Unclaimed dividends rise to N158.4b •‘Ghost’ investors get N100b

[Edoman]

Unclaimed dividends rise to N158.4b
•‘Ghost’ investors get N100b
July 14, 2020

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Securities and Exchange Commission

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Unknown investors have amassed more than N100 billion in unclaimed dividends as capital market regulators search for investors that had used fictitious names or multiple forms of original names to buy shares in quoted companies.

Data from the Securities and Exchange Commission (SEC) indicated that total unclaimed dividend stood at N158.44 billion by last December, with unknown investors accounting for more than N100 billion.

The breakdown showed that unclaimed dividends with companies, 15 months and above, stood at N119.01 billion while those with registrars amounted to N14.64 billion. Unclaimed dividend less than 15 months old stood at N24.77 billion.

The report highlighted the continuing problem of unknown investors, otherwise known as ‘ghost’ shareholders, who had used conjured or non-formal names and multiple accounts to buy shares during the fast-selling boom of 2005-2008.

The 2005-2008 boom period of the capital market had witnessed significant increase in public offerings as several banks, insurance companies and other non-financial quoted and unquoted companies jostle to raise funds through the capital market.

To increase chances of more allotments in the tight allotment process that was the hallmark of the large oversubscriptions during the period, several investors resorted to use of multiple applications, using shortened names, pseudonyms and other non-formal names. The inability to regularise these fictitious shareholdings has been the cause of growing unclaimed dividend.

The Capital Market Committee (CMC) – a consultative assembly of stakeholders in the capital market had introduced the “Multiple Subscription Initiative”, aimed at regularisation of shares purchased with multiple identities, by investors-otherwise known as ghost shareholders that conjured up many identities to secure large allocation of shares, especially during public offerings. CMC had in November 2018 extended the deadline from December 31, 2018 to December 31, 2019.

By last August, some 3.4 billion ordinary shares had been regularised under the “Multiple Subscription Initiative”.

Head, Office of the Chief Economist, Securities and Exchange Commission (SEC), Mr Okey Umeano, said the increase in total unclaimed dividend was largely due to many unclaimed shares as more than N100 billion out of the unclaimed dividend figures were from those unclaimed shares.

According to him, the quantum of unclaimed dividend would always be on the increase as long as there were unclaimed shares.

“The main issue why unclaimed dividend is rising is because we have a large number of unclaimed shares,” Umeano said.

He explained that many investors during the banking consolidation bought shares with different names as well as other people’s names which they were yet to rectify.

He noted that as companies declare dividend, those accounts would equally be paid, leading to increase in unclaimed dividend figure.

He pointed out that the commission introduced a forbearance window for multiple accounts to enable investors that bought shares with different names to regularise their accounts in order to reduce the quantum of unclaimed dividends.

“SEC gave a window for people to come and rectify the multiple subscription thing. Many people have still not been able to claim their own because some of them have forgotten the names they used. Some have not been able to prove to their stockbrokers that they are the owners of the shares. So, we still have a large chunk of those shares, and anytime dividends are paid, those shares are not claimed and those people don’t get their dividends,” Umeano said.

He said until the number of unclaimed shares comes down, the unclaimed dividend problem will continue.

On the way forward, he said the Commission would continue to put pressure on all the people involved in order to curb the problem of unclaimed dividends.