Unclaimed dividend hit N20 billion: Market Registrar


“Sterling Registrars Limited (SRL) formally NAL Registrars Limited was incorporated on 4th April, 1994.


The company is wholly owned subsidiary of Sterling Bank Plc, licensed to carry out corporate Securities Register Administration Services. Sterling Registrars therefore provides Registrar Services on one-off basis to offers as well as on a permanent basis to companies.


Focus of the company however changed recently to concentrate strictly in the share registration activity. Sterling Registrars Limited (SRL) as it is now known, in view of the poor quality services prevalent in the share registration industry, decided to pursue this area of business in order to create long term customer relationship by rendering at all times, services that surpass the industry standard, in quality and responsiveness to individual customer need.


This indicates therefore that SRL can effectively function as Registrar to quoted companies on a continuing basis. Most importantly, we have also packaged the services ahead local competition and on an acceptable standard internationally”.


(Source: Company’s Official Website)


In this interview with PETER OBIORA of investadvocate, Gboyega Babalola, Managing Director/Chief Executive Officer (MD/CEO) Sterling Registrars Limited discussed issues on companies and the recent trend of raising funds through Rights Issue, when the                Nigerian Capital Market (NCM) is expected to rebound, current kobo dividend regime by companies paying dividends, Sterling Registrars and ways of tackling dividend interception and method of paying investors promptly.


Other issues discussed include, ways of resolving unclaimed dividends and its current estimate, assessment of Arunma Oteh, the current Director General of the Nation’s Apex Capital Market Regulatory body the Securities and Exchange Commission (SEC) among other issues. Excerpts:


Companies and current trend of raising funds through Rights Issue


This is because the existing investors believe in the company and must have assured the company of taking up their Rights. In Sterling, as far as we are concerned, we strongly believe that if we are able to inject fresh capital, it will give us the wherewithal to do business and at the end of the day be able to give returns to shareholders.


Also, Rights Issue prevents dilution of ownership and it will be at a discount. We all know that the Market is yet to be stable and lacks investors’ confidence. Therefore, why embark in an offer that you are not sure of; meanwhile, the company will bear the cost of the offer. It doesn’t make any economic sense at this particular point in time.  In Rights Issue, the existing shareholders would have given the company its commitment that they are ready to take up their Rights.


Your past view on the Capital Market rebounding between Quarter one and two of year 2011


In year 2008, I granted a press interview and told journalists that the Nation’s Stock Market would start rebounding in the first or second Quarter (Q1 and Q2) of year 2011. They raised questions as to the reason it will take a long time before the Market comes back to profitability. A lot of damage has been done to our Market and what is happening at this period is what I will refer to as natural correction.


The market is correcting itself naturally; all the abuse of the past is no longer possible. It is going to take awhile before the Market comes back, it is very easy to destroy; but difficult to rebuild. I must say that gone are those days we observed astronomical increase in share prices, this will not happen again; because the Regulators are putting in all efforts to make sure the level of infractions in the Market is reduced to its lowest ebb. In the event of share prices rising to its peak, the fundamentals would be there to justify same. Confidence is gradually being restored; but not fully. Investors are no longer interested in long term investment; they just make a few kobo and off they go.

Also, during these forthcoming elections, the Market will react to it; because some of the Politicians are selling off whatever shares they have to raise money for their elections. They know that at the end of it, when funds are released to actually drive this process, some of these funds would find their way into the Capital Market and when this is done, activities would be driven in the Market and we would begin to see gradual increase in share prices; but not the type we do see.

I can assure that by next year, the Market will begin to experience relative stability. We pray to have a successful election; this would further boost confidence and bring in foreign investors.


Current kobo dividend regime


I do not see any economic sense behind this trend. I have asked myself why a company should declare about 0.2 Kobo dividend. No economic sense in this like I affirmed earlier. They should take into cognizance all the cost that would be incurred in the process of paying such a dividend to shareholders. For instance if you declare 0.2 Kobo dividend, and an investor has about 100 units of shares of that company; that amounts to N20.00.


Now, the company might take about N15.00 to print the dividend warrant, N5.00 to print each envelop, N45.00 to dispatch same to shareholders, this means that the company will spend about N65.00 to dispatch a dividend of N20.00.


If a company does not have enough money to pay dividends, they should appeal to their shareholders and worker harder to compensate them very well in another financial year.  It is not compulsory to pay dividend. Securities and Exchange Commission (SEC) does not ask any company to pay dividend if their financials cannot back same up. Then why incur debt to do this. If the funds are not available to pay dividends, then there is no point declaring one.


Sanusi Lamido Sanusi, the Governor of Central Bank of Nigeria (CBN) affirmed in one of his reform statements that it is not criminal to make loss; but it is only criminal when you make loss and not declaring it.

If companies look at the total cost of effecting the payment of a 0.2 Kobo dividend, they may discover that it is not worth it. Therefore, why not put it back into the reserve of the company; so that in the next financial year, something better would be offered to investors in form of dividend payout; which would be more appreciated by the shareholders.


Sterling Registrar and ways of tackling the issue Non-receipt and interception of dividend warrants/share certificates


I have always affirmed that any Registrar that do not have a sophisticated and robust Information and Communication Technology (ICT) then they are not supposed to be in this business. Take a look at the direction Capital Market Regulators are going at this present time, the regime of e-policy, we are beginning to have (e-offer, e-dividend, e-allotment) and so on; all is now electronically driven.


Thus, if a company does not have a very robust IT; like I affirmed earlier, then such a company should forget the business of Registrars.


Our greatest asset here at Sterling Registrars is our IT and Human Capital; as we speak I have a robust IT that can conveniently accommodate and service over 30 million shareholders; but at this particular point in time, Sterling Registrar has about 1.3 million shareholders it is servicing not to talk about the 30 million capacity available to it.


In Sterling Registrars, we have control in place to checkmate the interception or fraudulent practices as regards investors’ dividend payment. The job here is being divided, for instance, a staff captures the e-dividend information as furnished by the shareholders, and another staff does the call over of what the other staff has inputted with such documents. If this is not done, anybody can just input another bank account and funds will begin to be diverted.


The Institute of Capital Market Registrars (ICMR) has been campaigning that all hands must be on deck to make sure that fraudulent activities is reduced to its barest minimum. I must make a confess that fraud cannot be completely eliminated; but could be greatly reduced; if we do our jobs professionally.


Therefore, e-dividend arrangements will go a long way to prevent or stop the interception of dividend warrants and share certificates.



Sterling Registrars Limited is equipped with highly sophisticated software and strong back office capabilities for quality service delivery.


They have also installed an advanced and customised share registration management system which incorporates a signature verification module as a font office operation, developed on Microsoft relational database management system.



Effecting dividend payment on schedule


Take for instance Japaul Oil and Maritime Services Plc (JAPAUL) we did the company’s Annual General Meeting (AGM) last month in Port Harcourt Nigeria and the company affirmed that due to its transparent nature, they would want dividends to be paid at the venue of the AGM. They provided the funds which Sterling Registrars used in paying dividends immediately it was approved. Shareholders that attended the meeting went home with their dividend warrants.


The following day, those that were on e-dividend arrangements, their accounts were credited; before we dispatched those who did not attend the AGM and were not on e-dividend.


Registrars can do with a very robust technology, what you do is to make sure that you obtain the last diskette for qualification from the Central Securities Clearing System (CSCS) and update your system, with this process, the job of timely payment of dividend is achieved; what will be left is just to run the dividend warrants and this is exactly what we have been doing in Sterling Registrars.


Nevertheless, let me appreciate SEC for the campaign they have run these few years to make all our operations effective and timely through the electronic arrangement. SEC is just being responsive; trying to look at the implications time frame and having a consensus as to when and how the electronic arrangement would be implemented; this is the only way we can achieve result; if everybody is carried along.


Resolving unclaimed dividend


This trend is worrisome; even to the Regulators; all stakeholders are concerned. We have observed that the issue of unclaimed dividend warrants is on the increase. At Sterling Registrars; apart from the fact that we send out unclaimed dividend list, we also make sure that periodically all the instruments that were returned to our office; we do endeavour to find out the list of all the shareholders concerned as we currently have same on our system and we try to find out if there are changes in addresses we have on the physical instrument and what we have on the current address in our records.


Thus, where there are changes, what we do is to redirect such instruments to the current address as we now have it. This is really helping; however I must affirm that most of the problems come from the shareholders, some do not notify us when they change their addresses. In other cases, some of them do not pay for their Post Office Boxes and when we send the instruments there, the post office people will just dump them on the floor in their office for sometime; before returning same to our offices. All of us have issues, but if all the shareholders can imbibe the e-policy arrangement, it will go along way to reduce the incident of unclaimed dividends or interception.


Unclaimed dividend estimate


It is over N20 billion, SEC has just sent out all a letter to all the Registrars and quoted companies that information should be furnished to them on the quantum of unclaimed dividend in respect of each of the companies being handled by each Registrar.


They affirmed that unclaimed dividend list has increased to a higher level and the Apex Capital Market Regulator wants to find out the level of increase. This letter was sent out last week to all Registrars and quoted companies like I earlier affirmed. This letter emanated from SEC’s Research Department and they would want to find out over the period the total amount of unclaimed dividend and latest by next week, we would respond and furnish same to them. SEC is working hard to solve the issue of unclaimed dividends.




BusinessDay Newspaper on July 14, 2009 reported that SEC recorded about N17.9 billion worth of unclaimed dividend.


The estimate the paper affirmed was disclosed by Bala Usman, Acting Director, Special Assistant to the Daisy Ekineh, the then DG at a Capital Market seminar organised in Lagos Nigeria by PriceWaterHouseCoopers.


From N2.09 billion as at third quarter of 1999, the figure for unclaimed dividend has risen significantly over the years to about N17.9 billion as at December 2008, SEC saying that the figure was obtained from the companies not from their registrars. 


Assessment of Arunma Oteh as Director General of SEC


In fairness to her, I want to appreciate her style of leadership and management. On assumption of office, she met with all the Capital Market stakeholders at different dates and discussed issues and way forward. Based on these meetings she came up with some review in her rules and regulations; some of these were discussed with Capital Market Operators and stakeholders; because it is now a collective responsibility to make sure that we take this Market to that enviable position that we should be. Thus, for style, I would give her kudos, in approach, she has been consulting, and she has declared that there should be zero tolerance for infractions in the Market. As an Operator, I must do everything possible to make sure that I do not incur the wrath of the law. She has not yet made prouncements that would impact negatively in any way the Nigerian Capital Market (NCM).




April 2010 Nigeria’s Securities and Exchange Commission (SEC) unveiled new rules. These new rules, signed by Arunma Oteh DG SEC, became effective from April 01 2010 and reportedly cover:

• Appointment of directors of market operators,

• Bond issues: rules such as conditions to approve Initial Public Offer and listing by introduction, conditions for approval of offers and handling of certificates, rules on corporate and government (state and local) bonds, and cuts in SEC fees for the registration of bond issuance, as well as Money market fund rules

• Rules which regulate mergers, takeovers and acquisitions and can order the breakup of a company.

• Set Primary Market registration fee at 0.15%.

SEC set deadlines of April 30 2010 for a wide range of companies to publish results. Public companies shall publish “signed” quarterly balance sheet, income statement and cash flow statements in at least one National daily newspaper, while the accounting policies, notes and other relevant information shall be posted on the company’s website which address shall be disclosed in the newspaper publication.


Also SEC directed 143 companies and others not listed, whose shares are quoted on the Nigerian Stock Exchange (NSE), to publish their audited or quarterly results on or before Friday, April 30, 2010. “Financial statements should therefore, be released in the format specified by SAS 30, IAS 34 and the SEC rule B4 (4), to the public, NSE and the commission at the same time.”

SEC affirmed that any Company “that fails to file the report within the stipulated period would be penalised in line with the provisions of Section 65 of the Investment and Securities Act No. 29 of 2007.”

It confirming that such timely financial information serves as the basis on which the investing public takes timely investment and other decisions.

Following these,  SEC invited company secretaries and financial controllers of quoted companies to a one-day meeting on April 28 2010 to address the lingering problem of non-rendition of quarterly and half yearly returns and the attendant penalties such actions attract.


On Sterling Registrars


Our client base keeps growing due to the fact that our strength is in our service; we have about 15 quoted companies we are servicing as Registrars. Our policy is that all shareholders that come in here leave happy and satisfied. At Sterling Registrars we have zero tolerance for fraud and infractions; we hold professionalism to a very high extent; coupled with integrity and hard work. If we continue this way, the sky will not be our limit, but the beginning of success in Sterling Registrars Limited. I must also comment the support of our parent company; Sterling Bank, they have supported us materially, technically and most of all, their non-interference in our job.






















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