SEC to Mandate Registrars to Pay Unclaimed Dividends in 48 Hours

By Aduragbemi Omiyale

The era of unclaimed dividends in the nation’s stock market seems to be coming to an end very soon, going by the latest move by the Securities and Exchange Commission (SEC).

In 2015, worried by the huge value of investors’ sweat laying fallow, SEC introduced the e-Dividend Mandate Management System (e-DMMS).

This system was to allow the payment of cash rewards to investors directly into their bank accounts upon registering for an electronic dividend payment mode.

With this, the usual issuance of physical dividend warrants to shareholders who qualify for dividend payment was stopped, allowing them to have the payment into their bank accounts.

The initiative was launched in partnership with the Central Bank of Nigeria (CBN), Nigerian Interbank Settlement System (NIBSS) and other stakeholders.

However, since the introduction of this policy, unclaimed dividends in the capital market have continued to rise and as of last year, they stood at over N200 billion.

Some investors have accused registrars and others of frustrating the reduction of unclaimed dividends because of what they described as unnecessary bureaucracies.

To address the issues, SEC is coming up with a framework that would mandate registrars of publicly quoted firms to credit the bank accounts of shareholders with outstanding unclaimed dividends within 48 hours of receipt of the e-dividend mandate. Failure to adhere to this would attract sanctions worth millions of Naira.

According to SEC, this rule will “reduce the quantum of unclaimed dividends in the custody of the registrars as well as discourage registrars from keeping unclaimed dividends” of investors, who are gradually withdrawing from the market of the process of getting their returns on investment is discouraging.

To ensure strict compliance, the registrars would be required to forward a status report of all mandated accounts to SEC on a quarterly basis.

This status report would include a list of requests by shareholders, the number of requests processed, the number of successful requests and number of unsuccessful requests with reasons, the framework is proposing.