SEC directs usage of electronic payment means for dividend payments effective May 2024
The Securities and Exchange Commission (SEC) of Ghana has issued a directive discontinuing the usage of dividend warrants as a means of dividend payment in the securities market.
A dividend warrant is a document that shows that a shareholder is entitled to dividends.
The directive, which is pursuant to sections 2, 3, and 209 of the Securities Industry Act, 2016 (Act 929), as amended, is part of the SEC’s efforts to promote an efficient, fair, and transparent securities market in which investors and the integrity of the market are protected.
In recent years, the SEC has been working towards the digitization of the securities market in Ghana. This latest directive is part of those efforts, as it directs that effective 2nd May 2024, all dividend payments shall be made through electronic payment means such as mobile money, bank transfers and other forms of payments as may be approved by the SEC.
The directive also mandates that all licensed Registrars take steps to update shareholder records with their electronic payment details.
The directive is a significant development for the Ghanaian securities market, as dividend warrants have traditionally been used as a means of payment. This is largely due to the lack of a reliable and efficient electronic payment system in the country.
However, with the increasing use of mobile money and other electronic payment systems in Ghana, the SEC has recognized the need to move away from the use of dividend warrants and embrace digital payment methods.
While the directive sets the effective date for the discontinuation of dividend warrants as 2nd May 2024, it does allow issuers who meet the relevant requirements to proceed with implementation before the given timeline.
This gives companies and other stakeholders in the securities market enough time to prepare for the transition to electronic payment means.
Furthermore, the SEC has advised shareholders of listed public companies to update their records through their respective licensed Brokers or Registrars with their electronic payment details in accordance with this directive.
Failure to comply with the directive may result in the SEC taking any action(s) specified under section 209(4) and any other relevant provisions in the Securities Industry Act, 2016 (Act 929), as amended, and/or any other relevant law.
The directive is a major step towards the modernization of the Ghanaian securities market and aligns with the SEC’s commitment to promoting an efficient, fair, and transparent securities market. The move to electronic payment methods is expected to increase efficiency, reduce costs, and enhance investor confidence in the market.
