Ideas & Debate

Unclaimed assets people will not keep my money

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Nairobi Securities Exchange. FILE PHOTO | NMG

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Summary

  • There is a lot of work to be done to move individual non-corporate shareholders to the electronic bank transfers or mobile money dividend payment option which may take years to accomplish.
  • The unintended winner in all of this administrative investing nightmare is the UFAA who will continue to hold the funds in trust for the blissfully ignorant masses.

My mother is an avid bourse investor and ensured that she infected her offspring with the same bug. She became interested in the stock exchange after receiving advice from one of her former bosses in the bank where she worked until retirement.

The gentleman held all his investments in liquid assets primarily consisting of equities, making it completely easy for his family to liquidate upon his untimely death.

Each time a counter in which she is invested holds an AGM where a dividend is approved by shareholders, she marks her calendar so that she can go to the post office to pick up the dividend cheque shortly thereafter.

She keeps track of all the AGMs and dividend announcements for the counters in which she is invested and even goes to the offices of shares registrars to follow up on cheques that haven't been mailed in. In summary she is super-efficient. I am the total opposite. At the end of last month, August 2020, I got a letter from a registrar that I had several unclaimed dividends.

The letter, dated July 10, 2020, said that "the issuer is in the process of preparing to surrender your unclaimed dividends to the Unclaimed Financial Assets Authority (UFAA) by 1st November 2020 in line with existing regulations. You are therefore requested to make efforts to claim your dividends as soon as reasonably possible. Should we not hear from you by 16th September 2020, we shall proceed to prepare the final reports for submission to UFAA".

Accompanying this letter was a request to send in a whole bunch of items to validate my true identity short of the menu for my Christmas Day lunch.

In typical Kenyan style I decided to action said letter on September 15, the day before the deadline. By this time, a few other letters had come from a different registrar also alerting me that I had unclaimed dividends on other counters. When it rains it pours.

The beauty is that accompanying my unclaimed dividend letters were forms to opt in to the M-Pesa option.

You see the share registrars have opted not to waste this Covid crisis and requested shareholders that due to the pandemic and various government directives to minimise its spread, shareholders should opt in to claim outstanding and future dividends either via M-Pesa or through a bank transfer. I submitted all my documents and signed the M-Pesa option form with much flourish.

The registrars came through for me and within 24 to 48 hours of my submission I had the funds in my account. Carol Musyoka 1 – Unclaimed Financial Assets Authority - 0. I had to scratch my head as to how those dividends had been unclaimed in the first place and I figured out that they had probably been sent via registered mail and since we go to the post office perhaps once a month, the two-week registered mail notification had lapsed and been returned to sender without my ever knowing that I had a dividend cheque.

Now if my mother knew this story she'd probably give me a tongue lashing on my pathetic investment management ethos as she is supposed to have trained me well.

But I know I'm not alone in this hence the reason the UFAA is holding billions of shillings in unclaimed dividends belonging to thousands of investors who, like me, do not keenly follow up dividend payments nor visit the post office regularly. There are also many shareholders who have passed away, which brings in further complications as the dividends now form part of their estate.

There is a lot of work to be done to move individual non-corporate shareholders to the electronic bank transfers or mobile money dividend payment option which may take years to accomplish.

The easy part is for new buyers of shares who should be required to automatically sign up for this option upon purchase.

The harder part is for the legacy shareholders, some of whom still hold share certificates rather than electronic share accounts at the Central Depository and Settlement Corporation, who have to be individually contacted and nudged to move to the 21st century for those that are still alive today.

The unintended winner in all of this administrative investing nightmare is the UFAA who will continue to hold the funds in trust for the blissfully ignorant masses.