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E-Dividends Registration: Investors Rush to Beat Deadline

By Dipo Olowookere

There is last-minute rush by shareholders in the Nigerian capital market to register for free for the electronic dividend (e-dividend) payment system introduced by the Securities and Exchange Commission (SEC).

The regulatory agency fixed December 31, 2017 as deadline for the free registration of the e-dividend payment system.

Last month, while addressing capital market correspondents, the suspended Director General of SEC, Mr Mounir Gwarzo, had lamented the low level of enrolment for the e-dividend exercise, noting that the level of compliance had dropped lately.

He had said in August 2017, a total of 50,819 investors registered for the e-dividend, while it increased to 59,204 in September, but dropped to 37,153 in October.

Mr Gwarzo had warned that SEC would not extend the December 31, 2017 deadline for the registration despite pleas by stakeholders for an extension.

According to him, SEC has been underwriting the cost of the e-dividend and from next year, investors will have to pay N150 for the exercise.

“We realised that there is a slow pace in terms of the implementation of the e-dividend as in the last three-four months, there has not been appreciable increase in terms of number of people registering.

“By December 31, 2017, any Nigerian that does not register for e-dividend will now have to pay N150 for registration.

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“We have been pursuing this initiative since last year and SEC has been underwriting the cost. The moment you start extending, people will think they have 100 years to do it.

“I don’t think we should keep on extending it, we want to keep our word on that December 31. Whoever that does not register should be able to pay the amount stipulated,” Mr Gwarzo had told newsmen.

At the first Capital Market Committee (CMC) meeting for 2017, Mr Gwarzo had disclosed that about 2.2 million investors in the capital market registered for the e-dividend payment system.

But with three working days left before the deadline, there is a huge rush for registration.

From January 1, 2018, investors in the capital market will no longer be able to receive their dividends physically, but would be paid directly into their bank accounts.

Business Post gathered that investors, who were yet to register for the exercise, are in a last-minute rush to key into the system.

However, some of them complained that the process of registering for the exercise has been cumbersome.

According to the Nation, a cross section of capital market stakeholders at the weekend showed increased activities on the registration. At the various registration points – banks, registrars and stockbrokers, officials confirmed that there have been noticeable increases in request for e-dividend.

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Stakeholders, who spoke with The Nation at the weekend called on SEC to extend the e-dividend registration citing hitches that had slowed down the process of registration. They noted that given the importance of the e-dividend system to the stock market, SEC should allow the e-dividend and dividend warrants to run concurrently while improving enlightenment campaign for the e-dividend.

Shareholders United Front (SUF) National Coordinator, Mr Gbenga Idowu, said SEC should extend the deadline for the e-dividend registration to enable retail shareholders that are having difficulties with the registration to resolve the issues.

He urged SEC to widen its publicity campaign to other nooks and crannies of the country.

Standard Shareholders Association of Nigeria National President, Mr Godwin Anono, said SEC should allow open-ended registration for the e-dividend as part of its market development mandate.

He alleged that registrars were frustrating shareholders with unnecessary additional requirements for the e-dividend even when shareholders have provided their Biometric Verification Number (BVN).

According to him, many registrars were stalling the e-dividend registration because they are the main beneficiaries of the lopsided system where dividends are either delayed or categorised as unclaimed.

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Constance Shareholders Association of Nigeria National President, Mallam Shehu Mikhail, said SEC should compel the three main stakeholders in the registration process – the Central Securities Clearing System, registrars and stockbroking firms to harmonise their data base using the Know-Your-Customer (KYC) information from the stockbroking firms.

SEC last year announced last June 30, as deadline for issuing physical dividend warrants but later extended it to December 31 to shareholders by quoted companies to tackle unclaimed dividends and mitigate the risks associated with warrants.

In November 2015, SEC launched the E-Dividend Mandate Management System (E-DMMS)  with the Central Bank of Nigeria, Nigerian Interbank Settlement System (NIBSS) and other stakeholders. The E-DMMS is an E-dividend payment portal that ensures the payment of dividends  into a shareholder’s account.

It is believed that these steps taken by the Commission would help to reduce the increase of unclaimed dividend which stood at N117 billion as at December 31, 2016.  Of this figure, N86 billion was in the custody of the paying companies while N13.7 billion was with the registrars. From November 2015, when the SEC kicked off the campaign on e-dividends, about N42.2 billion has been paid to investors from the backlog of unclaimed dividends.

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Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

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