Determined to reduce the quantum of unclaimed dividends in the Nigerian capital market and encourage beneficiaries of deceased investors to step up efforts to claim such dividends, the Securities and Exchange Commission (SEC) has further reduced the time, processes and costs of the transmission of shares from a deceased to a beneficiary.
This effort will ensure seamless transmission and claim of a deceased’s shares by heirs and administrators, it said.
In an amended draft on the operating framework for the transmission of shares, SEC reduced the timeline for the transmission of the deceased’s shares from three weeks to one week. Going by that, registrars should now ensure that shares of a deceased are transmitted within a week of receiving the request from the administrators or executors.
The registrar is also required to transmit the Letter of Administration to the Probate Registry within 24 hours of receipt of the same for verification.
The administrators/executors are, however, required to provide a letter of introduction introducing themselves as the legal representatives of the estate. The letter should also indicate the names, addresses, signatures and BVNs of the individual administrators/executors, SEC said.
Also required are original death certificate from the National Population Commission (NPC) for sighting, original probate letter or Letter of Administration for sighting or the certified true copy (CTC) from a Notary Public. Others are a copy of the newspaper advert placed by the court or gazette, any evidence of ownership of the investment, i.e., CSCS statement(s) of the deceased, original share certificates, dividend stub or dividend warrants or bank statement(s) showing receipt of dividend(s) into the account(s) of the deceased.
“Where the administrator/executor cannot provide these requirements, the registrar may require confirmation through insurance, indemnity or interview,” SEC stated.
“The fees chargeable for transmission of shares by registrars are being limited to one percent of the total value and additional five percent Value Added Tax (VAT) for shares of N5 million and below and 0.5 percent of the value and five percent VAT on shares above N5 million with a maximum chargeable amount of N200,000, excluding VAT. Also, fees chargeable for confirmation of probate or letter of administration shall not exceed N12,000,” it said.
It disallowed registrars from charging fee on dematerialisation of share certificate and mandating of accounts for electronic dividend. However, change of address, name or mandate should not attract more than N100 per request while update of signature capture and scanning should not be more than N200 per signature.
The SEC further said that any registrar that violates the provisions of the rules shall be liable to a penalty of not less than N1 million and an additional sum of N20,000 for every day the violation persists.
The new rules also seek to standardise the turnaround time for processing all requests for replacement and update from the date of submission of all relevant documentation. The turnaround time for dematerialisation is three working days, an update of signature capture and scanning shall take place in 24 hours, while a change of address, name and the mandate shall be done within two working days.
According to SEC, the amended draft rules would ensure standardisation and efficiency in the transmission process, thereby minimising conflict, protecting investors and maintaining the integrity of the market.
Mary Uduk, acting DG of the SEC, recently urged beneficiaries of deceased investors to step up efforts to claim such dividends, saying one category of investors whose investment yields had contributed to the growth of unclaimed dividends in the capital market were deceased investors.
According to her, beneficiaries of deceased investors as indicated in the Will or Letter of Administration are yet to claim the investments and accrued dividends through the share transmission process.
“The capital market is a market for raising medium to long-term capital via a number of instruments. The most popular of the instruments are shared including bonds with resultant yields of dividends and interests. However, the quantum of unclaimed dividends in the Nigerian capital market has been on the increase as investors fail to claim the dividends from their investment in shares,” she said.