Exchange Commission reduces cost, timelines for transmission of shares

The Securities and Exchange Commission, SEC, has an amended draft on the operating framework for transmission of shares, reduced the timeline for the transmission of deceased’s shares from three weeks to one week.

Going by that, the registrar shall ensure that shares of a deceased are transmitted within a week of receiving the request from the administrators or executors.

The registrar is also required to transmit the Letter of Administration to the Probate Registry within 24 hours of receipt of same for verification.

The administrators/executors are, however, required to provide Letter of Introduction, introducing themselves as the legal representatives of the Estate. The letter should also indicate the names, addresses, signatures and BVNs of the individual Administrators/Executors.

Also required are original Death Certificate from the National Population Commission (NPC) for sighting, original probate letter or Letter of Administration for sighting or the Certified True Copy (CTC) from a Notary Public. Others are copy of newspaper advert placed by the Court or Gazette, any evidence of ownership of the investment i.e. CSCS statement(s) of the deceased, original share certificates, dividend stub or dividend warrants or bank statement(s) showing receipt of dividend(s) into the account(s) of the deceased.

This effort will ensure seamless transmission and claim of a deceased’s shares by heirs and administrators thereby reducing the quantum of unclaimed dividends in the Nigerian Capital Market and encouraging beneficiaries of deceased investors to step up efforts to claim such dividends.

In a statement, SEC said: “Where the Administrator/Executor cannot provide these requirements, the Registrar may require confirmation through insurance, indemnity or interview.”

The fees chargeable for transmission of shares by registrars is being limited to one percent of the total value and additional five percent Value Added Tax (VAT) for shares of N5 million and below and 0.5 percent of the value and five percent VAT on shares above N5 million with a maximum chargeable amount of N200,000 (Two Hundred Thousand Naira), excluding VAT. Also, fees chargeable for confirmation of probate or letter of administration shall not exceed N12,000 (Twelve Thousand Naira).

Registrars are also disallowed from charging fee on dematerialization of share certificate and mandating of accounts for electronic dividend.

However, change of address, name or mandate shall not attract more than N100 (One Hundred Naira) per request while update of signature capture and scanning shall not be more than N200 (Two Hundred Naira) per signature.

The SEC further states that any registrar that violates the provisions of the rules shall be liable to a penalty of not less than N1 million and an additional sum of N20,000 (Twenty Thousand Naira) for every day the violation persists.

The new rules also seek to standardize the turnaround time for processing all requests for replacement and update from the date of submission of all relevant documentations.

The turnaround time for dematerialization is three working days, update of signature capture and scanning shall take place in 24 hours while change of address, name and mandate shall be done within two working days.

According to the SEC, the amended draft rules would ensure standardization and efficiency in the transmission process, thereby minimizing conflict, protecting investors and maintaining the integrity of the market.

Acting Director-General of the SEC, Ms Mary Uduk, stated that one category of investors whose investment yields had contributed to the growth of unclaimed dividends in the capital market were deceased investors.

According to her, beneficiaries of deceased investors as indicated in the Will or Letter of Administration are yet to claim the investments and accrued dividends through the share transmission process.

“The capital market is a market for raising medium to long-term capital via a number of instruments.

“The most popular of the instruments are shared including bonds with resultant yields of dividends and interests.

“However, the quantum of unclaimed dividends in the Nigerian capital market has been on the increase as investors fail to claim the dividends from their investment in shares,’’ she said.