A company that is making a profit often keeps a portion of its earnings to reinvest in the future of its business. The remaining profits will normally be given back to the owners of the company, its shareholders, as a dividend payment.
The dividend may be paid in two or more installments over the year. The initial payment is called ‘interim dividend‘ and the remainder paid as a ‘final’ dividend, is approved by the shareholders at the Annual General Meeting.
What is a withholding tax on a dividend?
A dividend is normally paid net of a portion of tax, referred to as a ‘withholding tax’, which is then used by the company to pay the Corporation Tax that is charged on its profits. The portion of tax credit is currently fixed at one-tenth of the gross dividend.
Dividend payment problems
Dividend mandate rejected by the bank
If your dividend is paid directly into your bank account it may be rejected for the following reasons:
• The account has been closed.
• The account details are incorrect.
• Your BVN might be incorrect.
• Your signature specimen might differ from the signature in our record.
• Your bank account number might be incorrect.
• Your bank account name might differ from the account name in our record.
In this situation, DataMax Registrars will receive notification from the bank. The payment will be canceled and the shareholder will be advised to provide the correct bank details.
Please note that there is an administrative fee of N500 – N1,000 for readvising return payment that is above N10,000.
You may not have received a dividend payment because:
- You purchased shares after the ex-dividend date and were not entitled to receive the dividend.
- You have not completed the e-dividend mandate form.
- Your signature specimen is not in our record.
- Your signature is irregular or differs from signature specimen held in our records.
This is a description, sometimes abbreviated to ‘xd’ that is often quoted next to a share price. It translates as ‘without dividend’ and means that the next dividend payment is not included in the price of the share. This is necessary because the dividend is paid to all shareholders who were on the register at close of trading on a specified day.
Any shareholder buying shares who is registered after this day, will not receive the dividend. To compensate for this, the market price usually drops by the amount of the dividend payment and the description ‘xd’ is added to share price quotations to confirm that this has happened. To avoid confusion around this time, prices are sometimes quoted ‘cum dividend’ (meaning ‘with dividend’) which means that the buyer will be entitled to the next dividend payment and the share price has not been adjusted.
- Sometimes companies offer shareholders a way of taking dividends in the form of company shares. That is by traditional Scrip scheme. In a Scrip scheme, the cash dividend is not paid to holders. Instead, shares are allotted to participating holders and share certificates sent to them on the payment date. Scrip dividends have proved popular with shareholders.
Yes, this is possible with most bank accounts in Nigeria and is sometimes referred to as a ‘payment instruction’ or ‘dividend mandate’.
Mandating your dividends is easy and has a number of advantages for you.
Firstly, the dividend will go into your account on the payment date.
Secondly, the payment method is more secure than receiving a cheque through the post.
You can give us instructions online using our online service without the need to post a form.
You can click here to complete a form that can be printed and posted to us.
I sent you a payment instruction form. Why did I not then receive dividend ?
Dividend is usually paid to all shareholders on the register on a specified day, known as the ‘record or payment date’. Soon after this date, we will calculate the dividend due to all holdings and make payment to the shareholder whose e-dividend mandate has been updated in our records. If we receive your payment instruction form before this date we will do everything we can to register it in time for the dividend.
Sometimes however, you may not receive your dividend for the following reasons:
- The e-dividend mandate was not duly completed.
- Signature signed on the form differs from the signature specimen held in our records.
- You may not have signature specimen in our records
If your new account is with the same bank, it is expected that they will usually forward the payment to your new account.
If this does not happen, the bank should follow their procedure to return the money to us. We will then send you a cheque for the amount. We aim to do this very quickly after the dividend is paid but in some cases, it could take up to 1 month.
Dividends are a portion of a company’s profit that is paid to the shareholders, that is, the owners of the company. Dividends therefore vary in their amount depending on how profitable the company is, and if a company is not making any profit at all, it is unlikely to pay a dividend to shareholders.
Interest is paid by the company on money it has borrowed (for example, by issuing Loan Stock to investors) and is usually paid in arrears at the rates and times specified in accordance with the terms and conditions.
These are the most common reasons:
- If the dividend was made at a time when DataMax Registrars was not the registrar for the company, we may not hold the data.
- If 10 dividends are already displayed for the account – this is the maximum number we can display.
- If the payment was made more than 3 years ago it may not be displayed.
- If the information on a payment has been removed from the main register. For GTBank Plc, dividends paid within the last 24 months will be displayed.