The astronomical increase in unclaimed dividends in the country that was put in the region of N52 billion by the apex market regulator, the Securities and Exchange Commission (SEC), has been traced to the complicity of some registrars who allegedly connive with parent bodiesto deprive unsuspecting investors of their return on investments.
According to Leadership investigations, some registrars of companies are the major cause why the problem of unclaimed dividends is rising despite committed efforts of the market regulatory body, the Securities and Exchange Commission (SEC), to reduce it.
Further checks showed that to correct the anomalies in the market shareholders, the regulators should ensure that in the current financial year, companies listed on the floor of the Exchange should not operate any business as registrar.
Speaking to Leadership exclusively at the weekend, a senior broker on the condition of anonymity, said the inability of the registrars to key into the e-process have continued to be? constraints to the initiative meant to reduce the unclaimed dividends.
He noted that since going to the market to float right issue and Initial Public Offer (IPO) are no longer feasible because of the paucity of funds, most companies rely on the unclaimed dividends to run their operations.
He added that the intention might be deliberate as most times, the beneficiaries of unclaimed dividends are the companies ,the dividends payments become statute bared after a period of 12 years and the monies are returned to the companies that paid the dividends.
He noted that the problem investors encountereds especially between 2008 and 2010 in share meltdown in the equities market, was due to the culpability of companies’ registrars.
He said that there is need for the companies listed on the exchange to have a separate registrar that would take care of investors’ shareholdings in the quoted companies, especially as regard the payout of dividends.
He explained that, there are cases where companies connive with registrars to delay dividend payouts and in return, the money is plouged back to the companies’ coffers, which they use in running their operations.
However, the Managing Director, Crane Securities Limited, Mr. Mike Okpara Eze, also reacting to the rising wave of unclaimed dividends, said majority of the problem bedeviling the e-dividend malaise emanates from shareholders.
Eze noted that a good number of these shareholders are conservatively old fashioned and do not want to embrace the process of e-transactions.
“They bluntly refused to complete their e-dividend formalities presented to them leading to a compounding of the problem,” he said.
According to Eze, ever since the privatization policy of the administration of Gen. Yakubu Gowon in early 1970’s, unclaimed dividends has been a canker worm in the history of the capital market.
“During this exercise, those in positions of authority who had the wherewithal, acquired shares in the privatized companies with fictitious names of their drivers, cooks, gardeners, dead brothers, dead fathers etc in such a way that when the dividends came, they were not able to claim them because there is no such persons to claim such,”.
Speaking in the same vein, the Managing Director, Lambeth Trust & Investment Company Limited, Mr. David Adonri, explained that unclaimed dividends are increasing every year due to several factors which according to him, the problem started several years ago during the indigenization exercise when several shareholders made multiple subscriptions in fictitious names whose signatures they cannot remember.
He noted that the affected shareholders are also unable to open bank accounts in these fictitious names for the purpose of e-dividends collection.
He added that most of the unclaimed dividends are statute barred and forfeited to the companies in which case, recovery by the affected shareholders may not be possible in the absence of means of identification.
However, the shareholders association in the country representing these investors are championing the unraveling of these huge funds bottled up in the system and residing with the different registrars’ of the companies concerned. They are of the opinion that this fund which is put conservatively at N52 billion cannot just be left to the whims and caprices of the registrar and the companies concerned at the end of 12 years of no shareholder coming forth to lay claims to these monies
Presently, the bill on this regards at the National Assembly has gone through the 2nd reading in the House of Representatives and hopefully, the bill will scale through this level and will then go through the public hearing level.
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