Investors in the stock market generally benefit from capital appreciation, dividends, or both.
While none of these is guaranteed, over time, companies across the world have generated huge returns for investors, and the stock market has proved to be a viable tool for wealth creation.
One problem that has persisted in the Nigerian stock market is the problem of unclaimed dividends.
Year after year, the number of unclaimed dividends continues to soar due to inefficiencies in the system. This has eroded retail investors’ confidence in the market.
In June, 2025 the Securities & Exchange Commission published a circular wherein it clarified that by the provisions of the Finance Act 2020, where dividends declared by a publicly listed company remain unclaimed for 6 years or more, they should be transferred to the Unclaimed Funds Trust Fund to be held in trust and managed pending when a claim is made by the shareholder.
Furthermore, shareholders are entitled to claim unclaimed dividends that were not statute-barred (above 12 years) before December 31, 2020, when the Finance Act was enacted.
Typically, unclaimed dividends arise from:
- Death of shareholders
- Identity verification issues
- Registrars’ delay in processing e-dividend mandate requests
- Multiple accounts of shareholders and use of pseudonyms and nominees
- Inadequate/inefficient communication channels between companies, registrars, and shareholders.
- Shareholders’ lack of awareness of how to make dividend claims
How registrars frustrate investors seeking to claim dividends
The registrars of listed companies are their agents responsible for the administration of general meetings, keeping the register of members, and the payment of dividends declared by these companies. When a listed company declares a dividend, the registrars process the payment to the various shareholders entitled to receive them on the stated payment date.
However, some shareholders do not receive dividends years after they have been declared and paid, sometimes, due to the fault of the registrars. By law, a company is expected to pay interest at the prevailing interest rate on unpaid dividends after 3 months, where the non-payment is the fault of the company. Unfortunately, many shareholders do not know their rights, and even when they do, there is no efficient redress mechanism for them to enforce these rights.
While some cases of unpaid and unclaimed dividends are genuine, others are simply due to the deliberate failure of registrars who unjustly withhold dividends for no cogent reason. In an era of technological advancement and despite the availability of several means of identification, registrars still find one excuse or the other to deprive shareholders of their dividends under the guise of an identity verification exercise.
Even after visiting the office of registrars physically, delays in payments persist. Some shareholders have completed the e-dividend mandate forms several times, yet their dividends are still withheld. The financial sector is one where the value of time should be highly regarded because of the principle of time value of money.
Unfortunately, this appears not to be the case in the Nigerian capital market. Registrars need to automate their systems to be more efficient in this digital age. In addition, there is a need for synergy among capital market operators such that once a broking account is opened, no additional form is required for dividends to be paid.
How weak enforcement exacerbates the problem
Over the years, the Securities and Exchange Commission has continued to decry the rise in unclaimed dividends. However, the commission has been inefficient in resolving the situation. While the commission is currently focused on a crackdown on Ponzi schemes and illegal investment operators, it is important to enhance the operation of the stock market, which is a legal investment channel.
This can be achieved by creating an efficient administrative redress mechanism for aggrieved investors with clear sanctions for erring registrars and continuous enlightenment of investors through various channels. The commission needs to be more proactive than reactive in addressing issues relating to unpaid and unclaimed dividends.
There is a need for a dedicated desk and online portal to resolve complaints regarding unpaid and unclaimed dividends promptly. Presently, the complaint channel on the website of the SEC is not effective. Even complaints delivered physically at the SEC Head office could go unattended for several weeks, months, or even go unanswered. This is unacceptable.
There should be minimum standards and clear timelines within which cases should be resolved. Many shareholders have abandoned their dividends out of frustration because there is no clear mechanism for redress. Ultimately, if people cannot enjoy the benefits of their investment, there is no justification for them to continue.
Conclusion
Nigeria has become a “template” for the inequitable distribution of wealth, benevolent crowdfunding, and aid. According to Oxfam,” Nigeria must free millions from poverty by building a new political and economic system that works for everyone”.
To make the Nigerian capital market an attractive investment option compared to betting and illegal investment schemes, regulators need to do their job efficiently and rid the market of incompetent and non-compliant registrars.
Teingo Inko-Tariah, Esq., is a Corporate Governance/Compliance Professional. She can be contacted at teingoi@yahoo.com
This is exactly the truth, I’m a victim of unpaid dividends, even after I have filled forms and other things required and yet nothing has worked out.
I suggest, they should stop with the idea of filling many forms after registering open for trading on equity mkt let every data be taken immediately for further informations and other important uses