Accessing your dividends: The Nigerian Stock Market 💼💰🚀
From Mustard seeds…….to growing portfolios 💼
Understanding Dividends in Nigeria
If you've ever owned shares even from those "free" shares during bank recapitalization then you may have money waiting for you.
A dividend is a portion of a company's profits distributed to its shareholders. Historically, dividends were often paid via physical dividend warrants. However, to curb the growing issue of unclaimed dividends and streamline the process, the Securities and Exchange Commission (SEC) has mandated electronic dividend (e-dividend) payments.
This edition of our newsletter is dedicated to helping you understand how dividends are paid in Nigeria and, more importantly, how to claim both your regular dividends and any outstanding "unclaimed" dividends that may be rightfully yours.
Most commonly asked question about dividend:-"Can I still claim my dividends if it’s been many years since they were declared?"
Under the Companies and Allied Matters Act (CAMA) 2020 and the 2021 Finance Act, dividends not claimed within six months after declaration are returned to the company. If they remain unclaimed for between 6 and 12 years, they are transferred to the Unclaimed Funds Trust Fund, managed by the SEC and the Debt Management Office (DMO). Even if your dividends are in this fund, you can still claim them. However, dividends not claimed after 12 years are forfeited.
Dividends explained:
Dividends = portion of company profits shared with shareholders.
Paid either as cash (credited to bank accounts) or bonus shares (additional shares given).
Usually declared annually or semi-annually depending on the company.
Amount depends on number of shares you own.
Key Points To Consider
1. e-Dividend is the Standard: Since February 28, 2018, physical dividend warrants have been discontinued. All dividends are now paid directly into shareholders' bank accounts via the e-dividend system.
2. Why Dividends Go Unclaimed: Common reasons include:
Change of address without updating records.
Forgotten investments, especially those made long ago.
Shares bought under maiden names for married women who later changed their names without updating their records.
Death of the shareholder without the next of kin being aware or knowing the process.
Discrepancies in shareholder information.
Investors unaware they even own the shares (from privatization, IPO allocations, recapitalization era)
Steps to Activate E-Dividend:
Obtain the E-Dividend Mandate Form: You can download this form from your specific company's registrar's website or the SEC's e-dividend portal (often found on their website: E-dividend portal
Fill the Form Accurately: Provide all required details, including:
Your full name (as used when purchasing the shares).
Your CSCS account number (Clearing House Number - CHN). Your stockbroker can assist with this if you don't have it.
Your Bank Verification Number (BVN).
Your preferred bank account details (account number, bank name).
Contact information (phone number, email address).
Tick the companies you hold shares in on the form
Submit the Form:
Through Your Bank: This is often the easiest route. Take the completed form to your local bank branch. They will stamp it and forward it to the relevant registrar through the Electronic Mandate Management System (e-DMMS).
Directly to the Registrar: You can also submit the form at the registrar's office. Some registrars also offer online portals for submission.
Through Your Stockbroker: Your stockbroker can also assist in submitting the form on your behalf.
Confirmation: Once processed, you should receive a confirmation (often via SMS if you provided your mobile number) that your e-dividend mandate has been activated.
Reclaiming Unclaimed Dividends: A Step-by-Step Guide
If you suspect you have unclaimed dividends from past investments, here's how to initiate the retrieval process:
Check for Unclaimed Dividends:
SEC's U-eDIV Search Portal: The primary tool is the Securities and Exchange Commission's (SEC) U-eDIV Search Portal (visit SEC Unclaimed-dividend or SEC Non-mandated)
Enter your first name and last name to search. The portal will display information about any unclaimed dividends, including the company name, and importantly, the Registrar responsible for those shares.
CSCS Website: The Central Securities Clearing System (CSCS) also has an "Unclaimed Dividend List" on their investor relations page (CSCS Unclaimed-dividend)
Contact Your Stockbroker: They can conduct a "global search" for you, especially if you can't find your details on the SEC portal or suspect you have investments you've forgotten about.
Identify the Registrar: Once you find an unclaimed dividend, note down the name of the registrar responsible for that company's shares.
Download the Registrar's E-Dividend Form: From the SEC portal, you can often find a link to download the specific e-dividend form for your identified registrar. Alternatively, visit the registrar's official website directly.
Complete the E-Dividend Form: Fill out the form meticulously with your current and accurate details. This includes your:
Full name (as used when you purchased the shares, and potentially your current name if different due to marriage).
CSCS Account Number (CHN).
Bank Verification Number (BVN).
Current bank account details for payment.
Passport photo (some registrars require this).
Follow Up: It's advisable to follow up with your bank or the registrar to ensure your application is being processed. Payments are typically made within 24-72 hours once verified.
Submit the Form and Supporting Documents:
To Your Bank: Submit the completed form and a copy of your passport photo to your bank. They will verify and process it.
To the Registrar: You can also submit directly to the registrar's office.
Through Your Stockbroker: Your stockbroker can facilitate this submission.
Important Documents You May Need (General, specific requirements vary by registrar):
Completed e-dividend mandate form.
Valid means of identification (National ID Card, International Passport, Driver's License, Voter's Card).
Proof of bank account (e.g., bank statement, letter of confirmation from your bank).
Utility bill (for address verification).
Passport photograph.
For change of name (e.g., due to marriage): Marriage certificate, newspaper publication of change of name, sworn affidavit.
For deceased shareholders: Letter of Administration/Probate, Death Certificate, original banker's confirmation of the administrator's/executor's signature, and valid IDs of administrators/executors. It's crucial to consult with the registrar for the exact requirements for estate claims.
Follow Up: It's advisable to follow up with your bank or the registrar to ensure your application is being processed. Payments are typically made within 24-72 hours once verified.
Don’t Leave Your Money Idle!
In 2024, unclaimed dividends in Nigeria crossed ₦200 billion, don’t let your money be part of that statistic.
These are your rightful earnings. Take the proactive steps today to ensure you receive what is due to you. If you have any difficulties, reaching out to your stockbroker or the relevant registrar is always a good starting point.
From Mustard seeds…….to growing portfolios 💼