South African financial markets face a significant challenge in the form of unclaimed assets, with unclaimed dividends in particular surpassing R4 billion, as highlighted in a whitepaper by the Financial Sector Conduct Authority (FSCA).
The conundrum exists where thousands of shareholders have not been paid for assets such as dividends or share buy backs, and the issuers trying desperately to locate and pay their ‘lost’ shareholders are sitting on a growing liability affecting their balance sheets, while impacting governance responsibilities as shareholders remain disengaged.
Numerous underlying reasons can result in a lost shareholder. They can move or relocate, change bank accounts, changes to mobile number or email address, or personal detail changes due to marriage or other legal processes, and may not update these changes with the respective issuers. Should shareholders pass away, their shareholding may not be included in their estates and the executor will not be aware as a result.
With the FSCA engaging various market participants, and putting greater emphasis on the need for a coordinated approach to identify, manage, and minimize dormant and unclaimed assets, there is a greater urgency for issuers to reduce the amount of unclaimed assets.
Having an instinctive knowledge of issuer concerns and market realities, Computershare had already begun to address the broader issue of unclaimed assets several years back to identify, verify and trace thousands of shareholders entitled to unclaimed assets. In the past five years alone, Computershare has already facilitated payments exceeding R1 billion that is rightfully owed to legitimate shareholders.
A direct benefit has been the number of shareholder records that get verified and updated. Computershare’s initiatives have led to the verification and updating of more than 204 800 records with the latest mobile numbers, email addresses, ID and deceased status. Having the latest contact information opens communication with shareholders and further improves governance practices. With up-to-date details, shareholders receive vital corporate information about companies they invest in, information about upcoming AGMs where they can vote on resolutions, enabling informed decisions and active shareholder participation.
Several stories have emerged from shareholders benefiting from Computershare’s efforts, after receiving the news that they have unclaimed assets owed to them. One shareholder was planning to take out a bank loan so that his daughter could continue university, as he could no longer afford the tuition fees. The payment of his unclaimed dividends enabled him to pay for her university. With the tougher market conditions, another shareholder had lost his income and was facing the loss of his house, but then received a substantial dividend payment to avoid this. Another shareholder used the payment received to save their business and continue employing their staff, and elsewhere a student inherited shares and was contacted to be surprised by the amount of unclaimed assets that were owed to her.
Investing in technology and talent, Computershare has scaled its asset reunification efforts to meet market demands effectively. It’s current asset reunification technology already uses quick and secure digital shareholder verification that is authenticated across home affairs and national financial bureaus, providing additional assurance and governance. With its imminent innovation pipeline, this solution will soon evolve to map out a unique blueprint that raises the bar in asset reunification, unlocking further value for its clients and significantly improving the shareholder experience and impacting their financial prosperity.
Notably, Computershare offers asset reunification services as part of our standard service offering, unless issuers want to expedite an asset reunification project to meet specific objectives. We have customised projects for clients to meet certain targets within a specified time.
In addition, Computershare has been actively engaging market participants to meet financial market development objectives, participating in industry discussions and regulatory compliance, reflecting its commitment to contributing to broader financial sector goals. It uses years of local expertise and enhances its knowledge with valuable insights from its global network to share international best practices.
In its commitment to fostering talent and social responsibility, Computershare integrates Yes-4-Youth graduates in its contact centre, building their financial literacy and skills development and allowing the company to employ the country’s talented youth to better serve our clients and shareholders.
Computershare continues to collaborate with South African issuers and stakeholders and keep them on the front foot, its solutions are trusted to deliver insight, comfort and assurance to meet their priorities and stay ahead of change. With a track record of excellent and for driving financial market development, Computershare remains a trusted partner in navigating the complexities of the financial sector.