The Securities and Exchange Commission (SEC) Nigeria has warned quoted companies and capital market registrars to desist from selective payments and distribution of dividends to investors.
Director General of the SEC, Mr. Lamido Yuguda, gave this warning in his keynote address delivered weekend at the Institute of Capital Market Registrars (ICMR) 10th Annual Conference, Investiture of fellows, Induction of Associates and Annual General Meeting in Lagos.
The investment expert said that the commission had been intimated that some companies and registrars were involved in selective payments and distribution of dividends just as others some were unwilling to release the unclaimed dividends in their custody by adopting several antics to frustrate shareholders from enjoying the benefits of the E-DMMS platform.
Yuguda, who spoke on the theme ’Reinventing the Nigerian capital market for growth: The digital technology approach’, warned that the commission would not hesitate to sanction any erring operator found to be breaching the ethical rules or regulations of the market, especially as they relate to unclaimed dividend or any other issue.
While urging the Institute to encourage its members to uphold the Code of Ethics of the profession and as contained in the Rules and regulations of the commission, Yuguda noted that the number of mandated accounts had been on the decline for some time.
He lamented: “Regrettably, the number of mandated accounts has been on the decline for some time and the rate at which investors are coming forward to conduct their KYC has not been encouraging.
I urge the ICMR and its members to do their best to address some of these challenges.”
According to him, operators have a duty to uphold the integrity of the capital market to foster investor confidence as investors remain the most valued asset in the capital market.
The market regulator also stressed the need for the ICMR and SEC to work together and leverage the opportunities that digital technology provides, adding that doing so will help to resolve the lingering issues surrounding unclaimed dividends in the Nigerian capital market.
He expatiated: “I believe that we all have a common interest in seeing these opportunities harvested, but also in mitigating the risks so that we all can reap the benefits.
“As you are aware, the SEC has committed resources to put in place several measures to address the issues of unclaimed dividend. Despite this commitment of resources, the issues still linger,” Yuguda added.
Noting that the commission has adopted a three-pronged approach to regulating digital innovation – safety, market deepening and provision of solution to problems, the SEC boss promised that the commission would continue to ensure that intermediaries harness digital technology in such a way to better serve the needs of investors in all aspects of the capital market.
He also spoke on the commission’s understanding that if the application of digital technology to financial market practices was not properly regulated, it could lead to outcomes that would threaten investor confidence.
Yuguda, therefore, assured that the SEC would continue to ensure that intermediaries harness digital technology in such a way to better serve the needs of investors in all aspects of the capital market.
Earlier in his welcome address, the Institute’s President and Chairman of Council, Mr. Seyi Owoturo, said that the COVID-19 crisis brought about digital transformation in the way companies in all sectors and regions do business.
According to him, the forum was organized by the Institute to ensure that the new combinations of talent and technology are delivering decisive advances and value in investor experience and operational efficiency.
He said: “We expect digital technology to drive positive outcomes in streamlining processes, harnessing data and shaping entirely new ways of doing business.
“It is expected that the outcome of this conference will reposition the Nigerian capital market for growth by creating a capital market that is attractive to investors and able to support the long-term investment needs across the private and public sectors of the economy.
“We are confident that by addressing the scourge of unclaimed dividends, the need for shared market infrastructure, and the changing role of regulators, the discourse in the conference will galvanize the drive towards repositioning the Nigerian capital market for sustainable growth,” Owoturo added.
In his contributions to the discussions at the conference, Managing Director of SystemSpecs Ltd., Mr. John Obaro, who spoke on exploring digital innovations to solve the issue of unclaimed dividend in the country, said technology could be used to open up new ways of operations, drive productivity, increase collaboration and partnership, among others.
On how to find a lasting solution to the unclaimed dividends problem, the industry expert advocated the review of the existing legislations and guidelines in the ICT sector as current laws cannot motivate the industry players to aggressively seek a resolution.
The SystemSpecs chief also said that new legislations should be enacted, guidelines issued, and operations of the market automated in order to position the customer at the centre of the benefits of investments.
