No More Paper Dividend Warrants!

According to recent reports reaching us, the SEC has given a stipulation that effective  July 1^st 2017 dividends are to be paid directly into the bank accounts of shareholders.

This means that any dividends declared after July 1^st 2017 will not be issued or printed on paper. The implication is that any shareholder who doesn’t have an e-dividend mandate on his account is going to lose his dividends. I don’t know how that is going to work but if the BVN registration is anything to go by, many people are going to shed tears. However, with the e-dividend mandate service the dividends can be credited to the your account instantly if you are a shareholder.

This provides a win-win situation for stockholders and companies because the shareholder gets his dividends when due even if he did not know that dividends were declared. On the other hand the companies will increase the confidence of their investors and thereby secure increased investments. Then the SEC herself has a reduced pile of unclaimed dividends to deal with.

At the beginning of 2016, the Securities and Exchange Commission announced that they had currently a staggering sum of N90 billion (Ninety billion naira) worth of unclaimed dividends. To bring it down they organised and carried out campaigns to inform the public about the EDMMS (Electronic Dividend Mandate Management System) which they had created in partnership with NIBSS (Nigeria InterBank Settlement System) and the CBN. This system which works like a portal enables the banks to upload customers’ bank and stock details so that they can be credited directly without having to take paper warrants (cheques) to the bank.

For some people this is working. It has worked for some of my stocks but it hasn’t worked for others. This means that there is a lapse between some banks and some registrars. Sometimes too, some registrars still ask for a bankers’ confirmation of signature even though the customer has already verified his signature at the bank. This is a loophole that ought to be plugged otherwise the parties involved will only be driving their shareholders on a merry-go-round. At the end the investors themselves will boycott the idea.

There have been several times when my GTBank share dividends paid directly into my account saved me from pecuniary scrapes. At those times I had to admit that innovation is not ambition, it is convenience. Imagine what would have happened if I was stranded because I had thousands of Naira sitting in my Post Office box, and not one of it in my account. How would I know it had come?

In the current economic situation having up to sixty to seventy billion Naira worth of unclaimed dividends sitting idle has defeated one of the purposes of investing, which is to receive the dividend payouts. Add this to the fact that this is such a hefty amount of money that injecting it into the economy will surely give it a boost. After scraping money by to put into stocks, refusing to claim the dividends when they occur is like a hungry man saving to buy food then refusing to eat when the food is ready. He is the one that will get the ulcers.

Have you registered for your e-dividend mandate? Do it now. If you have any problems dealing with your shares, share certificates or other related matters, get in touch and we shall help you resolve them.