…says it hampers investors’ confidence
Ngozi Amuche
As the increase in investment by local investors becomes more pronounced in the equities market, a capital market operator, and the Chief Executive Officer of APT Securities & Funds Limited, Mallam Kasimu Garba Kurfi, has said the delay in payment of annual dividend to shareholders must stop.
Kurfi, who called on the regulators of the capital market, the Securities and Exchange Commission (SEC) and the Nigerian stock Exchange (NSE), said the delay should be tackled as it posed a threat to investors’ confidence.
The capital market operator, in a sideline interview, told 1stnewsonline that the regulators have to come out with a template that would ensure that the delay in capital market dividend payment is tackled, “because if they do that, it will attract more investment to the nation’s bourse, and that it will bring about more participation and encourage retail investors.”
He explained that the reason why there have been issues of infraction in the market is because there’s no punishment for not paying promptly dividend declared by companies.
“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, which was not put into consideration. This is hampering investor’s confidence,” he pointed out.
He noted that the most unfortunate thing is that “you hardly see big investors suffering from delayed payment of dividend. Most of them who have 5percent, 10percent, 20percent 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.”
Mallam Kurfi said, “Once we gain back the confidence of local investors, the foreign portfolio investors will not have any choice, but to troop in numbers and our market will be better for it.”
On the speculation that some companies that declare 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; Kurfi debunked the allegation, saying that the NSE can map out an easy strategy.
The capital market operator said, “The Central Securities Clearing System (CSCS) is the one in charge of paying coupon of the Federal Government bonds and we have no issues with that, 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.
“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’s see if the CSCS will delay.”