Incidence of Unclaimed Dividends: A Panel Data Analysis of the Role of Quoted Companies in Nigeria
Authors: Eriki Emoarehi , Iyoha Francis O. , Adetula Dorcas 
Published: September 2022

The objective of this paper is to examine the incidence of unclaimed dividends and the role of quoted companies in Nigeria. The rising trend of unclaimed dividends has been a serious concern to government, stakeholders, and supervisory authorities like the Securities and Exchange Commission, (SEC), and Nigerian Stock Exchange (NSE). There has been some policies put in place to reduce unclaimed dividends over the years. Some of the policies and measures include Companies and Allied Matters Act (CAMA), Investment and Securities Act (ISA), Central Securities and Clearing System (CSCS), Bank Verification Number (BVN), and e-dividend payment system respectively. Despite, these measures, unclaimed dividend figures have risen from 30 billion Naira in 1996 to 130 billion Naira in 2017. Studies done to address unclaimed dividends attributed various factors, some of which are: investors not giving their correct addresses, non-delivery of dividend warrants to investors, and Registrar not doing their work. However, one area that has not been addressed is the role of quoted companies in the rising trend of unclaimed dividends in Nigeria. Some large quoted companies have set up registrars but are really departments, with no separate boards from the mother firm. In Nigeria, registrars are statutorily charged with the processing of dividends from the time a quoted firm declared dividends and when the dividends fund is finally transferred to the registrars in Nigeria. But an emerging trend that has not been addressed is that quoted companies are now warehousing unclaimed dividends as reported by the reports of Securities and Exchange Commission (SEC). In other words, the dividends that have been declared and paid are still held and managed by the same quoted companies that paid the dividend. It is this trend that has prompted SEC to make proposal to the National Assembly for the review of CAMA law, to prevent quoted companies from exploiting the law. The quoted firms hitherto took advantage of the loop hole in CAMA to manage their already declared and paid dividends, months after payment through their owned established registrars. Though, about six shareholders associations have rejected the intervention of SEC in unclaimed dividend issues. But one of the principal functions of the SEC is to ensure is investor’s protection. It is against this background that the study investigate the quoted companies as a contributory factor in the rising trend of unclaimed dividends in Nigeria. The study used panel data analysis to run the quarterly data of unclaimed dividends amount with the quoted companies, the unclaimed dividend amounts with the registrars responsible for managing dividends, and the aggregate unclaimed dividends amount from 2012 to 2019. The study found that there was no difference between the role of quoted companies and the registrars in terms of managing unclaimed dividends in Nigeria. The study recommends a review of government policy that will continuously audit and sanction quoted companies that manage the unclaimed dividends through their subsidiaries or registrars and use it as working capital.