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Multiple Share Subscription: Investors Get Six-Month Grace Period

Direct Cash Transfer Of Proceeds Begin Sept 1

Stakeholders in the Nigerian Capital Market Community rose from its 2017 first quarterly meeting on Tuesday May 9, with a resolve to among others, give investors with multiple subscription for company shares a grace period of six month within which they can claim the shares and the accruing dividend after establishment and verification of their identity by the Securities & Exchange Commission (SEC).
Multiple identities have over the years been blamed partly for the huge unclaimed dividend which hit an estimated high of about N90bn in September 2015, following which there was an attempt to establish the Unclaimed Dividend Trust Fund (UDTF) in the past. Multiple identities was also rampart in the days when the Federal Government sold its stake in public companies list on the Nigerian Stock Exchange (NSE), setting limits as to how many units a single individual can subscribe to, when some individuals created multiple accounts by joggling their names and using the names of relatives and acquaintances, sometimes without the knowledge of such persons.
The Bank Verification Numbers (BVN) policy introduced by Bankers’ Committee (comprising chief executives of banks in Nigeria and the management of the Central Bank of Nigeria) now poses a major challenge for those with multiple identities.
According to a summary of the resolution at the meeting as recorded by the SEC on Wednesday “investors who joggled their names for the purpose of multiple subscription should be given a forbearance period of six months within which they can lay claims to both their shares and accruing dividends subject to establishment of their identity and a verification process by the SEC.”
Thereafter, such shares and accruing dividends would be transferred to a yet-to-be formed Nigerian Capital Market Development Fund (NCDMF), while those in the names of non-existent shareholders should be likewise forfeited and transferred to the NCDMF.
The Capital Market Committee (CMC) likewise resolved “that going forward, any person who engages in such act shall be prosecuted.”
Also, beginning “from September 1, 2017, Direct Cash Settlement becomes mandatory for all investors in the market,” such that payment would be cashless and via transfers into their designated bank accounts rather than cheques or dividend warrants.
The meeting also adopted a common position on the review of the Investment & Securities Act (ISA) and the Companies & Allied Matters Act (CAMA) for presentation to the National Assembly.
While expressing optimism on the performance of the market in the fiscal year 2017, participants at the meeting identified certain initiatives for implementation within the year to be carried out alongside implementation of other on-going initiatives. They include a revamp of the Nigerian Commodities market, following which a Technical Committee chaired by Ms. Daisy Ekineh (former Acting Director General of the SEC), is to be constituted. It is to among others, review the commodities ecosystem. Besides the proposed launch of the NCMDF, the meeting also proposed the commencement of the Risk Based Supervision model; as well as a “robust overhaul of the Capital Market Operators database to contain up to date information of all market operators.”
Presentations were made at the meeting by some, following which there were “resolution and application of the transaction fee structure for the SEC, NSE, Issuing Houses and Receiving Agents as presented by the Commission.
“The fee structure shall be operated as a pilot scheme for a period of one year, after which its impact shall be reviewed with a decision on either its continuance or discontinuance.”

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