Why change of name is a major cause of high unclaimed dividends


Mrs Sarah Olushola is one of many Nigerians who invested in the stock market during the boom era and just forgot about their investments following the disappointing market crash in 2008.

Though she forgot her investments, the dividend from the companies she invested in has been accumulating for years, thereby adding to the high backlog of unclaimed dividends in the Nigerian capital market.

What is so peculiar about Olushola’s case is that her parents purchased those shares for her when she was still in university. This was before she got married. The implication of this is that before she could assess the accrued dividends, she must go through the processes required for a name change.

Unfortunately, Mrs Olushola like many Nigerian women, have experienced challenges and continue to face challenges with the name change process. And the issue is a major contributor to the growth of unclaimed dividends.

It’s a challenging experience: Speaking to Nairametrics, Olushola said it has been a harrowing experience for her going from one registrar to the other trying to resolve the change of name issues for the unclaimed dividends. She added adding the requirements are very demanding and that some of the registrars are making the process which is supposed to be seamless difficult even after one meets the requirements. She said:

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  • “I have been going from one registrar to the other for six months now and have not been able to complete the process. One of the reasons is that the registrars of companies are in different locations and it requires money and time to be able to locate them in a congested state like Lagos. Also, some registrars apply delay tactics to deliberately frustrate and deny investors’ efforts to get their benefits through various schemes.”

Registrars have been blamed: Mrs Bisi Bakare of the Pragmatic Shareholders Association of Nigeria (PSAN), said some registrars are making the process difficult for her female members.

  • “When you get married as a woman changing your name to reflect your husband’s name is a difficult process, registrars are making the filing process difficult for some of them and it is not supposed to be so in a society where investors need to be encouraged. 
  • “And again, SEC should monitor the activities of the registrars, by knowing how many e-dividend mandate forms were signed for in a particular period, check the names on the forms and find out if such names are still among unclaimed dividends,” she said.

The Director-General of the Securities and Exchange Commission, Lamido Yuguda, recently confirmed that some registrars are unwilling to release shareholders’ unclaimed dividends in their custody.

Yuguda said the registrars had employed several antics to frustrate shareholders from enjoying the benefits of the Electronic Dividend Mandate Management System.

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He added that capital market operators must uphold the integrity of the capital market to foster investor confidence as investors are the greatest assets any capital market has.

Current state of unclaimed dividends: Quarterly reports by SEC show that the value of unclaimed dividends rose from N37 billion as of December 2010 to N180 billion at the end of 2021. This represents a 386.48% increase in the past 11 years despite measures put in place by the SEC to checkmate the rise.

  • Dematerialisation, which involves converting share certificates from physical to electronic form, has not helped much. The failure of registrars to fully adopt the electronic processing technology is another disincentive to market investors.
  • The move has, instead of boosting transaction processes, heightened delay, accompanied by irregularities that also encourage fraud, with attendant loss of share certificates, delay in receipt of dividend warrants, a notice of meetings, and companies’ annual reports.

Resolving unclaimed dividends issues: SEC is currently leading the capital market in implementing the 10-year Master Plan initiatives, which include a recapitalisation exercise to strengthen market institutions, dematerialisation of share certificates, e-dividend with collaboration from Central Bank of Nigeria and NIBSS and collaboration with the National Assembly towards legislations that will boost Nigeria capital market.

  • Yuguda speaking during the launch of the revised Capital Market Master Plan in Lagos last week said the e-Dividend Committee notified of efforts to rebuild the E-Dividend Management Mandate System (e-DMMS) platform.
  • According to him, this involves having a centralized submission of E-dividend mandate forms, an Application Programming Interface (API) for Banks and Registrars, and a revamped web interface among others.
  • Fundamental changes are the needed tonic that will bring growth and development in the market through the master plan. This is why the issue of identity management, which has been a problem, not just in the capital market, but in many sectors of the economy, needs to be addressed to aid the achievement of an efficient and vibrant capital market and the general economy.
  • Addressing the issue of identity in the capital market would not only help tame the issue of unclaimed dividends but, to a large extent, curb identity theft in the local bourse and give more access to credit facilities.

Shareholders’ voices: The National Chairman, PSAN, Mr Boniface Okezie, in a chat with Nairametrics said SEC needs to create more awareness.

  • He called on the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) to collaborate with market operators for a better-structured public awareness campaign about multiple subscriptions and how to curb unclaimed dividends.
  • Okezie said there was a need for a better structured public awareness campaign to be jointly anchored by NSE, SEC and market operators for the education of shareholders and the protection of their interests, especially the small investors.

The National Coordinator of the Independent Shareholders Association of Nigeria (ISAN), Anthony Omojola, said a lot needs to be done to curb the rising unclaimed dividend.

He explained that as long as companies continue to declare dividends, the unclaimed dividends will be rising, however, it’s rising should be seasonal as to the periods when most companies declare them. He said:

  • “The registrars should be updating their records from time to time and be willing to release the dividends as and when due. The surveillance unit of the SEC should step up their checks on the registrars for compliance. Some registrars still take up to two to three weeks before effecting payments of outstanding dividends after receiving completed e-mandate forms. Companies should also be advised to direct their registrars to print a readable list of outstanding dividends not only displayed on their website and that of their registrars but the list must also be printed and made available to notable Shareholders groups and big stockbroking outfits.”

Omojola noted that each company, especially those with outsourced company secretaries, must have investor relations units manned by competent officers to liaise between the companies and their registrars to quicken the process of dispute resolution.

  • “Another area is the issue of administration of the estate of the deceased. What the registrars are charging for verification of legal documents and processing is exorbitant and should be looked into to ease the process of probate etc. In the longer solution, many shareholders are not investors. Such shareholders buy between two to 10 units to attend annual general meetings (AGMs) and collect gifts for themselves and members of their families. They do not bother about the meagre dividends coming to them because of the small number of shares they have,” he said.


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