15042019 - North now land of bandits, says Northern Elders Forum

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26 — Vanguard, MONDAY, APRIL 15, 2019


Shareholders speak on re-opening of dividend warrant issuance by SEC

By Nkiruka Nnorom

The Securities and Exchange Commission, SEC, recently said it is continuing with issuance of dividend

warrant more than one year after closing the exercise to allow it sort out some outstanding issues. Shareholders

who spoke to Financial Vanguard expressed divergent opinion on the issue.

SEC should be more decisive on

termination of dividend warrant —



Mallam Mikaili

think SEC is just beating about the

bush. It should take decisive decision

as regards compelling all public

companies and shareholders to key into

e-dividend. Going back and forth is not

ideal. The only thing that is going to help

is for SEC to disseminate information to

the grass-roots and enlighten the people

at the grass-roots to key into the e-

dividend initiative. Likewise, the SEC

should take be proactive in reducing or

even removing cost of mandating

accounts. In fact, mandating accounts

should be free. More so, instead of

continuing with issuance of dividend

warrant, registration for e-dividend

should be extended possibly to year 2020.

I believe that by 2020 and with enough

enlightenment campaign by both the

SEC, Nigerian Stock Exchange, NSE, the

stockbrokers, registrars and even the

Central Securities Clearing System,

CSCS, more shareholders would

understand and be aware of the existence

e-dividend. The regulators should also

find out ways of reaching shareholders

with unclaimed dividend.


The law does not allow any regulator to

deny investors their dividend

— Alhaji Gbadebo Olatokunbo

SEC came about the directive on

electronic dividend payment and it was

targeted at achieving some purposes such as

reduction or elimination of unclaimed

dividend. It is to make it easy for shareholders

to claim their dividend as well as to encourage

investors to make use of the banking system

among others.

However, despite efforts by the stakeholders

to encourage and embrace the policy on e-

dividend, some shareholders are still having

problems with the policy. For instance, many

bank accounts are dormant and owners are not

interested in them due to reasons known to

them. Secondly, many investors have relocated

to their villages either due to retirement or loss

of their jobs and there are no banks at their

locations and they are not also ready to go the

extra miles because it will cost them more than

the amount to be collected as dividend.

Therefore, SEC has to be reasonable knowing

that there will be bigger problems insisting on

the policy deadline. It is very very important to

note that the law doesn’t allow any regulatory

agency to deny any investor the return on

investment – dividend.

Margin lending re-introduction will

lead to another market depression

— Adeleke

MR. Adebayo Adeleke is the former General Secretary of Independent

Shareholders Association of Nigeria (ISAN). In this interview, he said that reintroduction

of margin lending by the Securities and Exchange Commission, SEC,

is an error and will not be in the overall interest of the market. Excerpt:

By Nkiruka Nnorom

WHAT is your take on the plan by

the Securities and Exchange

Commission, SEC, to review rules on

margin lending with a view to reviving

activity in that space?

It sounds good because what they are

trying to do is to stimulate the market,

but at the long run, it is a very defective

plan because you don’t create credit for

capital formation from borrowing. All

over the world and all in the loan books,

you have two types of capital. You have

tier-1 capital and tier-2 capital.

Tier-1 capital being the seeds that

shareholders are providing for the

business, tier-2 being borrowings the

business is leveraging to take up

opportunities. So, now, you are talking

about tier-1, which is the stock exchange

- platform for long term capital formation

and you now want to take tier-2, which

is loan to fund people to go to that

market. What you will be doing in the

short run is using short term money to

play in a market that is meant for long

term capital formation.

So, there is going to be a disconnect;

you are just going to create unnecessary

excitement in the market where you have

so much money running after few shares

and then prices will start going up. Of

course, that is going to be artificial and

it is not going to be sustainable.

At the end of the day, at some point,

people will start pulling out because they

want to profit and they also want to repay

the loans and then there will be another

depression in the market and we will go

back to zero level which is what we

trying to avoid. For, me, it is going to be

a very temporary measure for a long term

problem. It is not going to be for long

term interest of the market. It is going to

It will allow more investors key into e-

dividend — Patrick Ajudua

Ithink it is a very good thing because of

the existing problems like lack of

enlightenment on the importance adoption

of electronic dividend by some investors. I

think that it will also offer more opportunity

to people in the rural areas to key into the

e-dividend registration exercise so that the

aim of reducing unclaimed dividend will be

achieved. This is what we have been saying;

there is need for more awareness on the ongoing

e-dividend before the issuance of

dividend warrant will be finally stopped.

Though I do not think that nine months will

be enough to sort out all outstanding issues

but it will go a long way in allowing more

people to mandate their accounts. That said,

SEC really need to go out and create deeper

awareness; there is the need to communicate

to more people in their local languages on

the need to stop issuance of physical

dividend warrant and embrace e-dividend.

The registrars should also do their own

work. We have to go the way other markets

around the world are going; we need to

embrace technology.

•Adebayo Adeleke, former

General Secretary, ISAN

be a very big error coming from the


You know we have tried this in the past

before the 2008/2009 market crash...?

Exactly and even when the market

crashed, how many of the shareholders

who took margin facilities were

compensated, rather the stockbrokers

who had the platform were the ones

who went asking for forbearance. A

stockbroker is an agent; he buys for

you, he makes money, he sells for you,

he makes money.

If they had also traded on margin, it

would have been a different ball game

but those were the people who were

asking government as at that time for


It is a good development

— Moses Igbrude

Life is dynamic when one

takes some decisions

thinking it will bring certain

desired results and it didn’t, the

wise thing to do is to revise such

decision and that is exactly what

SEC is trying to do.

SEC at a meeting with

stakeholders two years ago

thought that by eliminating

dividends warrant it will reduce

cost and companies will save

money for the shareholders as

well as reduce unclaimed

dividend but this rather started

increasing unclaimed dividend as

many Nigeria investors did not

key into it.

So, for me, this is a good

development because the best

thing to do in this situation is to

restart the issuance of dividend

warrant again and gradually

encourage people to key into the

e-dividend initiative.

forbearance. So, the individual

shareholders who also participated in

the margin facility were not given

forbearance. Now, the question is how

can we avoid a repeat of such occurrence

because it was not palatable for the

market and I am not sure that the market

has finally recovered from that incident.

So, it is going to result in re-inventing

the wheels or trying solutions that have

been tried and have failed us in the past.

It is not going to work out in the long

run. If we want to develop this market

and have a long term solution to this

market, we need to have rules and

regulations that are investors’ friendly.

We need to talk to our government not to

kill the enterprises by over-burdening

them with taxes.

We need to create an environment

where businesses will thrive, and then

we need to embark on sensitisation,

letting people know what the market

stands for in terms of long term capital

formation and of job creation. We need

to find ways of including capital market

studies in school curriculum in

secondary and tertiary level, irrespective

of the course you are studying.

Everybody must come to the market. It

is as important as learning how to take

care of your health or even your family.

This is much more sustainable than

creating margin facility. We are talking

about creating long term value.





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