SEC’s new e-dividend portal may fall short of expectations if…

THE Securities and Exchange Commission’s (SEC) new e-dividend mandate portal to be unveiled on or before the end of the month may fall short of expectations if certain flaws are not addressed, shareholders told The ICIR.

According to the shareholders, the SEC has to get it right to resolve the lingering problems of unclaimed dividends, which have risen to N190 billion.

The ICIR reported on November 16 that the apex regulator was about to launch the new e-dividend portal to solve the perennial problem of unclaimed dividends in the capital market.

The Director General of SEC, Lamido Yuguda, hinted at the launch in a remark to welcome journalists for a two-day training the commission organised in Lagos State on Tuesday and Wednesday, November 14 and 15.

The initiative, e-dividend mandate management system (E-DMMS) portal, was birthed on July 29, 2015, under the leadership of the former director general, Mounir Gwarzo.

Gwarzo had described the e-dividend platform as a priority initiative for the entire capital market to curb the growth of unclaimed dividends and improve the overall efficiency of Nigeria’s equities markets.

Over eight years, the initiative has not yielded the desired results as unclaimed dividends continue rising and investors encounter difficulties mandating their accounts.

The unclaimed dividend has more than doubled to N190 billion, as announced by SEC in August this year, relative to N90 billion it was as of September 2015.

As the SEC plans a new e-dividend portal, the regulator must take into cognisance some impediments hampering the process, the national president of the New Dimension Shareholders Association, Patrick Ajudua, told The ICIR.

According to him, for the new unclaimed dividend portal to make any meaningful impact, the SEC needs to embark on more sensitisation and awareness campaigns.

He believes that the SEC needs to create more awareness to drive the success of the e-dividend mandate initiative, pointing out that many shareholders need to be informed on the workings of the platform.

Related to this argument is that the SEC and the registrars have to unearth the root cause of “identify management”, which, if not addressed, will continue to account for 80 per cent of unclaimed dividends, Ajudua said.

“There is a need for sincerity on the part of the registrar, SEC, central securities clearing system (CSCS), and other stakeholders in holistically solving the issue of unclaimed dividends.

“The new portal must be made seamless in operation and able to provide an immediate response to an enquiry,” Ajudua further highlighted as issues SEC should address.

On his part, the national chairman of the Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, queried that the SEC would embark on designing a new e-dividend portal without carrying shareholders associations’ leaders along with their plans. 

He said, “Why will they (SEC) launch such important things that involve shareholders, and they did not deem it fit to invite leaders of the Registered Association of Shareholders? Is there anything they are hiding from us, the shareholders?

“What happened to the existing one launched by the immediate past director general?”

Okezie believes the current SEC DG, Yuguda, needs to achieve the objectives of the e-dividend mandate set out by his predecessor in solving the issues of unclaimed dividends.

He also sought to know if the new platform would solve the impending problem.

“If that is what he wants as the DG on board now and will be a lasting solution, let him go ahead and make it work so that shareholders can get their money, and it will be accepted,” Okezie added.

The SEC’s e-dividend mandate portal is an initiative that enables investors to search and locate their outstanding dividends, if any. Through it, several investors have been able to reclaim their dividends.

“The platform’s effectiveness could be improved by regularly updating it. It provides only information but needs to resolve the issues investors face while reclaiming their dividends.

“Hope the new platform will remedy flaws of the current one and facilitate the reclaiming of dividends,” David Adonri, a capital market operator, opined.

What’s unique about SEC’s new portal?

At the capital market committee (CMC) media briefing on November 17, SEC’s director, Lagos zonal office, Hafsat Rufai, noted the new portal would require shareholders’ bank verification number (BVN), account details, pictures, and other means of identification.

Unlike in the existing portal, where the registrars have their e-dividend forms, the new portal has a drop-down list of stocks, and shareholders can tick simultaneously as many companies they own shares in, she said.

Mandating an account on the new portal will cost N250 from N150 accepted on the existing portal, Rufai said. “This is because of the cost of building the portal so the portal developers can be paid.

“We will ensure the payment is at the end of the process. So, only when you mandate successfully will you be charged, but if your mandate is not successful, you will not be charged.” 

According to her, the SEC will ensure the portal gives a prompt within forty-eight hours, adding that when the mandate is successful, a shareholder will get a message that their account has been mandated.

But if unsuccessful, it will give you a reason why it was unsuccessful.

Another feature to be expected is that when a shareholder has a challenge with the registrar and the information they input on the portal does not match what the registrar has, the query will state the specific reason.

Rufai hinted that the SEC had not placed a deductible charge to use the portal “as there are different things the commission is doing to reduce unclaimed dividends.”

On tracking investors’ data from the secondary market, the SEC Lagos director said the commission would ensure that the CSCS transmits information to the registrars.

“If you buy a security, you would have provided your data or KYC (know your customer) to your broker, who then routes it to the CSCS.

“Ordinarily, CSCS will route that information to the registrars. What the commission then mandates the CSCS to do is that in addition to such personal data, your bank’s details should also be routed through the registrar.”

So, when an investor buys security via the secondary market, they do not even have to access the new portal as the person’s information will automatically be made to the registrar to enable their dividend to be paid, Rufai explained.

She said the SEC had directed the registrar to do a clearing house number (CHN) mapping on the major issue – outstanding unclaimed dividends. 

She further explained that if a shareholder had some securities with the same registrar, once one account is mandated, the registrar should use its technology to discover the other accounts the person has with it, using the person’s name, address, and CHN as a minimum, and extend the mandate to the other accounts.

“So, the portal is essentially for legacy issues or any other issues the two systems we have designed could not handle,” Rufai added.






     

     

    Initial process

    The e-DMMS portal utilises the Nigeria Inter-Bank Settlement System’s (NIBSS) document management system, to which completed e-dividend mandate forms filled by the investor are uploaded.

    Where an investor opts to fill this form at a registrar’s office, the registrar verifies details such as the investor’s name, account number, and CHN. 

    Should an investor choose to complete the form at a bank branch, the bank validates their BVN and account details before uploading a scanned copy to the e-DMMS portal.

    This uploaded form would immediately be accessible to the investor’s chosen registrar, who must validate the investor’s name, shareholder account number, and CHN.

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