“To provide the best register services to our clients

To become the leading registrar service provider through high level innovation and service delivery in the Nigerian Capital Market”

(Source: Company’s Official website)

Lagos– investadvocate in its usual manner sought to find out more about First Registrars Limited following its 10 year anniversary celebration.

 

In this interview with PETER OBIORA, Online Editor of investadvocate, Bayo Olugbemi, Managing Director/Chief Executive Officer of First Registrars Limited at its Head Office in Lagos Nigeria discusses issues relating to the Company’s call on shareholders in the Nigerian Capital Market to embrace full dematerialisation, status update on unclaimed dividends and its proposed Bill, why people use pseudo names to buy shares and Registrars involvement in Market infractions.

Other issues discussed include, why Stockbrokers get involved of unauthorised sale of shares of investors following the introduction of the electronic system in the Market, he also shed more light on the proposed Online Real Time clearing system, the newly developed valued added products of First Registrars and the future outlook of the Company among others. Excerpts:

What is the level of dematerialisation in the Nigerian Capital Market

The level is not as encouraging as it should be, it is still low compared to what it should be; for first Bank of Nigeria Plc, shareholders of the Bank that has embraced dematerialisation are not more than 30 percent. Sometimes, investors may have up to three accounts with the Central Securities Clearing System (CSCS); the shareholder may have accounts with various Stockbroking Firms and by the time it gets to a place like First Registrars in most cases; since it is the same name, address and other details, we merge all together. We try as much as possible to ensure that the shareholder does not have more than one account of First Bank in First Registrars.

But in the CSCS, the investor may have several accounts with different Stockbrokers; but when it gets to First Registrars, like I affirmed earlier, we ensure that we make it one account.

We encourage investors not to have more than one account in our record and that is the reason we encourage people to have only one Stockbroking Firm. Or they may have more than one Stockbroking Firm; but the same Clearing House Number (CHN). Some shareholders today have different CSCS numbers from different Stockbroking Firms; which is a duplication of efforts. But if they have one Clearing House Number, when they move from one Stockbroking Firm to another, it will still be under one account.

What is the actual figure of unclaimed dividends?

It will be difficult for me to tell you the actual amount of unclaimed dividends in the Nigerian Capital Market. One, I keep only Register of shareholders on the stable of First Registrars; I don’t know what happens in other Registrars. It is the Securities and Exchange Commission (SEC) that is the only Commission that can furnish the actual figure; because every Quarter, all the Registrars make returns to the Commission, they are in a position to give the accurate figure.

Apart from the above, the actual amount of unclaimed dividends in the NCM is a moving figure; because as we speak dividends are being cleared through the system, many other shareholders are claiming their outstanding dividends. Somebody came to me with a letter from an Investment Club which he belonged to and has not collected his dividend for sometime. We have a lot of Bankers who are shareholders; but they have not been collecting their dividends. They have them and dump them. The transaction I handled recently, one is over N1.0 million and the other about N1.5 million outstanding dividends for about four years.

Some of them may ignore collecting their dividends because of the amount involved; they may look at a N500, 000 dividend payment as a small amount. The figure of unclaimed dividend is changing; but the question is what is the percentage of unclaimed dividends compared to the amount declared by the various Companies. It is good to talk of absolute figure; but if we want to be fair to everybody in this process; including the Registrars and other stakeholders; yes it is not good for any Kobo to be outstanding; but if I have sent them out and I have made efforts to reach the concerned shareholders; they are not claiming the money, what do I do? At First Registrars, we are currently working at publishing the list of unclaimed dividends of First Bank of Nigeria Plc for year 2010.

Like I was trying to affirm, what is the percentage of unclaimed dividends, in First Registrars, except for the ones that are not up to six months or one year, dividend becomes unclaimed after 15 months. Here in First Registrars, we don’t have more than five percent of it in our records. We have given SEC such information before and nobody has come to dispute that. It maybe running into billions of Naira; but compare it to what have been declared by these Companies, it is not more than five percent like I said earlier and I don’t think that it is too much.

This is not the Registrars fault, it was sent out, some of them returned unclaimed, we have written to people to come and claim them, but if they don’t, what will we do as Registrars.

Some of these investors are people who are literate, I have people that will tell me to leave it there at the Registrar that they would come to pick them up when they wish. We have encouraged people to do e-dividend, at First Bank; we don’t have up to 10 percent of shareholders that have embraced the electronic dividend; which is estimated to be about 130,000 compared to about 1.4 million shareholders. I have printed forms, done adverts and other awareness campaign for people to embrace e-dividend; but the figure to this effect still remains low.

EDITOR’s NOTE:

Before this time, Apex Capital Market Regulatory Institution, the Securities and Exchange Commission (SEC) had affirmed that unclaimed dividend was N2.09 billion as at third quarter (Q3) of 1999, and then the figure rose significantly over the years to about N17.9 billion as at December 2008. This shows an increase of 756.46 percent (756.46%) in the review period of N2.09 billion in 1999 to N17.9 billion in year 2009.

Now unconfirmed Reports put the amount of unclaimed dividend in Nigeria to an estimated N20 billion.

On the Unclaimed Dividends Bill

There is a Law that operates today in Nigeria, which guides how Companies should be run; it is called the Company and Allied Matters Act (CAMA) and one of the businesses of CAMA is that dividends that are not claimed should be reversed to the Company to be used for the benefit of all shareholders. I think for now the only entity that can lay claim to that fund if they don’t want to keep it with the Registrar is the Company.

If we look at the presentation of the Bill, there is nothing that shows what efforts should be made by the Commission that would be set up to take care of the Fund to get to the shareholders. We should do massive publicity and campaign to encourage people to come forward and claim their money. Like I affirmed earlier on the part of Registrars, we have been doing adverts, sending out list, sending text messages to shareholders to come and claim their dividends, but if they don’t come, what do we do? A lot of Nigerians that invested over the years, some of them used pseudo names and they find it difficult to come up and claim their money.

Somebody just called me to inform me that during an offer, he bought shares in the name of his wife’s maiden name and now he is finding it difficult claiming the certificate and dividend. The best thing to do is to change the name in the record to reflect her real name then she should be able to claim it. Or a transfer should be done on the Floor of the Exchange through the Stockbroker from the maiden name to the marriage name. We have a lot of people like that who use several names like the name of their children who do not have accounts to buy shares; now they are having problems to claim it. In this particular case can you blame the Registrar? We have many cases at First Registrars; where people use the name of their children to buy shares.

Reason for using a pseudo name to buy shares

If not for the e-allotment system that we recommended to SEC; of which they have adopted, it is called the Modified Allotment System (MAS). Prior to this time, there was a kind of incentive for people to buy small units for fear of oversubscription; so many people will use their name, their wives maiden name, their children’s name and so on. Meaning if they buy 1,000 units each with these names, they would be fully allotted; but if they apply for say 10,000, they may not get full allotment. These encouraged a lot of investors to use pseudo names to buy shares.

After the Public Offers of year 2007, the Operators and Regulators came together and analysed the reasons for multiple applications and we discovered that it was because of the minimum allotment system which states that anybody who applies for certain amount of units should be given in full. Then if we say let it be on equal basis, everybody gets the same percentage of the subscription level; for example if I wanted to raise N100 million and there was 200 million subscription, it means there is 100 percent over subscription; which implies that I will give only 50 percent of what was subscribed to meet the funds I wanted to raise. I need N100 million and I got N200 million; so I need to refund N100 million. Let the allotment be on equal basis in this case. If you apply for 1,000 you get 500 units, the person that applied for 10,000 should get 5,000 units. With this system, people would stop doing multiply application; because they know if they apply for 1,000 they would get 50 percent same with those who applied for 10,000 and other figures get the same 50 percent; then why would people split 100,000 into 10 places; when I know it is the same 50 percent. So with this new system, there won’t be any incentive for any investors to engage in multiple applications.

This was the system we used in the Rights Issue of one of the Companies I am handling their Register.

Registrars involvement in Market Infraction

Honestly, I am not trying to defend anybody; but I am not sure there is any Registrar that would deliberately keep peoples dividends. Over the years, people have come to Registrars to tell them to keep their dividend warrants and not to send them, we have done that, we keep it for them. At a point in time, in the years back, because of the fact that fraudsters intercept dividend warrants, for big ones, we don’t send them to the Post Office at First Registrars. We send them to our Regional Offices outside Lagos and inform the shareholders to come physically and collect and the ones in Lagos come to our office to collect. This has really helped to curb the incidence of stolen warrants. However, I can confirm that in the past two to three years, the incidence of dividend interception has been on the increase. What we do at First Registrar is that any amount above a particular figure, we register it. It cost more, and we send it by registered mail. Some of us use N50, 000 or above to carry out this transaction.

The best way to reduce the incidence of unclaimed dividend and interception is for investors to embrace e-dividend. You get your money almost immediately and it will not be subject to interception. What we have been campaigning in the past two years is that investors in the Nigerian Capital Market should key into e-dividend, it makes life easy. Even before e-dividend, we had what we called mandated Accounts, in this system; it is not easy to intercept dividends. We send physical dividend warrants; but not to the shareholder. We sent it to their Banks. Like I affirmed earlier, it is not easy to steal dividend warrants in this system; because we would have written on top of the dividend warrants, the name of the Bank, account number, branch and name of the shareholder who owns it. This means even if anybody steals it, you can’t claim it because it has been domiciled to a Bank and a branch.

If it is First Bank Iganmu Branch, it can’t be applied in First Bank Kakawa or any other branch of First Bank. This was what we were doing before the advent of e-dividend.

EDITOR’s NOTE:

At the 49^th Annual General Meeting of the Nigerian Stock Exchange held Tuesday November 23 2010, Ballama Manu, Interim President of the NSE affirmed that complaints received during the period under review border mainly on unauthorised sale of shares and failure to rmit sale proceeds; which was attributed to the illiquidity suffered by majority of Dealing Member firms.

On verification of share certificates

Let me clear one thing about verification, we have had different cases where there has been fraudulent verification. Shareholders unlike in the Bank where you go to the Banking Hall and they know you; you have Know Your Customer (KYC); which includes your passport photograph. For Registrars, forms are filled at remote locations; shares are bought on the Floor of the Exchange through Stockbroking Firms. We don’t have interface with the shareholders one on one, we don’t know what they applied for, and we just see forms which we capture. The only means of identifying a shareholder is by signature. So if at the initial stage, the investor signs certain amount and if he or she wants to sell, and there is a variation, I won’t verify; because if I do, somebody will pick me up tomorrow and say I connived with fraudsters. I have heard cases they say Registrars connived with people to sell my shares. I am not a Stockbroker, the first point of contact if you want to verify is the shareholder going to the Stockbroker. The Stockbroker must do KYC and they fill the forms and open the account before they bring it to the Registrar. All I have to do is to certify that the signature on my record looks like what is being signed now. If it does not, I won’t do it, even when I do it; it doesn’t mean that it is 100 percent correct. We have seen situations where people forge other people’s signature and it was perfect. We have seen cases where children of shareholders or their staff forge their signature and was correct.

Recently, a man came to First Registrars and claimed his name was Grace. He got a Bankers confirmation in the name of Grace, opened an Account in the name of Grace. Grace is a female name, and this man has been answering such a name, not only in First Registrar; but other places. He has opened a Bank Account with a man’s face; but Grace as a name. The Grace in question happens to be the former wife of his elder brother. But we got a tip on it; before hand. So when he came, we handed him over to the Economic and Financial Crime Commission (EFCC). I can bring you cases where fraudsters actually got Bankers confirmation in another persons name or photograph. They impersonate another person and open account with fraudulent identity and got Bankers confirmation; claiming another person’s shares; because a Bank has said that this person’s name is what they have in their records. You cannot blame the Banks too; because what I say is my name is my name. The follow I told you that came to First Registrars to defraud an investor whom we have handed over to the EFCC went a long way to do an International Passport, Drivers License, National Identity Card and two of the last voters Registration Cards done in difference locations. This fellow was ready for us that any question we ask, he was ready to answer with evidences. We would have been convinced; but something happened and we spotted that account prior to the time.

The fellow up to the extent brought more than six different documents identifying him in the name of Grace; including a School Certificate Result.

We go through threats in this place, my life have been threatened here before by a Fraudster. At times with charms for me to sign cheques. One of my colleagues has been lured before with all sorts of incentives; but he refused. If we see any of our staff compromising with any shareholder; we sack the person. I have done that before; not because they were actually involved, but because remotely we saw some traces of compromise.

Here at First Registrars, we don’t comprise; not like those days of the old Registrars businesses; but since we took over about 11 years ago we have to some extent sanitised the Market. Today we have graduates and people well trained working with us. Before, in the 70s, 80s and 90s, they just deploy people in the Registrars Department; but now it has changed.

Also in terms of verification, there is what is called Turnaround Time; Nigeria’s SEC gave directives that we must do verification within five days. When I came here I put a target time of 48 hours to do verification; but now we do 24 hours; unless there is a problem with an investor’s signature.

When there are issues bordering on signature or Bankers confirmation. We have had cases about somebody who brought Bankers Confirmation and based on that, we verified and it turned out to be a fraud; and SEC directed that we and the Stockbroker should restore the investor on a 50-50 basis.

This from our perceptive is unfair to us, we are not Stockbrokers. We were not the ones that issued the cheque to the purported shareholder, we don’t know the shareholder. It was the document that was brought to us by the Stockbroker that we relied on to do our work.

Thus, sometimes if we don’t do our verifications on time, you don’t blame us. It is because of issues like this; where we have gotten our fingers burnt in the time past; trying to verify promptly by relying on Bankers Confirmation.

However, today, we still rely on Bankers Confirmation; but not as we do before. Now, when they send the Bankers Confirmation to us, we go through another filtering process; which is to send the letter from the various branches of the Bank to their Head Office for their Internal Control to reconfirm that it is genuine; before we adopt it.

In verification, we still try to do as much as possible; most of us 48 hours Turnaround Time; if everything are in order. However, I am not vouching to every Registrar; we may have one or two not living up to expectation.

We have improved now considering the volume we receive compared to what it was before.

On unauthorised sale of shares by Stockbrokers following the introduction of e-system

When people say that Registrars connive, like I said earlier, we are not the first point of contact; it is the Stockbrokers that sell shares. While Registrars only verify what was brought to them by the Stockbrokers. There are shares that cannot be verified, those that was bought or been sold on the Floor of the Exchange; is it the Registrars that are in -charge of these transactions?

We do not get involved in the sales of shares, the only thing we do is to verify those shares that are certificated based on what the Stockbroker brought to us compared to what we have in our record.

However, if all investors embrace dematerialisation, with time, the issue of bringing items to registrars for verification will be eliminated.

On the proposed online Real Time

This has to do with our linkage with the Central Securities Clearing System (CSCS). For now when there are sales on the Floor of the Nigeria’s Exchange, it is T+3. We only get to know after it settles and we are now given an Update Diskette by the CSCS. That Update Diskette comes once every week; depending on how active the Companies are performing. For instance we are updated on a weekly basis on the First Bank of Nigeria Plc and Oando Plc. For those Companies that are not active, we are been updated every two weeks or as activities occurs.

What we have done with the Nigeria’s Clearing House is to do Online Real Time; meaning that items that are traded on the Floor immediately they clear, we can see same and download them. This is what the CSCS is trying to do now; it will become online access. They now give us CDs or Flash Drive to update records. But with this system, it will be online update henceforth; this may probably commence by the middle of the year when we would have completed the process.

On the e-products of First Registrars

Our e-dividend is not paid for, what is required is for an investors to fill some forms; for us to capture details of that individual and input on our system and subsequently we will be doing e-dividend for the shareholder.

The e-verification is a product that we designed for the Stockbrokers to capture all they are bringing to us for verification in a CD format; instead of manual previously used. We at First Registrar do not collect fees on this.

E-Bonus is a system of direct crediting of shareholders CSCS Account with their allotted units of share and bonus share units. It is an electronic policy.

The First Registrars Online-Access is an internet window that gives our clients unlimited access to their shareholders register. It also allows our shareholders to access and manage their share accounts anytime. The fee for this is N1, 000.00 per annum and it is per account not per company. If you are a shareholder with all the Registers that we have at First Registrars, you pay only N1, 000.00 as long as it is the same name.

From the comfort of your home, through your internet, log onto our website if you have paid, you can access your account. So if you are a share, Bond or Unit holder in all our Register, you pay only N1, 000.00 as long as it is the same name you are using.

On e-share notifier, it is a product we designed for instant SMS alert. If you have shares in about 10 Companies or more with First Registrars you pay only N1, 000.00 to get alert; if there is dividend payment or Bonus Issue, we alert the shareholder. Also, if you change your address and you notify us, you will be sent an alert as to that regard. Again, if your share certificate is brought for verification, you will be alerted; in the event that you were not the one or have given an authorisation to someone else, you will be alerted.

While the M-Access is the mobile equivalent of online Access, it will help you to get information on your Statement of Account on your mobile phone. The fee for this service is N1, 000.00 per annum irrespective of the number of companies in your name.

E-lodgment is designed for stockbrokers, when they lodge shareholders verification items, they can log onto our website and check the status update; either it has been verified or not. Unfortunately, not many Stockbrokers has keyed into it. We have less than 50 Stockbroking Firms that has taken advantage of this service compared to close to 300 Stockbroking Firms on the Nigeria’s Exchange. The Fee that the Stockbrokers will pay for this is N25, 000.00 per Annum because of the volume of work they bring to the Registrar.

These are products that we have introduced to encourage shareholders and to make sure that all our stakeholders have easy access to their investments.

Future outlook of First Registrars Limited

We clocked 10 years last April, but we are actually celebrating it this year. The first 10 years has been very challenging and rewarding. The investment landscape has changed and there would be more challenges. Thus, we are ready to face the challenges that we have ahead of us; which is the reason we are changing our system, mode of operation, products and Human Capital so that we would be able to deliver our best; not only in Nigeria; because we are talking about international best practice. At First Registrar, we would want to be able to compete with any Registrar Company anywhere in the world. And we are looking forward to expanding beyond the shores of Nigeria in the next 10 years and do more than what we have done after this time.

End