CBN seeks enforcement of dividend payment, seven days after AGM

The Central Bank of Nigeria, CBN, is considering issuing a directive to quoted companies to ensure that dividends declared are remitted to registrars for onward payment for shareholders within seven days after their annual general meeting.

The CBN is also seeking to ensure that banks credit the account of investors not later than one day from the receipt of funds from registrars.
The CBN, in its exposure draft on Guidelines for Securities Settlement in Nigeria, released yesterday, said, “Quoted companies shall make funds available to the registrar not later than seven working days after the Annual General Meeting where the dividend was declared.”
It is also seeking to promote the electronic dividend policy of the capital market authorities, as it is considering ensuring that registrars pay dividend to investors electronically on due date and also advise the investors through any credit advice.
It, however, exempted investors from any charges, saying, “There shall be no charges to investors on e-payment of dividend/interest.”
It stated that registrars shall obtain account details of investors for the purpose of electronic payment of dividend and interest.
The CBN stated further, “Banks shall credit the account of investors not later than T+1 (one-day after transaction) from the date of receipt of mandate and funds from the registrars.
“ Where the banks can not apply funds into some investors account, the funds and a schedule containing the list of the affected investors shall be returned to the Registrar on or before T+2 with reasons for the reject.
“The Registrar shall contact the affected investors within two working days to correct or supply the required information and copy SEC.
“Upon receipt of the required information, the registrar shall re-send the funds and the payment details to the banks within two working days.”
Also, the CBN said customer should be given options of receiving their proceeds from sale of their securities directly into their bank account or deposit into their stock broking account or cheque payments.
It added, however, that payments shall reach the beneficiary’s account not later than the next working day after settlement.
“The Investor shall have options for making payment to his broker through the use of payment instruments in Nigeria such as cheque, cards and other payment modes excluding cash,” the CBN stated.
Continuing, the CBN stated, “The Registrar shall have the following responsibilities: Select the DMB or service provider for electronic payments; Provide the basic infrastructure requirements for electronic payments; Define and adhere to appropriate operational processes for initiating electronic payments; Obtain correct details of investors and validate them.
“An Investor has the following responsibilities: Maintain an account with a DMB; Confirm and provide proper details of the account to the Registrar and Stockbrokers; Alert the Registrar or Stockbroker if payment is not effected after being advised.
“Banks have the following responsibilities: To process electronic payments instructions in accordance with the terms defined by the payments system; To provide correct account numbers and bank sort codes to beneficiaries; To provide timely information on customer enquiries.
“The Payment Service Providers have responsibility for the payment initiation platform and the electronic reporting system used by the Registrars and Stockbrokers. Their responsibilities include: Provision of a secure electronic platform for payment initiation and online transaction reporting; Implementation and support of the electronic payment platform; Validation of received payment instructions to ensure that transactions are from the purported originator and have not been manipulated.
“Processing of received instructions and onward transmission to the banks for Registrars and Stockbrokers using appropriate ACH Infrastructure with capabilities for bulk processing; The capability to generate and send Credit Advice to funds beneficiary via email and/or SMS when payments are made provided the Registrars and Stockbrokers pays for the service.”