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The Director General, Securities and Exchange Commission on The advantages of the E Dividend Mandate Management System (E-DMMS)

Director General of the Securities and Exchange Commission (SEC), Mr. Mounir Gwarzo has described the e-Dividend platform as a game changer in the Nigerian Capital Market which will ensure that infractions are reduced to the barest minimum.

At a Town Hall meeting to sensitize the investing public on the E-DMMS held at the International Conference Centre, Abuja, on Thursday, January 14, 2016, the Director General expressed satisfaction with the level of success recorded so far with the enlightenment programme and urged investors to take advantage of the service by visiting their registrars or banks to register on the E-Dividend platform. He added that registration was currently on going nationwide.

Addressing the public, the Director General said this was a step in the right direction, and assured the investing public that registration on the platform shall be free for the first ninety (90) days commencing November 23, 2015.  In his speech, Mr. Gwarzo said “We have agreed with all stakeholders that for the first 90 days, the registration on the platform would be free, subsequent to which registration would attract a fee of N100”.

The Director General also submitted that the implementation of the E-Dividend platform would fetch certain advantages to the capital market which include:

1. Direct access to dividends by investors. Mr. Gwarzo was quoted as saying “Once the e-dividend is in place, the issues surrounding stale dividend warrants will be a thing of the past, similarly, the challenges of travelling from one place to another to deposit dividend warrants would be completely disposed off. This process would eliminate all challenges associated with payments of dividends in our markets”.

2. Reduction in the quantum of unclaimed dividend. According to Mr. Gwarzo, the issue of unclaimed dividends which according to the records of the SEC is in excess of ₦80 billion would also be reduced with the implementation of the platform. This is because unclaimed dividends are an off-shoot from dividends of small stakeholders who have been unable to claim them.

3. The benefits of the Direct Cash Settlement. Implementation of the e-dividend programme would also enable investors enjoy the benefits of the Direct Cash Settlement. The entire market has commenced the Direct Cash Settlement module, the era when proceeds from sale of shares were being given to a stockbroker who will in turn pay the clients is over.  The proceeds would now be paid directly into an investor’s Bank account. The E-Dividend platform creates an avenue for a transparent compliance with the Direct Cash Settlement.

Mr. Gwarzo hinted that the E-Dividend programme was in phases, adding, that upon conclusion of the registration process, the next phase of the project would be to look into claims made by investors who have dividends less than 12 years old. He stressed that in implementing this phase, the registrars would be expected to verify the owners of all unclaimed dividend in that category, following which they would be mandated to pay investors in that regard.

While applauding the efforts of all stakeholders towards the achievements of this landslide, Mr. Gwarzo stated that the era of denying investors the proceeds of their shares was over.  The e-dividend platform with the use of Bank Verification Number (BVN) would contribute immensely towards this.  He added that another advantage of the e-dividend platform is that it will provide a very robust Know Your Customer (KYC) regime for the operators. He cited the lack of KYC as a major reason for infractions in the market.