A few years after the introduction of the E-dividend mandate by the Securities and Exchange Commission (SEC), stock market operators said the value of unclaimed dividends in the system has reasonably decreased to some N60 billion compared to N129 billion in 2017.
This development shows that the decision to introduce the E-dividend solution has yielded the expected result. Recall that capital market operators were highly optimistic about the E-dividend initiative by the NSE, describing it as a great initiative that will ultimately reduce the rate of unclaimed dividends to the minimum.
An extended period has been given
In a related development, the Acting Director-General of the Securities and Exchange Commission (SEC), Ms Mary Uduk, recently disclosed that there has been an extended forbearance period for the regularisation of shareholders’ multiple subscriptions. The new deadline is December 2019, she said.
Speaking during the sidelines of the recently held third Capital Markets Committee (CMC) meeting in Lagos, Uduk said the decision to extend the deadline by one year was unanimously reached by members of the committee. This was necessary because many investors were yet to realise the importance of the regularisation, she said.
According to her, regularising the multiple subscriptions held by shareholders will also facilitate the efforts being made to reduce the number of unclaimed dividends in the market.
A closer look at the E-dividend mandate
The E-dividend mandate was introduced in 2015 by the Securities and Exchange Commission (SEC) in a bid to tackle the persistent issue of unclaimed dividends which was becoming a source of concern among capital market stakeholders.
The process is intended to make it easier for investors to complete their bank mandate with company registrars. In order words, shareholders are to download the E-dividend form, fill out the information needed and submit at their bank or with the registrar. Afterwards, their dividends would be electronically transferred to their accounts.
So far, a total of 2,599,641 mandates have been approved since the commencement of the E-dividend initiative. There was, however, an 11.38% decline in the number of approved mandates in the third quarter of 2018. This contrasts with earlier records.
Meanwhile, some shareholders have blamed banks for frustrating their efforts to register for the E-dividend. According to one Mr Olalekan Oregbesan,
“once you fill the e-mandate and the bank certifies you, registrars will still demand signature specimen from brokers. This is a hitch in the registration process.”
He said this is needless and makes the process unnecessarily cumbersome.