By Peter Egwuatu with agency report
Despite the introduction of electronic dividend payment system, e- dividend, in the Nigerian capital market the total value of unclaimed dividend has risen sharply to N158.4 billion at the end of 2019, representing an increase of 32 percent from N120 billion recorded in 2018. About N100 billion of the amount is from unclaimed shares.
This was disclosed by the Securities and Exchange Commission, SEC, according to the News Agency of Nigeria, NAN.
The report revealed that the figure has been on the increase despite the introduction of e-dividend by SEC in 2015. From about N100 billion in 2017, it closed 2018 at over N120 billion.
Dividend is company’s earnings, decided and managed by the company’s board of directors, and paid to a class of its shareholders.
The earnings turned unclaimed when a shareholder fails to take ownership of an already paid dividend after six months.
The breakdown, according to the report, showed that unclaimed dividends with companies (15 months and above) stood at N119.01 billion.
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The ones with registrars amounted to N14.64 billion and unclaimed dividend less than 15 months old stood at N24.77 billion.
While stating the reason for the rise in unclaimed dividend, Head, Office of the Chief Economist, SEC, Mr Okey Umeano, explained that value has been on the increase since the market has been witnessing surge in large number of unclaimed shares.
He said, “The main issue why unclaimed dividend is rising is because we have a large number of unclaimed shares.”
According to him, many investors during the banking consolidation bought shares with different names as well as other people’s names which they were yet to rectify.
“As companies declare dividend, those accounts would equally be paid, leading to increase in unclaimed dividend figure.
“The commission introduced a forbearance window for multiple accounts to enable investors that bought shares with different names to regularise their accounts in order to reduce the quantum of unclaimed dividends.
“SEC gave a window for people to come and rectify the multiple subscription thing.
“Many people have still not been able to claim their own because some of them have forgotten the names they used.
“Some have not been able to prove to their stockbrokers that they are the owners of the shares.
“So, we still have a large chunk of those shares, and anytime dividends are paid, those shares are not claimed and those people don’t get their dividends,” Umeano said.
Until the number of unclaimed shares goes down, unclaimed dividend problem will continue.
On the way forward, he assured that the commission would continue to put pressure on all the people involved in order to curb the problem of unclaimed dividends.
Umeano called on investors to go and prove ownership of their shares, noting that SEC was not prosecuting anybody.
“SEC has given them amnesty to go and claim their shares and as people are claiming those shares, unclaimed dividends number will go down” he added.