In its effort to increase market growth, efficiency and transparency, the Securities and Exchange Commission (SEC), has urged members of the public with physical certificates of shares to take advantage of the dematerialization initiative of the commission to convert it to electronic format.
The Acting Director General of SEC, Ms. Mary Uduk made this known on Thursday during the 2018 SEC Journalists Academy in Uyo.
According to her, “We have ensured that all share certificates are fully dematerialized. This is to say that physical share certificates are now fully converted into electronic form in Nigeria. This initiative has further enhanced the market efficiency and transparency.”
According to Mr. Henry Rowlands, The Ag. Executive Commissioner (Corporate Services) of SEC: “The advantage of dematerialization is the availability of your money any time you need it. It is held electronically on the data base of the Central Securities Clearing System (CSCS).
“If at any point in time you want to transact business, you just contact your registrar and instruct them to make the conversion of your physical certificates to electronic format, and it is available for transfer to you. You don’t need to wait all day.
“Another advantage is that the age of lamination of certificates are no more. You no longer have to worry about theft, flood, fire or any other potential destruction to your certificate.”
Henry explained that people (beneficiaries) that have plenty of shares bequeathed to them can easily convert those shares in the event of the death of the original share owners.
An investor who wants to dematerialize his shares need to open a “demat account” in the Central Securities Clearing System (CSCS) through a stockbroker of his choice. In return he gets electronic shares in his demat account.
Also, concerning electronic dividends (e-dividends), Henry explained that e-dividend is a secure online means of paying dividends to shareholders.
“When we are talking of digitization, anybody that does not have e-dividend mandate may still suffer loss.
“The Capital Market through the initiative of the SEC no longer prints warrants. So if you do not mandate your preferred account to receive electronic payments of dividends, then your dividend may not get paid to you.
“It enables you never to go to the bank anymore, and enables you to get your dividend within 24 hours of its declaration.
“Also, you don’t need to come to Lagos to see your registrar, all you need to do is go to SEC’s website, download and complete the company’s form and walk up to the nearest branch of your bank. This is facilitated on the platform of the Bank Verification Number (BVN).
“Once you do this, all outstanding dividends will automatically be paid to you,” he said.
He further added that: “Direct Cash Settlement is a sole means to ensure that your investments are secured. It is assumed before now that when you give mandate to a broker, some of them after selling on your behalf, receive the main proceeds from CSCS into their account.
“With the regime of Direct Cash Settlement, rather than wait for the stockbrokers to get the money and transfer to you, when you register, the net proceeds of your investment which you have sold, goes to your preferred account.
“We encourage people for the safety of their investments to key into the Direct Cash Settlement.”