Despite measures put in place by the Securities and Exchange Commission (SEC), unclaimed dividends in the country have crossed the ₦100 billion mark. Unclaimed dividends are dividends that have not been claimed six months after declaration.
SEC had recently extended the deadline for the free e-dividend registration which it has sponsored, until April 2018. The latest in a series of extensions, since the exercise began in 2015. The current extension is to enable commercial banks, the Nigerian Interbank Settlement System (NIBSS), and registrars work out a revenue sharing formula.
Listed companies have also stopped the issuance of physical dividend warrants for the 2017 financial year.
Why the large amount?
A huge proportion of the amount belongs to retail investors with minute holdings. In some cases, the dividends paid by the companies are so small, shareholders do not bother cashing them. Many shareholders are also deceased, with the next of kin sometimes unaware or unable to follow up with the processes required to claim such funds.
Some shareholders have been totally put off the market by the diminution of their holdings. Nigeria’s poor street numbering system often leads to dividends being posted to wrong addresses. Investors often neglect to update the registrars about a change in address.
How are unclaimed dividends being managed?
Currently, unclaimed dividends are kept in the custody of registrars for 15 months, after which they are returned to the companies. Investors that fail to claim their dividends after 12 years, forfeit them to the company.
SEC last year unveiled plans to establish an Unclaimed Dividends, Trust Fund (UDTF). The fund will be managed by an asset manager, and have a board of trustees that will be overseen by the commission.