Kurfi challenges regulators on the challenge of delayed dividend payment

• Calls for punishment for delayed payment
• CSCS should be made to handle it
• BVN registration has solved the problem
• Companies which declare dividend without funds available should be sanctioned

A seasoned Stockbroker and the Chief Executive Officer of APT Securities and Funds Limited, Mallam Kasimu Garba Kurfi, has frowned at the escalating problem of delayed payment of dividends in the nation’s capital market, saying the problem is hampering confidence of retail investors in the market as they are the main victims of  the problem.

In an interview with Business247News during the week, Kurfi thereby called on the regulatory authorities- Securities and Exchange Commission (SEC) and The Nigerian Stock Exchange (NSE) to  prevail on company registrars and quoted companies to urgently find solution to the problem which he said should not even be a problem at all.

According to him, “The reason why we are having the issue is simple. There’s no punishment for not paying promptly dividend declared by a company. If the registrar doesn’t pay your dividend for a year, two years or more, regulator will only tell the registrar pay him and that is all! But what of the time value of money? If you didn’t receive your money as and when due, you are losing.

“The most unfortunate thing is that you hardly see big investors suffering from delayed payment dividend. Most of them who have 5%, 10%, 20% and higher stakes in companies don’t suffer from this problem, they are settled immediately dividends are declared even before you and me that have small units. It should not be like that.

“I believe that the regulators, particularly the Securities and Exchange Commission (SEC) has to come out with a template that ensures no more delay in dividend payment because if they can do that, it will promote investor confidence generally in the market and you will see more participation by retail investors because once you open an account with your BVN number with CSCS yet you cannot get alert as when your dividend is paid. This should not be allowed to continue to linger in the nation’s capital market.

The NSE and SEC have to come up with solution and make sure that this problem is no more because it affects investors’ confidence in the market and  the issue of confidence is paramount and we need more participations by the local investors. Once we gain back the confidence of local investors and build their confidence in the market, the foreign investors will not have choice, they will be trouping in and our market will be better for it.

On the speculation that some companies that declare these dividends, most times, don’t have the money to pay all investors immediately and the ones that have the money their registrars will want to make some gains by keeping the money in the banks and collecting  accruing interest on what they should have paid to the investors.

“If this is the issue, the NSE can make it clear to any company that as you declare the dividend,  drop your cheque with the CSCS and the next day, the CSCS would pay everybody so you cannot declare dividend and get shareholders approval and now be selecting who to pay and who not to. I believe if the whole dividend is dropped with the CSCS the next day, everybody will get alert because it has all the bank account details of investors and there is no reason whatsoever for CSCS to say it cannot credit you after all, it is doing direct cash settlement so why can’t they pay dividends?

“The CSCS is the one in charge of paying coupon of the Federal Government’s bonds and we have no issues with, we hardly have any client who complains that he doesn’t receive dividend or interest.  So if the CSCS can demonstrate such capability, the responsibility of dividend payments should be transferred from the Registrars to the CSCS if this will solve the problem. For those companies that declares dividends and don’t have money, SEC will know and take the necessary steps.

“I can tell you that almost all the companies that pay dividends have their shareholders complaining of not getting their dividend on time. If data is synchronized between the CSCS and the registrars, then we shouldn’t be facing the challenge of delayed dividend payment. If we still have this delay, then the problem has to do with the money being declared not adequate enough to take care of all investors at a time and in view of this, I am proposing that while the exchange insists that any company declaring dividend should drop their cheques with the CSCS and let see if the CSCS will delay.

“The coming of the BVN (Bank Verification Number) has been able to solve identity problem   because no two persons even if they have the same name, they will not have the same BVN number and the Central Securities Clearing System (CSCS) has made it mandatory that without bank account you don’t open account for investors.

“Now if the CSCS has investors’ BVN numbers and the bank accounts of investors, we expect to transport the same data and the information to the registrar once we do this, the question of unpaid dividend would not continue to arise again because what matters is your name, your bank account and BVN number that identifies you.

“So, if there is one hundred Kazeem Garba, each of them will have different BVN numbers and since you have my BVN number and have verified me as Kazeem Garba, you have no reason to delay my dividend payment”.