Good news emerged from
According to official sources, the value of unclaimed dividends in 1999 was just N2.09 billion. Between 2002 and 2004, the unclaimed dividend increased from N5.1billion to N6 billion. It rose to N6.4 billion in 2003 but dropped by the end of 2004. At the close of the year 2008, unclaimed dividends were valued N17.9 billion, before skyrocketing to N52 billion at the end of 2011.
Many reasons have been adduced for the mounting incidence of unclaimed dividends.
These include issues of shareholders who died without giving due information on their next-of-kin to claim such dividends and multiple applications made by applicants during investment process, example during initial public offerings (IPOs).
Others are loss of dividend warrants by investors following
Also identified were lack of operating current accounts for cashing dividends, while some shareholders consider certain amount of money too small to warrant the headache.
Some registrars and companies who lack liquidity are also known to deliberately deny investors their benefits through various schemes.
According to the provision of the Companies and Allied Matters Act (CAMA), unclaimed dividends are dividends not claimed within six months after declaration, and are returned to the company, from where the investors can make claims not later than 12 years. This means that the shareholders would forfeit dividends not claimed within 12 years.
The implication of these developments on the investors when dividend cannot be claimed, is that they are deprived of their rightful earnings. This could dampen the enthusiasm of investing in the capital market with severe implications for the economy.
While the latest news from the nation's capital market should be appreciated, the regulators should not ignore the following footnotes as a means to further whittle down on this scourge.
The practice has been that investors who were not informed of this development initially, now have to grapple with the hassle of getting the e-dividend form, after being told that dividend has been declared.
It should also be mandatory for stock broking firms to insist at the point of first contact that investor's current account is a pre-condition to the consummation of their transactions. This is because most clients only get this information when ever they come back to dispose of their shares.
Also, as a way to further facilitate payment of dividend warrants, banks should not insist on client's current account, as most of them are small investors who are ill-equipped to go further than savings account.
More important, to curb the excesses of some companies that declare dividends without making efforts or having no money to pay, some relevant sections of the (CAMA) may need to be amended to compel such companies to transfer such unpaid dividends to a special account to be opened by the companies on their behalf in any scheduled bank to be called 'Unpaid Dividends Account'.
If the unpaid dividends are not so transferred, the companies involved should pay a determined interest rate per annum that should serve as a deterrent.
NB: Photo of DG,
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