E-DIVIDEND: WITH 60% OF INCOME AT RISK, UCAP BOSS TASKS REGISTRAR FIRMS ON INNOVATION
Pix Caption: Mrs. Fadayomi sounding the closing gong on
the Nigerian Stock Exchange (NSE) on July 17, 2017, when the board and
management of African Prudential, visited.
Going by the revolutions going in the Nigerian capital
market with regards to fee structure, dematerialization of share certificates
and electronic distribution of financial reports and dividend declared by quoted
firms, which are the traditional income streams, registrar companies in the
country were on Friday in Lagos challenged to adopt innovative ways to serve
their clients, or risk extinction in the not too distant future.
Group Chief Executive of United Capital Plc, Mrs. Toyin Sanni, noted that with 60% of the revenue of registrars companies coming from deposits for dividends and related deposits driving their revenue, there is need for them to think outside of the box for medium to long-term survival.
Sanni, in a keynote address titled: “leveraging Opportunities in an Evolving Capital Market, the Changing Roles of Registrars,” at a stakeholders’ forum organized by African Prudential Plc, said the “innovate or die” challenge has become most important today, when Nigeria’s Securities & Exchange Commission (SEC) is determined to end the issuance of physical dividend warrants.
“The deadline for discontinuance of issuance of physical dividend warrants has been extended a number of times to allow for full subscription. New deadline is now December 31, 2017,” she said.
The desire to migrate towards electronic dividend payment, she said, is borne out of the need “to mitigating risks associated with physical dividend warrants and improving investors’ experience.”
Ahead of this, the “Nigeria Interbank Settlement System Plc (NIBBS) is now sole processor of shareholder dividends. Registrar companies have been integrated to the NIBBS Electronic Payment network to facilitate processing and payment of dividends on shares and bond coupons, through the automated clearing house.”
She therefore urged registrars to, as a quick-fix, begin to expand into other parts of Africa, where “the registrar function is yet to evolve to the same level as Nigeria,” expressing confidence that “Africa Prudential as the first publicly listed registrar company in Africa has a chance to lead within the continent.”
The United Capital boss also recommended the model of “Computershare, a Global leader in not just transfer agency but employee equity plans, mortgage servicing, proxy solicitation, stakeholder communications and other diversified financial and governance services.”
The revolutions and technology brought into the operations of share registrars, she noted, have not been all bad, since it led to “enhanced efficiency, increased specialization, encouraged competition and improved service delivery by registrar businesses.”
To survive the trend and competition, Mrs. Sanni urged traditional registrar services to expand their horizon from share data/register management, KYC verification, shareholder relationship management, IPO/Bond Issues, probate management services, among others, and begin to explore technological trends for product innovation to meet demands of today and the future.
“The digital revolution must be embraced and B2C (Business-To-Clients) models” explored.
She also suggested the birthing of “technology Products – E-Notifier, E-lodgement for stockbrokers, online account access, dividend cards, electronic voting support.
“The Nigerian capital market is still evolving. Thus, registrars generally have voids to fill within their regulatory ambit.”
The UCap boss recalled that the transformation in Nigeria’s financial services sector today followed the Central Bank of Nigeria (CBN) Regulation 3, directing banks to sell their non-banking subsidiaries or to adopt a holding company structure as one of the three main drivers of the changes we are now seeing.
The directive, she told participants, “shook things up in the financial services industry.
“This forced a change in not just the model of the registrar business but of other financial institutions like investment banks, trustees, asset managers, insurers and brokers.”
Today, she continued, registrar companies have moved from the analogue age and ways of maintaining share registers, voting at annual general meetings, issuing share certificates and dividend warrants, to running fully automated operations involving: Electronic voting at AGMs, electronic-dividends, prepaid dividend cards and online access to account.
Earlier, in her address of welcome, Chief Eniola Fadayomi, chairman of African Prudential, said the company is mindful of the need to continuously innovate, remain agile and adapt to the changing times, without forgetting “that corporate success has its inherent risks and dangers (including) complacency.
“At Africa Prudential Plc, we realise that change and innovation is paramount for a sustainable future for our company and that is why we are all here,” the chairman said.
In an intervention after the panel discussion, Bayo Olugbemi, chief executive of First Registrars and chairman of the Institute of Capital Market Registrars that the growth of unclaimed dividend in the country has been considerably brought under control over the past five years. The growth in volume over the last three years has come to less than 5% of dividends declared annually by companies, compared to what it was 10 years ago.
A participant at the forum challenged stakeholders in the capital market to look into the issues of probate as they affect share registration business.
“The probate issue is real, especially with companies that are very old (have exist for many decades) like Nigerian Breweries, First Bank and Guinness, among others,” he said, adding that the Bank Verification Number (BVN) would help resolve a lot of the issues.
In the area of the ongoing innovations, David Walker Ogogo, Chief Executive of the Institute of Capital Market Registrars, also urged SEC to carry the law enforcement agencies and the National Assembly along to enable them understand key issues and workings of the capital market.
Speaking on the new Africa Prudential, Peter Asade, the company’s chief executive, assured that the management has taken in all of the advice and suggestions offered at the forum, assured of plans to “continue supporting the Nigerian capital market” while supporting clients with more cost effective and time efficient options.
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