SEC Director Advises Shareholders on Electronic Dividend
Shareholders have been advised to embrace the electronic dividend(e-dividend) because of its numerous benefits.Â Â The Securities and Exchange Commission(SEC) introduced the e-dividend as part of efforts to reduce unclaimed dividends in the nationâ€™s capital market.
e-Dividend is a secure on-line means of paying dividends directly to the shareholderâ€™s account instead of printing and mailing dividend warrants, as currently practiced.
Speaking on the need for shareholders to key into the e-dividend, Director, External Relations, SEC,Â Â Â Mr.Â Â Henry Adekunle Rolands saidÂ Â with e-dividend, shareholdersâ€™ accounts are credited within 24 hours of the dividend declaration.
â€œIt enables the shareholdersâ€™ accounts to be credited directly within 24 hours of the dividend declaration; thus, curbing the growth of unclaimed dividend. It eliminates the problem of returned dividend warrants where a shareholder changes address without notifying the company.
It provides a reliable means of identity management for investors using the BVN; It provides a platform for the payment of all outstanding unclaimed dividends directly to the shareholdersâ€™ accounts, thereby reducing the quantum of unclaimed dividends,â€ he said.
He added that e-dividend engenders increased transparency in administration of dividend payment.
â€œ Companies no longer need to print/write cheques, use envelopes, or buy postage stamps; thus translating into savings in overhead costs and, ultimately, more money is available to be paid as dividends,â€ Rolands added.
The SEC director saidÂ Â Â the huge amount of unclaimed dividendsÂ Â could discourage foreign investment as well as discourage members of the public from staking their funds in the market.
According to him,Â non-receipt of dividends discourages investors in stock market and encourages them to search for alternative investment outlets such as the real sector and money market.
This development, he said deniesÂ public companiesÂ Â the opportunity of cheaper source of finance.
While acknowledging the high level of unclaimed dividends in the market, the SEC chief cited some of the causes of unclaimed dividends.
According to him,Â a careful assessment of the current practice ofÂ printing and mailing dividend warrants as means of paying dividendsÂ revealed that,Â Â some of theÂ Â causes of unclaimed dividends are associated withÂ Â shareholders, while others are associated with registrars, stockbrokersÂ Â and postal system.
He said causes associated with shareholders include:Â incomplete or wrong mailing address when completing application forms, thus making it difficult to deliver dividend warrants; non or late communication to the Registrars, when change of address occurs, thus making the dividends warrant returned when posted; provision of an address in a place that cannot be accessed.