By PETER EGWUATU

To successfully implement a complete dematerialisation in the nation’s capital market, shareholders around the country have urged the Securities and Exchange Commission (SEC) and Central Bank of Nigeria (CBN) to investigate the activities of quoted banks and registrars over non-compliance with e-dividend payment directive.

Dematerialisation is the process of co

nverting physical share certificates into electronic form i.e. crediting of equivalent number of shares to a depository account electronically.

The shareholders equally averred that for full dematerialisation to be effectively implemented, there is urgent need to amend the Companies and Allied Matters Act (CAMA) 1990.

According to a  section of CAMA, “However, should an allottee insist on being issued a share certificate, despite its disadvantages, a certificate shall be issued, in accordance with sections 146 and 147 (1) of the Companies and Allied Matters Act (CAMA).”

The Chairman of Proactive Shareholders Association of Nigeria (PROSAN), Mr. Oderinde Taiwo,  who spoke the minds of his members to Vanguard, said; “It is really appalling that after several directives from the regulatory bodies in the financial system asking banks to accept dividend warrants into savings account, they are yet to comply. How will the SEC be able to achieve the dematerialisation policy in the Nigerian capital market when banks are frustrating shareholders?”

Continuing he said, “I think what SEC and CBN should do is to jointly investigate the activities of these banks and the registrars and why they are refusing to accept dividend warrants into savings account. The registrars on their part ,do not pay the money due as dividend to the shareholders when accounts details are sent to them.

When you go to the bank, they will say,  ‘we have not seen any cheque sent to us. How do you want us to credit the shareholders?’  Shareholders use savings account because if they pay the dividend warrants into current account, the banks will charge them Commission on Turnover (COT).

So this is part of the reasons why unclaimed dividend is growing. Most of the dividends paid to shareholders in recent time are very minimal and most shareholders would want to avert the COT, hence they will prefer using savings account to receive their dividend.”

The PROSAN chairman, further said, “In the last one decade, information technology has been adding value to all areas of human endeavours – social, economic, political, science, sports, journalism, among others.  The Nigerian capital market through the apex regulatory authority – SEC, launched some electronically information technology-driven initiatives such as e-Bonus, e-dividend, e-Rights among others in 2007 to replace the manual and slow implementation of these services in order to move our market forward and to compete with other capital markets in the world.

“But to the surprise of all other stakeholders, some of the registrars are yet to carry out these highly publicised services to the benefit of our market. This, we have observed as an organised body of shareholders that some of the registrars of our companies do not have modern facilities to carry out these technology-driven services. We hereby call on  SEC to set up an investigative panel to look into this issue and act accordingly for the sake of our market, especially now that they are trying to rebuild investors’ confidence in the market.”

To this end, Taiwo suggested that any operator found wanting in the course of investigation by both SEC and CBN should be suspended and fined accordingly.

Meanwhile, the Director-General of SEC, Arunma Oteh, said  in an interview with newsmen that the commission has commenced the revamping of its investor outreach, public enlightenment and investor education programmes. She said; “We have a committee on dematerialisation and we are waiting for them to tender to us their plans over enlightening investors on the importance of dematerialisation and when it would be appropriate to commence full dematerialisation.

Furthermore, we are going to listen to retail investors concerning some of the issues they have with the market. Some of what we have heard as we look at the profile of the complaints relate to issues around not having their share certificates delivered to them, dividend and un-returned money related to allotment.

“So, what we are going to do in organising this town hall meeting is to have registrars, representatives of other trade groups participate in those discussions so that directly, they can answer some of the questions that investors have. We are also going to make sure that shareholders understand their rights because what we have observed is that there is not much understanding of the rights of a shareholder.

We are going to, in the future, have what I call a plain English programme as part of a way to enhance understanding, which is basically to make sure that our rules are produced in language and material that are easy to understand by a lay man.”

Emphasising that, “a well-informed investor is a well-protected investor,” the SEC DG said ongoing radio and television programmes would also be expanded. “We have offices in Abuja, Lagos, Kano, Kaduna, Port Harcourt, Maiduguri, Onitsha and Ibadan. We hope that those offices can help to try and make sure that we are easily available to the average investor in the different regions in the country,” Oteh added.

It would be recalled that the SEC had initially set up January 2013 as deadline for full dematerialisation in the capital market. Oteh had disclosed that SEC may postpone the deadline for the share certificate dematerialisation earlier fixed for 1st January, 2013 if necessary.

She said the idea of postponing the deadline was as a result of the inability of the committee on dematerialisation to organise an enlightenment programme in all the geo-political zones of the country to enlighten investors on the need and benefits of dematerializing share certificates. The committee is expected to advise the Commission on what to do to implement full dematerialisation after the exercise.

While commenting on the issue of dematerialisation, the Chairman of Progressive Shareholders Association of Nigeria (PSAN), Mr. Boniface Okezie, blamed the regulators for failure to implement the e-dividend policy four years after it was launched.

According to him, “SEC failed to put up the required massive enlightenment campaigns on the policy. Electronic dividend payment is the process of crediting shareholders’ accounts within 24 hours after a company pays dividends. It was launched by SEC in February 2008.  It is a good policy because it will help wipe away some of the mal-practice we have witnessed using manual system.”

He said that e-dividend, if implemented, will also reduce the incidence of unclaimed dividends to the barest minimum. In his words; “SEC also failed to meet company registrars, service providers and banks on problems being encountered in remitting dividends.

Many shareholders are not interested in the e-dividend policy due to some banks’ insistence on current accounts for e-dividend payment. So I advised SEC to liaise with the CBN to ensure that all banks, both quoted and unquoted, accept both savings and current accounts for e-dividend payment.”

Alhaji Gbadebo Olatokunbo, President, Nigeria Shareholders Solidarity Association (NSSA), in his own view said; “The country’s poor postal system contributed to the problem of unclaimed dividend.”

Continuing, he said, “However, the CAMA 1990 is long overdue for amendment. There is no how we can implement full dematerialisation in the capital market because the CAMA still gives investors power to have physical share certificate. The uncooperative attitude of some banks on payment of dividends into savings accounts made some investors to shun the policy.

We are doing our best in educating investors on the benefits of the policy. The problem at the moment is that investors with small dividends are being discouraged from subscribing to the policy due to insistence of banks on payment into current accounts.”

Meanwhile, efforts to speak to some of the banks failed as most of the spokes-persons refused to comment. However, one of the banks’ spokespersons who preferred to remain anonymous said; “Why the banks are not accepting dividend into savings account is that during clearing, the banks pay COT. So if the regulators want the banks to accept dividend warrants into savings account then issue of COT should be eliminated  during clearing and there should be a directive from our regulator, CBN.”