Unclaimed Dividends – What is an unclaimed dividend?

When an individual purchases shares in a company, they are entitled to a portion of the company’s profits, known as dividends. These dividends can be distributed as dividend warrants, electronic payments for each unit of stock held, bonus shares, or other forms of compensation. However, many shareholders fail to claim their dividends due to reasons such as lack of information, the perceived complexity of the process, negligence, forgotten investments, death, or changes in marital status (particularly for female shareholders who bought shares under their maiden name). It’s important to note that unclaimed dividends gradually lose value over time since they don’t accumulate interest.

Data Analysis: The Securities and Exchange Commission (SEC), which regulates stock management in Nigeria, reported that the amount of unclaimed dividends in Nigeria’s capital market rose from N158.44 billion in 2019 to N168 billion in 2020, and currently sits at approximately N177 billion.

What Happens to Unclaimed Dividends: The 2021 Finance Act requires that dividends unclaimed for 6 to 12 years be transferred to the Unclaimed Funds Trust Fund, which the Federal Government can borrow from to support its budget. Former SEC Director-General Lamido Yuguda stated at the Second Post Capital Market Committee media briefing on August 25, 2023, that these unclaimed dividends are now managed by the SEC and Debt Management Office until their rightful owners claim them.

How To Claim Unclaimed Dividends

Steps to Redeem Unclaimed Dividends:

  1. Consult a Capital Market Professional or Bank: Your stockbroker can assist with retrieving your CSCS account number, sending your signature to the registrar, tracking the process, and offering investment advice. Alternatively, banks can help you collect unclaimed dividends.
  2. Use the U-eDIV Search Portal: Investors can also use the SEC’s U-eDIV self-service portal to register for and claim their unclaimed dividends, as well as have future dividends paid electronically to their preferred bank account.
  • Step 1 – Log on to the SEC U-eDIV Search Portal at http://sec.gov.ng/nonmandated/
  • Step 2 –  Do a search using the combination of your first name and last name as required on the portal
  • Step 3 –  The portal will display a table showing where you bought the shares and the name of the registrars, with a link to download the e-Mandate form ***Download and fill out Your Registrars e-Mandate Form. This can be filled online and submitted also
  • Step 4 –  Complete the form and send it to your local Bank or your Registrar’s office with a copy of your passport photo or submit it through your Stockbroker. The information required ranges from your address, date of birth, Bank Verification Number, Your preferred account number for collection of the unclaimed dividends, email address.

Outlook and Conclusion

In our final assessment, we commend the Securities and Exchange Commission for its innovative efforts to streamline the process of claiming unclaimed dividends. However, there is a notable challenge, particularly for married women, as changes in their names and the integration of the Bank Verification Number may unintentionally complicate the process. Their current bank information might not match the name under which the shares were originally purchased.

The SEC could consider adding provisions on their website and require corporate registrars to include an option in the E-dividend form that accommodates changes in marital status. This would allow married women with unclaimed dividends to submit supporting documents reflecting their new names.

In conclusion, recovering unclaimed dividends is a relatively simple process, but it requires individuals to take action. By confirming their eligibility, gathering the necessary documents, and reaching out to the appropriate authorities, shareholders can reclaim their unclaimed dividends. Don’t let your rightful funds go unclaimed—act now to recover your dividends and maximize your investments.

John A. Edjeba, Esq,LLM,ACIarb(UK),ACTI,ACIPM,ACIS
Partner – Uwensuyi-Edosomwan SAN & Co

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