notifier).

Abdulraham believed the e-dividend would strengthen the Know Your Customer (KYC) status of all investors in the capital market to curb unclaimed dividend and stoppage of unauthorised sale of shares in the market.

According to SEC, inefficiency, poor logistics, management and inadequate update of personal data in the existing dividend payment system had created a lot of problems in the system.

It is, however, expected that the e-dividend system would lead to increased transparency in the administration of dividend payment and eliminate the costs associated with printing and posting dividend warrants.

According to SEC, the continuous retention of dividends by companies had distorted the true financial position of companies and misled investors and other members of the public.

 “The huge amount of unclaimed dividends would discourage foreign investment and discourage members of the public from staking their funds in the market. Non-payment of dividends discourages investors in stock market and encourages them to search for alternative investment outlets such as the real sector and money market”, SEC added.