By John Okoh
The June 30, 2017 deadline given to registrars of quoted companies by the Securities and Exchange Commission (SEC) to stop the issuance of physical dividend warrants to shareholders may have suffered a setback.
Sources in the registrars business disclosed that based on SEC rule and the Companies and Allied Matters Act (CAMA), it will be difficult for the apex regulator in the capital market to enforce the non-issuance of dividend warrants to shareholders.
Except the registrars apply for administrative waiver, it’s obvious that the June 30, 2017 deadline may not be feasible as earlier expected.
This means that registrars will continue to be issuing physical dividend warrants, until the legal issues surrounding it are resolved.
Findings however show that SEC is already working on its rules in order to actualize its mandate of market development.
Meanwhile, SEC in a statement Tuesday saidthat investors with multiple subscriptions for the same public offer may forfeit their investment.
The commission at its last Capital Market Committee meeting (CMC) had approved the report of a market wide committee on formulating a uniform position for the treatment of multiple subscriptions to public offers.
According to a circular from the SEC, “the Nigerian Capital Market cannot and should not be seen to reward the wrongful acts/illegality of the perpetrators. This was with a view to ensuring the global sustainability of the Nigerian Capital Market’s Integrity and Reputation”.
The Circular observed that one major source of unclaimed dividend remains the use of non-existent identity to make multiple subscriptions to public offers.
The Committee unanimously agreed that, the action of submitting Multiple Applications for the same Public Offer was, in every consideration, illegal. The perpetrators, under False Pretense, carried out, the wrongful acts.
The report describes two groups of investors involved in multiple subscriptions. The first group (Group A) of investors joggled their names in different forms to enable them purchase more than the permitted units of shares on offer.
The second group (Group B) does not actually exist but used fictitious names for the purpose of purchasing more than the permitted number of shares during public offers.
The report agreed that both groups had fraudulent intentions and their actions were collectively illegal.
On this strength of this development, the CMC approved these recommendations: That Group ‘A’ above should be considered for a level of forbearance by giving them a grace period up to 1st September, 2017 within which to come forward and expressly prove their individual identities, subject to highest KYC criteria, to be defined by the SEC.
Those owners, whose identities are established, would then be allowed to consolidate their accounts. After the expiration of the timeframe, unclaimed dividends, traceable to this category that have been identified and consolidated, along with their securities and transferred to the Nigerian Capital Market Development Fund to be managed transparently in a separate basket under clear guidelines;
That since category ‘B’ refers to those securities with non-existent owners, the unclaimed dividends and related securities of this category cannot be ascribed to anyone.
Therefore, both the unclaimed dividends and securities shall be transferred to the Nigerian Capital Market Development Fund referred to in (i) above; (iii) That, going forward, anybody who engages in the wrongful act of Multiple Subscriptions for the same Public Offer, shall be prosecuted.
(iv) That the Market shall put in place adequate processes, leveraging on technology, towards detecting and identifying such cases of Multiple Subscriptions, in the future.
