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SOLVING PROBLEMS ASSOCIATED WITH OWNERSHIP OF SHARES – REGISTRARS PERSPECTIVE

PREAMBLE

We shall begin this lecture by first explaining what it means to be a REGISTRAR to a Company/government whose Share/Stock/Bo nds are quoted on the stock exchange.

WHO IS A REGISTRAR?

The Oxford Advanced Learners Dictionary defines – REGISTRATION as the action of registering something/somebody; one can therefore define a REGISTRAR as a person whose duty is to keep official record, especially of births, deaths, marriages and shareholdings.

SHARE REGISTRATION AS A BUSINESS

We can deduce from the above that Share Registration as a business is the creation and maintenance of the register of members (widely known as shareholders/bondholders) of quoted/unquoted Companies and Government.

From the legal angle, the Company and Allied Matters Act required that the register of members must be well kept with detail information as to full name number of shares held, date of entrance and exit date etc.

FUNCTION OF REGISTRARS

A registrar is expected to perform the following functions:

  • Maintenance of register of members as to change in addresses, names, bank mandates, handling deceased shareholding etc.

  • They also play prominent role in respect of new issues, Rights issues, Private placement, Merger and Acquisition etc.
  • Others function include.

  • dividend payment.
  • Issuance of share certificates
  • Distribution of offer documents and audited reports.
  • Organizing/Officiating at Annual General Meeting /Extraordinary General Meetings
  • Production/filing of statutory report with CAC, SEC and other regulatory authorities.
  • Registration of share transfers in liaison with CSCS Ltd.
  • PROBLEM ASSOCIATED WITH SHARE OWNERSHIP

    Having come this far, this importance aspect of my delivery will identify problems based on what obtains in the Nigeria Capital Market and as it affects the Nigerian Shareholder. The most prominent of these problems and which seem to cut across the various registrars and shareholders alike are as follows.

  • Non-receipt of dividend warrants.
  • Non receipt of share certificate-bond issues and new issues.
  • Loss of contact due to change in addresses.
  • Late receipt of notice for AGM, offer document/rights circulars.
  • Lack of knowledge to know how to handle deceased shareholdings.
  • The hold-tight syndrome.
  • As the popular adage goes, a problem identified, is a problem half solved. In the light of this, the nature of each problem shall be examined briefly while solution based on previous experiences shall be proffered.

    PROBLEM NUMBER ONE

    NON-RECEIPT OF divIDEND WARRANT/SHARE CERTIFICATES

    Shareholders ordinarily, expect returns on their investment. Companies do declared dividends during AGMs and expect this to be distributed within a reasonable period of time.
    For one reason or the other, these dividend warrants get to the beneficiaries either very late or not at all. Experiences have show that this occurs mostly due to our inefficient poster delivery system or usage of wrong postal addresses.

    POSSIBLE SOLUTIONS

  • Notify the registrar of change in your address on time.
  • Confirm that this has been effected. How? Through the receipt of their written acknowledgement of the change sent through your new address.
  • Where possible, use your post office box/private mailing box instead of residential addresses. It is safer and faster.
  • If you have a bank account you may request and complete a dividend mandate form. This will allow payments to be passed through your bank account under advice from your Bankers.
  • You can also exceptionally, arrange with the registrar for personal collection of your dividend warrant/share certificates. However, you need to give them early notice of such arrangement.
  • HOW DO I SOLVE PROBLEMS INVOLVING UNCLAIMED ITEMS

  • Simply contact registrar concerned by personal visit/writing.
  • Confirm if your address on their records is correct.
  • If the item has earlier been return unclaimed, it will be made available to you after being positively identified as a rightful owner. If not you will require to complete an indemnity form to enable them issue a duplicate.
  • Inform your registrar of subsequent change in address – VERY IMPORTANCE

  • PROBLEM NUMBER TWO

    LATE/NON-RECEIPT OF NOTICES OF AGMS AND OFFER DOCUMENTS.

    In practice, companies place notice of their Annual/Extra ordinary General meetings (AGMS & EGMS)on the national dailies; That notwithstanding, they are statutorily bound, to send notices of such meetings within a stipulated period (21 days)preceding the meeting date to all shareholders.

    However, for reason bordering on poor poster system or change of addresses without notice to the registrars, these notices may not get to their destinations. At times, they are received after the meetings have taken place. While the registrar should strive at all times to ensure that they get to their shareholders at all times, they may perhaps be hamstrung, due to late receipt of document from the client companies.

    POSIBLE SOLUTION

    The various solutions identified in respect of non-receipt of dividends and share certificate shall suffice with the exception of dividend mandate instruction.

    PROBLEM NUMBER THREE

    LACK OF KNOWLEDGE AS TO HANDLING OF DECEASED RELATIONS SHAREHOLDERS

    At one point or the other, death of loved one does occur. The immediate families of the deceased shareholders are expected to handle his investment most especially if the deceased left behind young ones who are not of age.

    WHAT DO I DO?

  • Notify the registrar of the death on time in order to avert illegal or unauthorized transfer of the shares. Ensure a death certificate accompanies the notice sent to the registrar.
  • Obtain letters of Administration/probate as the case may be.
  • Approach the registrar in writing with the document (original for sighting only) along with the original share certificates that you can lay your hand on as well as banker letter of confirmation of administrators signature. From many personal experiences, Administration usually delays the registration of their name due to their inability to comply fully with this requirement.
  • With these documents in place, the share certificate will be suitably amended, to reflect the administrators’ names and return to you.
  • If you are in possession of unpaid stale dividend warrants, make same available for revalidation/endorsement and confirm if there has been any dividend payment since the date of death. Also those declared but not claimed by the decease should be ascertained.
  • If you desire, request for and complete a dividend mandate instruction form so that subsequent dividend can be paid through your bank account.
  • Always ensure that registrars are kept inform of any change in address.

  • CHANGE OF NAME

    A female shareholder may change her name due to marriage while a change in name could also occur due to personal reasons.

    WHAT DO I DO IF THIS HAPPEN?

  • Approach your registrar in writing.
  • Avail them with your document – in case of marriage, marriage certificate/copy of newspaper notifying the world of the change in name.
  • Ensure your letter to the registrar bears your old and new signatures.
  • Avail registrar with your original share certificates in the order to effect the new change in name by endorsement.
  • WHAT IF THE CHANGE IN NAME IS NOT DUE TO MARITAL STATUS?

  • In this case the procedure is the same with substitution of the legal document evidencing change of name with marriage certificate.
  • Please note that in all cases, original document must be sighted.
  • CHANGE OF ADDRESS

    A Shareholder may need to change his or her address for any reason.Whenever this is necessary,Download the Change-of-Address Form availiable here .Then fill and send to:

    The Registrar,
    First Registrars Nigeria Ltd.
    2, Abebe Village Road, Iganmu
    P. M. B. 12692
    Lagos.

    PROBLEM NUMBER FOUR

    THE HOLD-TIGHT SYDROME

    The fact that Rights issue implies that existing shareholders, are given provisional allotment based on their number of present holdings, obviously preclude non-shareholders from participating. Also, the failure to buy share through public offer when on sale, coupled with the fact that transmission of shares is limited, leaves one with only one choice. That choice is the secondary market (second hand shares but definitely not tokunbo) of the Nigerian stock exchange with the assistance of stockbroker.

    However, such shares may not be available due to prevailing practice of holding tight to share by Nigerian shares holders. This is quite at variance, to what obtains in the developed capital market outside our shores. Nigerians do not believe in the quick entry and exit maxim. Shares are acquired in most cases, as if they are real property – a sort of lifetime illiquid investment to be inherited by their offspring.

    The capital market can not outgrow the numbers of shares on offer. Unless and until quoted companies offer their share for sale through public issues or existing shareholders sell theirs, (though at times rather than sell, they also want more) one’s desire to own a particular company’s share/stock may not materialize. Even if it does, it may not be at the desire quantity.
    The practice has greatly reduced the quantity of share/stock traded and also hindering the much anticipated growth of the Nigerian Stock Exchange.

    CONCLUSION

    The various problems/solutions highlighted above are by no means exhaustible. Also, the absence of adequate and well documented research materials has not helped matters. This notwithstanding, I sincerely believe that this humble piece will go a long way in attending to various problems the NIGERIA SHAREHOLDERS has to contend with

    On behalf of the management and staff of FIRST REGISTRARS NIGERIA LIMITED, I wish you all successful shareholders forum while assuring you of willingness and readiness to attend to your enquiries expeditiously.

    Thank you.


    ASSISTANT REGISTRAR
    FIRST REGISTRARS NIGERIA LIMITED
    PLOT 2 ABEBE VILLAGE ROAD, IGANMU LAGOS.

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