THE Securities and Exchange Commission (SEC) has raised the alarm that banks are threatening the success of the e-dividend registration launched to have unclaimed dividends paid to investors.
It was gathered that the SEC has evidence that some banks were charging as high as N1,050 to stamp and sign the e-dividend forms that would allow investors migrate from the old dividend warrant practice to e-dividend platform.
Investors have 30 days to migrate to the e-dividend platform for free starting from December last year.
An official of SEC told The Nation that the SEC reported the matter to the Central Bank of Nigeria (CBN) last week when stakeholders on the e-dividend met.
The SEC official confirmed that the CBN has offered to raise the issue at the next Bankers’ Committee meeting to make the banks comply with the free registration period. The official, who pleaded not to be named, lamented that the activities of these banks posed a threat to the desire to have unclaimed dividends paid to their rightful owners.
As a first step to check the “unscrupulous activities of banks”, the SEC official disclosed that the free registration period for the e-dividend exercise has been extended by 30 days so instead of free registration period ending in March, it will now end in April, this year.
It was revealed last month that there is in excess of N90 billion in unclaimed dividends sitting in the bank accounts of quoted companies which ordinarily should have been paid to investors.
The SEC official noted that investors were being short changed but both quoted companies and their registrars who use the 15-month grace period that unclaimed dividends are allowed to be with registrars before such monies are returned to the companies.
Some of the big registrar outfits are owned by big quoted companies, particularly banks. According to the SEC official, “some of these companies own the registrar companies they use to drive their public offers. The registrars are allowed to hold on to dividends declared at the end of annual general meetings for 15 months and those dividends that are not redeemed wishing that period revert to the companies resulting in unclaimed dividends.”
The SEC official accused many quoted companies of working with their registrars “to perpetuate the unclaimed dividends syndrome with a peculiar Nigerian twist”.
Apart from the prompt remittance of declared dividends into the accounts of registered investors, the e-dividend platform will allow investors who desire to sell all or part of their shares to be paid immediately the shares are sold instead of the old practice where registrars hold on to the proceeds of sold shares for weeks and months before the investors can get his money.
The SEC began its e-dividend registration campaign in January 2016 in Abuja with road shows and a town hall meeting. The Commission will bring the campaign to Lagos this week ostensibly to sensitize the large investor population of Lagos not only of the benefits of the e-dividends registration but to resist any attempt by banks to charge any fees for the registration before April after which banks are allowed to charge only N100 for the registration.