What is e-Dividend?
A dividend is the portion of a company’s profit distributed to its shareholders. In any given operating year, a company can either make profit or loss; and when it
makes a profit, part of the profit may be distributed to its shareholders as dividend while the remaining part is kept by the company for investment purposes.
Sometimes shareholders/investors are unable to claim their dividends either because the divided warrant could not be delivered to them by post, lost in transit, stolen or misplaced. Such dividends are unclaimed. In our country, the volume of unclaimed dividends is growing and has become a source of concern to both the apex regulator and other stakeholders of the Nigerian capital market.
The e-Dividends strategy is a way to avoid these problems and
ensure that shareholders/investors in the Nigerian capital market receive their dividends promptly. e-dividend therefore,
is the process of paying dividends due to shareholders through a direct credit into their chosen bank account electronically rather than the issuance of dividend warrant through the postal system.
What are the benefits of e-dividend for the investor/shareholders?
• Shareholders will receive their dividends promptly, without the hassles of lodging their dividend w a r r a n t s in banks or fear of dividend warrants becoming stale.
• The volume of shareholders’ dividends locked up as unclaimed dividends will reduce since all dividends will now be paid directly into the shareholders’ accounts.
• The volume of shareholders’ dividends warrants lost in transit will decline.
• There will be more transparency and efficiency in the administration of dividend payments for shareholders benefit.
• Investors will be able to monitor and track dividend payments more effectively.
• It eliminates the problem of returned dividend warrants where a shareholder changes address without notifying the company.
What Should Shareholders do to benefit from e-Dividend?
• Shareholders/investors must have an account with a bank and must supply the account details on the Initial Public Offer (IPO) forms and on the share transfer forms
• Shareholders must complete mandate forms of registrars of companies in which they have shares.
• Shareholders should ensure that completed Mandate forms are endorsed by their banker before submitting to their registrars directly or through stockbrokers.
• Shareholders should follow up and track dividend declared until credit hits their bank accounts.
• Shareholders should always keep their registrars and stockbrokers updated on any changes in their bank account.
• Shareholders should always disclose their Central Securities Clearing System (CSCS) clearing house numbers to new stock broking firms they engaged in order to avoid multiple clearing house numbers.
• Seek to know from their chosen stock broking firm, their current registration status with the Securities and Exchange Commission (SEC) and the Nigerian Stock Exchange (NSE) so as to avoid any dealing with illegal market operators.
• Shareholders should maintain a good relationship with their registered stockbroker.
• Endeavor to attend the Annual General Meetings (AGM) of companies in which they hold shares.