Question:
I bought Netcare (Network Healthcare) shares 12 years ago, but have never received a cent in dividends despite writing to them many times.

What do I do to get my dividends plus interest?

Answer:
Your complaint is not uncommon. Many people do not receive their dividends from listed shares — not because companies don’t pay them, but due to administration errors (often on the part of the shareholder).

I contacted Mr. Bert Kok, the Head Office Company Secretary at Netcare Limited, and he did some investigation into the matter. This was his reply:

“The shareholder (name withheld) basically informed the wrong party of her address changes. As a result her dividends were sent to the old address and her file was eventually marked as address unknown. We are not required to trace shareholders when they move — the onus is on the shareholder to inform the share registrars of the address changes”.

Mr. Kok went out of his way to track down your records and remedy the situation. If all large companies had people like him in their ranks life would be so much easier!

He also suggested that all shareholders in possession of paper certificates should have them dematerialised as doing so will have the following benefits:

  1. There would be no difficulties regarding address changes as the shares will always be with a stockbroker.

  2. There would be no ‘lost cheques’ as the funds are electronically transferred into the linked money market account with the stock broker.

  3. Shares would be tradable. In paper format they are not.

  4. There would be no lost share certificates, a matter that occurs frequently.

There are brokers out there who do not charge a monthly fee to keep shares in custody — they make their money on actual sales, so there is no excuse for not converting shares if you are a long term investor. Also, reinvesting dividends is a key part of building future wealth and can even be used to diversify the portfolio.

There are a number of companies grappling with a legacy of paper shareholders and all of them would welcome any focus on reducing this administrative nightmare.

As some shareholders have simply vanished and are untraceable several older companies have actually changed their articles to include a prescription period on unclaimed dividends. Some include articles instructing the donation of dividends under a certain amount (i.e. R15) to charity.

STRATE (Share Transactions Totally Electronic) have been running a charity sales program for years whereby shareholders holding a minute number of shares (mainly from odd-lots or cap awards) can donate those shares as, more often than not, the cost of selling small numbers exceeds the value of the transaction. STRATE agglomerates all donated shares, sells them in the market and donates the proceeds to worthy causes at no cost to the investor.