The Securities and Exchange Commission (SEC), the apex regulatory body of the Nigerian capital market, Monday introduced electronic-dividend payment system, which will enable share-holders get paid within 24 hours of dividend payments, as a way of improving efficiency and enhancing investors’ confidence.
“We believe the e-dividend payment system, which is already catching up, will minimise cases of unclaimed dividends, eliminate dividend loss in transit, the for feiture of dividends and enhance the ability of shareholders to immediately access and utilise proceeds of their investments,” the Director General of the Securities and Exchange Commission (SEC), Musa Al-Faki, said at the launching ceremony.
The DG spoke through the Director, Security and Investment Services Department of the Commission, Daisy Ekimeh. SEC had earlier this year disclosed there existed about 14 billion naira of unclaimed dividends.
E-Dividend is the payment of dividends due to share-holder through a direct credit into a nominated bank account rather than issuance of cheque or dividend warrant.
Some of the drawbacks of the old dividend payment system, according to capital market operators, included: poor logistic management, inadequate update of shareholders’ personal data, inability of investors to maintain regular signature to collect dividends and multiple applications during public offering.
Financial experts at the occasion said the e-dividend would eliminate existing shortcomings, as it is convenient and secure on-line means of payment of dividends .
The new system equally has its own challenges of reaching out to a larger number of people who do not fall into the elite bracket. To take care of those in this category, the exchange said it would embark on translating the e-dividend information into the three main Nigerian languages.
“It is the best and cheapest way of paying shareholders. What this means is just for shareholders to submit their bank account information details and dividend will be paid into it,” Paul Lawal, Managing Director Nigerian Inter-bank Settlement System explained.
He disclosed that the organisation had started settling dividends through the e-dividend system, starting with the shareholders of Oando Nigeria Plc and Nigerian Breweries Plc, stressing that more companies will also followed.
In order to ensure the success of the new system, the commission has issued letters to respective shareholders to meet their implementation modalities.
Issuers are to meet payment obligations immediately after declaration of dividends at Annual General Meetings (AGM).
“This will help (e-dividend) to lift the face of business in Lagos. Shareholders whose accounts will now be credited 24 hours after declaration of dividends will now be able to utilise their dividends whenever they wish.
“It will also improve the market for more investments. Which will equally boost the image and stocks listed on the Nigerian Stock Exchange (NSE) which is now quoted in major markets of the world,” Governor of Lagos State, Babatunde Fashola observed at the occasion. Panapress .