Nigeria has an avalanche of unclaimed dividend, larger than the country’s combined capital expenditure to health and education sectors in its 2020 budget. The value may keep growing and serve little or no economic gain as some stock investors in the Nigerian capital market continue to leave their dividends untouched.
But what does a dividend really mean? A dividend is a reward a shareholder of a company gets from a portion of the company’s net profit. This reward can be issued in the form of cash payments for every unit of the company’s stock owned, bonus shares or any other form.
Basically, companies use part or a whole of their retained earnings to reward their shareholders as dividends. However, companies are not obliged to pay dividends, particularly when there is a shortage of cash or a need to carry out some investing activities to expand the business.
It is noteworthy that only shareholders who bought shares of a particular company on or before the closure of the company’s register for a period are entitled to the company’s dividend.
In Nigeria, the total value of unclaimed dividend stood at N103 billion as of December 2017, according to the Securities and Exchange Commission (SEC). This means a total of N103 billion worth of investors’ dividends owned as a result of investing in the shares of some companies is lying fallow waiting to be reclaimed.
While stockholders have several reasons for not claiming their dividends including lack of information, perceived hassle that comes with the processing of the funds, negligence, forgotten investments, death or some other reasons, it is important to note that a dividend left unclaimed gradually loses its value as investors do not earn interest on the unclaimed dividend.
For instance, if First Bank of Nigeria Holdings Plc paid you a total dividend of N200,000 in January 2010 without claiming your funds, it probably has lost about 66 percent of its purchasing power to inflation within the period since the money did not grow. If the dividend was paid in October 2019, the real value would have reduced to N68,000 even though you hold a nominal value of N200,000.
How would you invest and watch the value of your dividend erode for every day you delay to claim your reward? “The best time to plant a tree was 20 years ago. The second-best time is now,” according to the Chinese proverb. It, therefore, means that you can take a step and halt the losses. You can claim your entitlement now using these six steps as a guide provided it was declared within the last 12 years.
Check if you have an unclaimed dividend
The first thing you need to do is to check if you or your relatives have an unclaimed dividend. This can be done through your stockbroker or on SEC database for non-mandated accounts at (www.sec.gov.ng/non-mandated).
The online portal can help investors to check if they have unclaimed dividends by simply inputting their names in a search box and see the list of companies they have an unclaimed dividend in. So, the website will produce a list of
Know your registrar(s)
The registrars are mandated to manage all issues relating to the shareholders on behalf of companies. These issues include dividends, public offers, and share certificates. Obviously, for your dividend to be paid, you need to know your registrar(s).
The Securities and Exchange Commission (SEC) has about 18 registrars managing all the listed companies on the Nigerian Stock Exchange (NSE), implying with more than 160 firms on the Nigerian Stock Exchange, a registrar could have more than one company it manages. Also, you could have your data with more than a registrar depending on the companies you invested in.
Sign a share transfer form
Now that you know your registrar, you can proceed to obtain a share transfer form from your stockbroker. The form mandates the stockbroker to process your unpaid dividends with a fee which could be a certain percentage of the value of your dividend.
But if you are concerned about the fee, you can contact your registrar to process your dividends. This approach, though saves some money, might take a longer time to process your dividends.
Process your e-dividend registration
It is also important to process your e-dividend registration and get it sorted out once and for all. Yes! It is a one-off process; it was introduced to as a solution to the incidences of unpaid dividends.
This means you would not have to go through the stress again once a dividend is paid. Whenever a dividend is paid by any company you have holdings, the dividend will be automatically credited into your bank account by your registrar(s).
Once you identify your registrar(s), go to their websites on SEC website to download their e-dividend mandate forms and complete with the right information. You will need to provide vital information such as name, Bank Verification Number, account number, email among others.
Visit your bank
Now, you will take a completed and signed copy of the e-dividend mandate form to your bank – it is advisable to use a bank rather than multiple banks to monitor dividend payments – for signing.
Return signed e-dividend mandate form to your stockbroker
You can now return the e-dividend mandate form which has been duly signed to your broker or registrar in order to complete the process on your behalf.
While this ensures your subsequent dividends are paid directly into your bank account, you can make enquiries on the status of your unpaid dividend haven done the needful and how to get them back.
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