The Pros and Cons of Electronic Dividend
April 16th, 2009 Ogunyemi Olumade || olumade@stockmarketnigeria.com
The Pros
The advantages of the e-dividend platform cannot be over emphasized. First, the secret behind the steady decline in the value of unclaimed dividend in the Nigerian Capital Market cannot be revealed without a mention of the e-dividend platform. Also, the system prevents loss of dividend warrants in transit and the stress involved in renewing a stale dividend warrant with a few clicks and the submission of an easily filled e-dividend subscription form. Apart from eliminating cases of unclaimed dividends, the system reduces time spent in awaiting dividend via post while conserving time and effort spent in depositing physical dividend warrants into bank accounts.
E-dividend also increases profitability of listed companies by reducing the cost of printing and posting dividend warrants; it also increases the efficiency of the registrars as changes in shareholders address do not adversely affect timely dividend delivery. Finally, the platform ensures the payment of dividend into any of savings or current account unlike the physically dividend that can only be paid into a checking/current account. The system has also empowered the relevant regulatory organizations in their regulatory oversight as there has also been a reduction in the cases involving the misuse of funds meant for dividend payment as float since monitoring of dividend payment as at stipulated payment date is made easy through the electronic platform. Several companies have also embraced this transparent option for obvious reasons thereby boosting investors’ confidence.
The cons
The deployment of electronic payment systems is fast growing in the country and several institutions are keying into the opportunities such platforms provide (SEC’s e-dividend inclusive) without being oblivious of associated threats; security, cost and obsolesced technology. While the commercial banks that have invested heavily in the technology and human capital requirement have not been adequately compensated or commended; the country continues to embrace electronic payment systems without a national plan for its coordination and sustainability. One is of the opinion that the government should be proactive in this regard by ensuring a sizeable tax relief for investments in electronic payment systems/security. A special fund could also be constituted for the advancement of security of the electronic payment systems as a long-term precautionary measure.
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You are correct about the advantanges of E-dividend and may be E-bonus.
In my case, Intercontinental Securities and Intercapital Securities sold my e-bonus and other stocks without my consent.
@ Titus, kindly bring the complaint to the notice of the management of Intercontinental Securities and Intercapital Securities. I am sure you wld get a quick redress.