The relentless rise of unclaimed dividends, up by more than N176 billion over the last 20 years, and projected to hit N200 billion over the next 7 months is causing worry for investors. Some analysts say the continuing trend can be ascribed to bureaucratic bottlenecks caused by the law, regulators and agents alike.
Although the Security and Exchange Commission (SEC) had claimed to have made sedulous efforts to reduce the development to zero, there seems to be no abatement in sight.
From a little over N2 billion in 1999, the figure rose sharply to N158.4 billion at the end of 2019, an increase of 32 per cent from N120 billion recorded in 2018, stands at N178 billion today, and projected to accrete to N200 billion by year end.
“What this tells us is that the measures put in place by the SEC are yet to hit the right chord,” said a Lagos-based stockbroker, Friday Udom.
The trend compounds the woes of investors, and threatens to dampen investment fervor. An investor in the stock of Stanbic IBTC, Iwinosa Ogbegbor, told this medium that although the value of his stocks have grown over the last 12 years, with several dividends having been declared over the period, he is yet to make any claims, although he has met the necessary requirements for payment. He said he blames bureaucracy in the system.
A civil servant, Onyinye Uche told NATIONAL ECONOMY that she wishes to invest more of her savings in stocks, but is deterred by the fact that she has not been able to claim any cash from her investments since 2007. “How can I put my money into something I have not been able to get any reward from?” she quipped.
It may be recalled that the House of Representatives Committee on Capital Market last November predicted that unclaimed dividends in the country should be in the region of N200 billion by the end of this year. Chairman of the committee, Babangida Ibrahim, disclosed this at an investigative hearing on “The Need to Investigate the Rising Value of Unclaimed Dividends, Unremitted Witholding Tax on Dividends and their Attendant Effects on Nation’s Economy.” This, as the committee chair noted, was a worrisome development indeed.
The director-general of the SEC, Mr Lamido Yuguda, had expressed dissatisfaction with the process associated with the release of unclaimed dividends to shareholders by capital market registrars and listed companies.
Yuguda said that dividends that had not been claimed over a certain period were being transferred into the trust fund.
According to him, if anyone comes forward at any given time to claim their unclaimed dividend, this fund will be able to repay those dividends without any problems.
Although N180 billion unclaimed dividends is a large amount, Yuguda said that the amount constituted only five per cent of the quantum of dividends declared in the entire capital market.
“That is a large amount, but when you compare that with the total amount of dividends declared in the Nigerian capital market, these unclaimed dividends amount to about five per cent of the total amount of dividends declared.
“Every person, who has come to the capital market and invested money, should be able to get his dividends as and when due,’’ Yuguda said
He also said the SEC is working with the Central Securities Clearing System (CSCS) and other stakeholders in the industry to address the issue of unclaimed dividends.
“The SEC has been working with CSCS, registrars and the stockbrokers to make sure that every market appraisal makes it easy for the clients to fill their mandate form. We are also making sure that investors continue to get their dividends,” he stated.
He also said the federal government intervened last year by enacting a Finance Act on Unclaimed Dividends Fund.
“The government is looking at unclaimed monies both in the capital market and the banking system and established a fund that will actually access through dividends that have been unclaimed for a certain number of years that meet certain basic definitions.
“It is not that the government has taken over the money, but when the claimants eventually surface, there is a system for recovering.
“Every person who has come to the capital market and invested money should be able to get his dividends as and when due,” he added.
He noted that SEC would continue working to ensure it gets to zero per cent level, saying that “there is a need for strong investor education to achieve success.
The Finance Act 2020 provides that “Any unclaimed dividend of a public limited liability company quoted on the Nigerian Stock Exchange and any unutilised amounts in a dormant bank account maintained in or by a deposit money bank which has remained unclaimed or unutilised for a period of not less than six years from the date of declaring the dividend or domiciling the funds in a bank account shall be transferred immediately to the trust fund.”
Some stakeholders claim that the Act presents another disincentive to potential investors, who claim the federal government may take advantage of their inability to claim their dividends based on bureaucracy on the part of regulators.