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Mrs. Shittu started trading as a young
girl and in 20 years had established herself as one of Nigeria’s
largest distributors of high quality household brands ranging from baby
food and diary products to instant noodles. She also became a large
investor in the blue chip companies for whom she distributed products
and built a substantial share portfolio.

Whilst she was an experienced trader
and investor, she was one of those Nigerians that saw the writing of a
will, or any estate planning for that matter, as taboo. When she died
of a heart attack at 67 years old, leaving a legacy valued at hundreds
of millions of naira, it took her seven children seven long years to
sort out her estate and gain access to just a part of it.

Many share certificates were lost as
neither the administrators nor the beneficiaries had full knowledge of
the totality of the shares involved. Over time, some companies had
merged with others or ceased to exist. They were unable to trace a
large number of share certificates and some dividend cheques appeared
to have been fraudulently cashed.

Many legal heirs get caught up in a
long drawn out and tedious process after the death of an investor. Due
to a general apathy shown towards investments, share certificates and
dividend warrants are often not given the appropriate attention during
an investor’s lifetime and usually end up being lost or difficult to
trace. Consequently, many legacies or bequests go unclaimed and
abandoned. This has contributed to, and continues to exacerbate the
already large incidence of unclaimed dividends in the Nigerian Capital
Market.

Transmission of shares

The process by which securities of a
deceased account holder are transferred to the account of his legal
heirs is referred to as “transmission”. The process is an involving one
that includes, but is not limited to:

Obtaining either probate or Letters of Administration, whichever is applicable.

Presenting physical share certificates
if they have not already been lodged in the central depository prior to
the investors demise.

Presenting a certified copy of the death certificate along with other documents required in support of the application.

If the deceased shareholder had
holdings in different companies, the relevant documents must be
forwarded to each of the company registrars.

Payment of estate taxes, which is 10 percent of total estate value to the government, and a transmission fee.

Obtaining bankers confirmation for the various registrars.

Here are a few things you can do now to
minimise the stress that your beneficiaries go through to gain
ownership of the shares that you intend to leave them.

Dematerialise your share certificates

The share transmission process becomes
most complex where the deceased held shares in physical form in his
sole name and died intestate. The process of transmission in the case
of dematerialised holdings is simpler and much quicker.

In the depository system, the shares
are already account balances in the electronic form and the successor
needs interact only with the stockbroker to whom he submits necessary
documents.

In case of physical securities, the
legal heirs or surviving joint holders have to independently correspond
with each company registrar in which securities are held, which can be
a long drawn out process.

Make a will

When one dies leaving a valid will that
specifies how an estate including shares, property, and cash in the
bank should be shared among beneficiaries, the transmission process is
fairly straightforward once probate has been granted.

A trust is also an ideal vehicle to
hold assets for proper management and a seamless transfer, particularly
when a substantial estate is involved.

Shares held jointly

Some people opt to include their
spouses or other family members as named joint shareholders. In the
case of a joint shareholding, the registrar, after verifying the
transmission form and other relevant documents submitted by the
surviving shareholders, will delete the deceased members name from the
register.

Consequently, the remaining
shareholder(s) will be recognised as registered holders. The process is
much more unwieldy where a deceased shares are held in a single name
only.

Other planning options

There are other planning options that simplify the transfer of assets to beneficiaries.

Some investors purchase shares in the
name of a company or have shares transferred to a company vehicle with
beneficiaries as shareholders of the company. Upon the demise of the
investor, the authorised signatories of the company can simply be
amended to reflect the beneficiaries.

Another option is to open a nominee
account and transfer all the shares to an account managed by an
experienced portfolio manager as a discretionary portfolio.

Do something about your shares in your
lifetime. The effect of not properly handling these assets can only
result in a painful and frustrating time for your loved ones, which you
can avoid.

Even where certificates cannot be traced, along with their request
for transmission of shares, legal heirs can apply for the issuance of
duplicate share certificates.