Enoch Abiodun in this report examines the importance of Wills and Trusts to investors and suggest that it is better not to invest than to die without a will or specific instructions as to how your investment should be managed in you absence.
One of the very important financial management plan that investor shy away from is your will or a Trust.
In this part of the world it is a taboo for dependants to suggest to their breadwinner to write his/her will even if it is clear the person have but a few months to live.
As the Nigerian capital market experiences boom and awareness and interest gets bigger, it is important that investors are advised on the need to put proper arrangement in place as to who take over (manage it for his children and wife/husband) their investment when they die.
Having succeeded in taking the capital market to the door step of Nigerians to a large extent, the
Stock Exchange (NSE) can also as part of its investors education effort inform market participants on the need to put measures in place to see that their investments are in good hands when they are no more.
My father was of the very old school, he died a proper will, for a man who had nine legal wifes and 24 leaving children, even with a will the children will still engage in a battle of who takes what. My father invested in blue chip companies on the NSE, name itNestle Nigeria Plc, Cadbury Nigeria Plc, Nigerian-German Chemicals Plc,African Petroleum Plc, MorisonIndustries Plc and a host of others.
Today, the family is so polarized that we do not even see each other eye ball to eye ball and my father’s investments including landed properties and Hausas are in the hands of only God knows who.
The same thing goes for a million and one family out there, we can now understand why unclaimed dividend will remain an issue in our clime.
The Securities and Exchange Commission (SEC) recently released the figures unclaimed dividend and as expected an overwhelming N15 billion was said to have been unclaimed in five years.
Although a good portion of it is as a result of poor logistics, a larger portion of it is as a result of the issues highlighted above.
Before we continue with the unclaimed dividend story, let us look at (define) a Will, Trusts and Credit Bureau.
A will or a “last will and testament” is a document in which you describe exactly what you want to happen to your goods and assets after you die.
To be valid, a will has to be drawn up correctly and you and two witnesses must sign it at the same time.
Your will is part of your overall financial management plan. If you die without a valid will, your assets can go to the wrong people – and the process can take ages.
A clear and practical will ensures that your assets are distributed quickly and according to your wishes after your death. It is best to have it drawn up professionally.
A lawyer can do it, or your insurance company, your bank, or a trust company. You must stipulate an executor, which, in the case of a very simple estate, could be a family member.
The purpose of a trust is to provide security for your dependents.
A trust can own property receive donations and inherit money from your estate when you die. What makes a trust so secure is the fact that its decisions are taken by the trustees you appoint when you create it.
There are basically two kinds of trust: An “inter vivos” (living) trust, created while you are still alive.
A testamentary trust, created after your death in terms of instructions in your will.
Whichever type you choose, a trust protects the interests of your dependants. If you think a trust could benefit your broader financial plan, talk it over with your financial adviser, bank or lawyer.
The role of a credit bureau (as obtainable in the United Kingdom)
Credit bureaux are companies that keep a record of all consumers who use credit, as well as details of their credit history.
The credit bureau provides this information to assist companies to decide who gets credit. A good credit record is an asset as it reassures the company that you are a good credit risk.
However, if you have had a judgment against you for money you owe or you have been declared insolvent , this will be on your record too.
Once the investigation is complete, any information that is incorrect or under dispute will be rectified on your profile.
If you are not satisfied with the assistance given to you at a credit bureau, you have the right to complain to the Credit Information Ombud . The ombud will be able to tell you what steps you can take to have your name cleared, and how long it will take
Unclaimed dividends has increasingly constituted a serious problem in the Nigerian capital market; basis being the staggering and generally increasing amount involved in the last few years.
The continued retention of such dividends by public companies most times distorts their true financial position thereby misleading investors and government.
Director General of SEC, Musa Al-Faki, at the symposium on the new regulatory measure for the monitoring of unclaimed dividends said a study of dividend records of 183 companies between 1999 and 2002 revealed that N7.2 billion was outstanding as unclaimed dividends. The returns from registrars revealed the following:
2002 N5.1 billion outstanding
2003 N6.4 billion outstanding
2004 N6.0 billion outstanding
“This figure excludes those that are statue-barred; this is very unhealthy for our market and could lead to loss of confidence in the market. It would also hinder the inflow of investment funds, and subsequently the multiplier effect will hamper growth and development.
A lot of the discussions on the unclaimed dividends problem have focused on the registrars and public companies. I must at this juncture also point out that some of the investors are also to blame. This is due to the fact that at the point of subscription, quite a number of investors either bought shares for dependants and signed the forms for them; or bought shares in non existent names, and today the dividends of such shares are without visible owners.
Ladies and gentlemen a market that is not efficient with regard to payment of returns on investment, in this era of globalisation and liberalisation, and increasing competition for funds will be unlikely to be a favourite destination of foreign portfolio or direct investment,” he said.
He added that, “It is therefore imperative that in line with our regulatory function to ensure investors are adequately protected.Investor protection entails that investors are adequately protected from practices which may lead to loss of their money, as well as building up integrity of the capital market to attract confidence of local and foreign would be investors.”
The issue of unclaimed dividends has increasingly become worrisome and is a challenge to the regulatory authorities. As you are aware the commission has spearheaded various initiatives with a view to proffering a lasting solution to the problem of unclaimed dividends in the capital market.This has attracted a lot of debate in recent times, some quite constructive and others not so, usually arising from misconceptions of our objectives. Some of the steps taken to address the problem range from meetings with registrars, the postal authorities, the Corporate Affairs Commission, and the banks. These meetings threw up some immediate and long-term measures designed to curtail the incidence of unclaimed dividends,” he said.
He also stated that, “The expectation of the NEEDS strategy hinges on a private – sector driven economy, and this can only be achieved through a buoyant capital market. In a recent presentation to the Honourable Minister of Finance, unclaimed dividend issue was identified as one of key challenge areas the commission is dealing with.
It is in view of the forgoing that the issue of unclaimed dividends must be dealt with by all stakeholders in the market.”