South Africans owed R4.5 billion in unpaid dividends

South Africa currently has approximately R4.5 billion worth of unclaimed dividends, and about 309,900 South Africans are eligible to claim these from companies like Old Mutual, Sasol and Naspers.

As such, the JSE has undertaken a campaign to encourage South Africans to check whether they may be eligible to claim any dividends, explained Vuyo Lee, director of marketing & corporate affairs at the JSE, on the Kaya Biz podcast.

“What we are doing with this campaign is actually encouraging people to come forward, check their dividend status, and find out whether they’ve got unclaimed dividends with the issuers that are participating,” Lee said

“We’ve got about 19 registries that make up about R1.2 billion. So this is a real big chunk of the 4.5 billion – representing about 373,000 shareholders – which is a lot of shareholders this could make a profound impact on.”

She explained that there are multiple reasons why people may have unpaid dividends owed to them.

She said the first reason boils down to education. Some people may not be aware that dividends are due to them when they purchase certain shares, especially since not all companies pay dividends.

Some people may also have forgotten that they bought certain shares in the past or have changed some of their personal details in the meantime, making it harder to find and pay them.

For example, when people change their banking details, any dividends paid out to that original account will simply bounce back.

Similarly, when someone changes their home address without advising the issuer, they will become classified as a “lost shareholder”.

A large number of unpaid dividends also result from shareholders passing away. In cases like these, their beneficiary will be owed these unpaid dividends, which is why it is so important for investors to prioritise their wills.

Lee explained that in the JSE’s base of 373,000, about 69,000 shareholders have passed on, which is over 18% of the outstanding shareholder base.

Lee explained that the JSE has built a shareholder base using information provided by participating issuer companies to identify South Africans owed dividends.

Based on that information, they built a portal to help determine whether additional information about those shareholders is available.

“We’re very proud to say that we’ve managed to do an 86% match of the shareholders that are represented by the 19 registries.”

Potential shareholders can check whether they have any outstanding dividends using the “claimant” tab on the JSE website.

“The portal will then have a response as to whether there is a probability that you have a dividend that’s outstanding or not. And if not, we will ask you for more details just to double-check that, indeed, you don’t have a dividend.”

Alternatively, people can also phone the JSE’s call centre, which will help the caller through the steps and tell them which documents they need.

“We’re very proud of this capability that we built because most of the reasons why people are not found is because we don’t have details like ID numbers or addresses.”

This system’s achievement of a match rate of 86% means that the JSE will be able to give people a very accurate answer about whether they have outstanding shares.

Lee cautioned that shareholders who are able to successfully claim should also be aware that South Africa has a 20% dividend withholding tax.

This means that if your dividends are worth R1,000, for example, you will only receive R800. However, this is already handled on the JSE’s end and consumers do not have to take any extra steps.

However, she cautioned that although the JSE is making an effort to spread awareness, it is only running an inbound campaign, which means that it is not reaching out to dividend holders.

In other words, if someone receives a phone call, email, or message saying they or one of their deceased relatives are owed dividends, it is likely fraudulent.

“We’ve gone through extensive work to make sure that we mitigate against fraud because we do realise that it is the everyday reality of people in South Africa,” Lee said.

“The piece of work that we’ve done for a starting point is to make sure that our processes are rigorous and we have the necessary documentation to make sure that we are paying the right person, and we do have certain remedies if something goes wrong.”

Since the JSE still wants to raise awareness of this problem, it will launch a marketing campaign on February 10th, presented by JSE brand ambassador and former South African footballer Lucas Radebe.

“We’ve done quite a lot in terms of really thinking about how we cut through the scam barrier and make sure that members of the public trust that we’re a legitimate organisation that has very good intentions to pay out the billions in unclaimed dividends,” she added.