By Peter OBIORA Investadvocate
Lagos (INVESTADVOCATE)-The newly inaugurated Board of the Nigeria’s Securities and Exchange Commission (SEC) Wednesday said unclaimed dividends in the Nigerian Capital Market (NCM) has hit N60 billion mark.
Suleiman Ndanusa, the Chairman of SEC disclosed this in Lagos Nigeria at the Maiden Meeting with Publishers and Chief Executive Officers of media organisations in Nigeria.
According to him, SEC is going to reduce the quantum of unclaimed dividends in the Nigerian Capital Market. ”We are going to reduce the quantum of unclaimed dividends, when I was at SEC from 1999 to 2004, I was an advocate for doing away with unclaimed dividends, because it’s a governance issue,” he said.
Ndanusa affirmed at the time he was the Director General (DG) of the Commission, the level of unclaimed dividend was just about N8.0 billion, ”today I’m told its about N60 billion, something is wrong, why is unclaimed dividends growing; because if a Company is declaring profit and not paying dividend; then there is a problem.
The SEC Chairman said is either a Company is declaring paper profit and don’t want to pay dividends or give other excuses; so the Market must do something to ensure that this practice is stopped. ”Otherwise in the next three to four years, we would probably be talking of Hundreds of Billions of Naira as unclaimed dividends,” Ndanusa said.
The Chairman of SEC said he is comforted by the fact that the Commission, Nigerian Stock Exchange (NSE) and other Market Operators are working towards the dematerialisation of the Capital Market; using the Information Technology (IT), e-dividend and so on to move the Market forward.
”But there are motivations for not paying unclaimed dividends, no matter the IT put in place to reduce the trend. However, we have to go to the core of the matter, what are the benefits for not paying dividend,” he said.
He said it’s important that we have to ensure that those motivations that a Company will have for not paying dividend are discarded; which can only happen through the enforcement of rules and regulations and ensure proper Corporate Governance.
As earlier reported, the issue of Unclaimed Dividend Trust Fund was first proposed in year 2006 under the Olusegun Obasanjo administration and was opposed by stakeholders in the Capital Market, following this development; the National Assembly had to dump the idea.
As at year 2010, the amount of unclaimed dividends was estimated to be over N20 billion.
In a Journal of Financial Management & amp; Analysis, July 2006 by Ifuero Osad Osamwonyi, Osarobo Churchill Imasuen, It was affirmed that the growth of unclaimed dividends in Nigeria has been phenomenal. As at the end of 1999, the figure had risen to about N2.0 billion.
From N2.09 billion as at third quarter (Q3) of 1999, the figure for unclaimed dividend has risen significantly over the years to about N17.9 billion as at December 2008, SEC was quoted by the paper as saying and that this figure was obtained from the Companies not from their Registrars.
As earlier reported, Nigeria’s SEC in its Fourth Quarter Report 2011 disclosed that as at December 2010, the unclaimed dividend figure from Quoted Companies was N33.92 billion (N33, 929,435,751.27).
SEC also affirmed in its Fourth Quarter Report, five Companies; mainly Banks have the highest figures of unclaimed dividend.
As at late February 2013, reports have it that the total amount of dividends declared by Quoted Companies but remain unclaimed in 2012 may hit N50 billion when the final computation is done.
But with the confirmed N60 billion unclaimed dividend in the Nigerian Capital Market for year 2012, when compared with the N40 billion reported in year 2011, it shows an increase of 50 percent (50%) in the review period.