Download Shares Registration

SHARES REGISTRATION
PRESENTED
TO
THE PARTICIPANTS OF THE 1ST CS PRACTITIONER’S SEMINAR, ON
FRIDAY, MARCH 10, 2017
BY: CS VICTORIA CHEROTICH
B.com, MBA, CPS(K), CPA(K), LLB, Certificate in Investor RelationsInvestor Relations Society-UK, Master in Public Policy and
Administration (MPPM)-Ongoing
2
OUR ROLE TODAY
 60 MINUTES PRESENTATION
 60 MINUTES INTERACTION
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STRUCTURE
OF
PRESENTATION
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1. Introduction- Image Registrars, Certified Public Secretaries
2. Our Experience
3. Share register maintenance
4. Managing Shareholders Relations
5. Management of Bonds
6. Management and Processing of Dividends
7. Share Transfers, Transmissions and Immobilisations
Q&A
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1. INTRODUCTION
•Image Registrars (IR) is a certified public secretarial firm
formed in 1994 to offer company secretarial as well as shares
registration and other related services such as trusteeship and
management advisory to both quoted and unquoted
companies across the public and private sectors of the
economy.
•In 2008, the firm was converted from a partnership to a limited
liability Company. The Directors include Certified Public
Secretaries and Certified Public Accountants of good
standing.
•IR currently manages 16 equity and 4 debt listed securities,
and several public unlisted securities.
•Currently, our combined shareholder base totals to over
1,400,000.
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2. OUR EXPERIENCE
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3. SHARE REGISTER
MAINTENANCE
 The Companies Act 2015 Part VII, Division 2 –
Register of Members, provides that every
company shall keep a register of its members
and shall have the following information as
minimum:
◦ Names and addresses of the members
◦ Number of shares held by each member distinguishing
each share by its number and by its class if more than
one class
◦ Date on which each person was registered as a
member
◦ Date on which any person ceased to be a member.
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SHARE REGISTER
MAINTENANCE…
 Shares registration does not have a single
body of rules and regulations that govern its
practice but it borrows from different
bodies such as CMA, NSE, CDSC and The
Companies Act 2015.
 The Shares Registrar is the link between the
Issuer of Shares and the Investor
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Main Duties in Share Register
Maintenance for Listed Companies
 Initial set-up of the register
 Verification and immobilization of share certificates
 Shares transfers and transmissions
 Change of shareholder details
 Shareholder correspondences
 Dividend management
 Periodic reconciliation with CDSC
 Unclaimed Assets Management
 General Meetings Management
 Monthly and Quarterly statutory returns to CMA
 Corporate actions
 Other responsibilities
 Risks
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Initial Set up of the Register
 Members are entered into a shareholders’
register:◦ After allocation of shares in a public offering
◦ Upon purchase of shares from an existing
member and transferring the said shares to the
transferee, or through an estate transmission.
 NOTE: It is important to ensure that the issued
shares of the company are all allocated to each
member so that the bottom-line total is equal to
total issued shares of the company, at all times.
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Verification and Immobilization
of Share Certificates
 Verification refers to the process of ascertaining the validity of
the documents presented and that the person executing the
documents has the necessary authority to do so.
 Immobilization refers to the process of transforming shares held in
certificate form to electronic form.
 These shares are stored in CDSC accounts under various CDAs.
For those who are yet to immobilize their shares, these shares are
still held electronically under the issuer in non-trading accounts.
 Verification is a prerequisite to immobilization.
 The documents involved in immobilization include:◦ Original Share certificate
◦ Duly filled CDS 2 Securities Deposit form
◦ Provisional Deposit schedule (PDS)
◦ Any other relevant documents
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Change of Shareholder Details
 Non-Trading Account holders (Certificates)
 The registrar receives requests from shareholders
who are yet to immobilise their shares, to change
their particulars in the register, e.g. Names, postal
addresses, bank details.
 The registrar verifies that the requests are from
the shareholder or other persons duly authorised
to do so.
 In case of name change, the registrar will require
an affidavit duly sworn or gazette notice proving
legal change of name, as well as a certified
copy of identification documents.
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Change of Shareholder
Details…
 Trading Account holders (Immobilised)
 All changes of shareholder details are
effected through their respective CDAs.
 The Registrar is updated on these
changes on a monthly basis on receipt of
the download files from CDSC.
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Shareholder Correspondence
 The registrar keeps track of all correspondence to and
from shareholders.
 In the current environment, shareholders
correspondence is received electronically via email
and social media.
 It is important to ensure that all correspondence is duly
signed by the shareholder or other person duly
authorised.
 Response to all correspondence from shareholders
should be timely, accurate and easy to understand.
 Filing should be systematic and organised to ensure
easy retrieval of letters.
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Dividend Management
 A major part of shares registration is dividend
management.
 The Registrar is normally mandated to calculate
dividend per shareholder based on the approved rate
per share, to come up with the gross dividend,
withholding tax deducted and net dividend payable to
shareholders in the register of members as at book
closure date.
 Reconciliation of the dividend account (s), RTS cheque
management and tax exemption monitoring, all form
part of the dividend management process.
 The overall objective is always to ensure that the
shareholder receives his/her entitlement as efficiently
and effectively as possible.
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Periodic Reconciliation with
CDSC
 The registrar shall, at the end of the month, or at
a cut-off date agreed with CDSC, reconcile the
immobilized shares for that period against the
shares held by the CDSC for a particular
company.
 CDSC will generate a list of confirmed share
certificates and the registrar will compare this list
with their list of acceptances for the same
period.
 Any discrepancies will be investigated and
corrected to ensure that total shares in the CDSC
are equal to the total shares immobilized by the
registrar.
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Unclaimed Financial Assets
Management
 The Unclaimed Financial Assets Act provides for the
surrender of all unclaimed financial assets to the
Unclaimed Financial Assets Authority annually.
 Dividends issued to the public and which remain
unclaimed for a period of more than 3 years qualify for
surrendering to the Authority.
 The Registrar is therefore expected to maintain proper
records of all claims as well as updating the paid status
for dividends to establish what is meant to be
surrendered in compliance with the UFA Act.
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General Meetings Management
 The Registrar plays an important role in the management of
general meetings of shareholders.
 As the custodian of the shares register, the Registrar will carry
out the attendance recording of the members attending the
meeting, filtering to ensure that only bonafide shareholders or
their duly appointed proxies are allowed into the meeting.
 Before the meeting begins, the registrar will be expected to
provide a report to the Company Secretary on the number of
shareholders and proxies who have attended, for purposes of
confirming whether or not there is a quorum.
 In the event of a poll being called for, the registrar will provide
ballot papers, ballot boxes, and a tallying system to count the
votes and relay the results within the stipulated time.
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Monthly and Quarterly Returns to
CMA, NSE
 According to the CMA Foreign Investors Regulations (2002)
section 4, every listed company shall maintain a register of
shareholders of ordinary shares showing at all times the holding
by: Foreign investors
 Local individual investors
 Local institutional investors
 Accordingly, every listed company shall within 10 days following
the end of each month, submit a report showing details of the
holding of its ordinary shares in the above categories.
 The details required include the names, addresses, shares held
and percentage shareholding.
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Monthly and Quarterly
Returns to CMA, NSE…
 For listed bonds, besides the above monthly reports,
the Fifth Schedule to The Capital Markets (Securities)
(Public Offers, Listing And Disclosures) Regulations,
2002 which elaborates on continuing obligations
specifying the nature of interim and quarterly reports.
Paragraph B. 19 A of this regulation puts the
obligation of submission of these returns on the
arranger of the issue. However, the Registrar, being
the custodian of the bond register, prepares the
report in the prescribed format and provides it to the
arranger for submission by the 10th of the month
following the end of the quarter.
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Corporate Actions
 These include dividend payments, bonus issues,
rights issues, Annual General Meetings, etc.
 The listed company is expected to announce a
book closure (record) date for purposes of
identifying those shareholders who qualify for
the corporate action.
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Corporate Actions…
 CDS will provide an Entitlement Download File
containing the list of shareholders to the registrar
and the registrar will perform the entitlement
processing and distribution.
 This applies to dividends, bonus and rights issues.
 The registrar will then generate an Entitlement
Upload File for crediting of new shares at CDSC,
in case of bonus and rights issues and share
swaps.
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Other Responsibilities
 These include :Annual return filing to Registrar of Companies
Replacement of lost share certificates
Custody of documents
Any other duty that may be agreed on
between the registrar and the company.
Company Secretarial Services Support
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Registration Risks
•
DUPLICATE CERTIFICATES
•
WRONG CREDITS TO CDSC
•
PLEDGED SHARES
•
FRAUDS
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4. MANAGING SHAREHOLDER
RELATIONS
Need for Relationship Management:
• Shareholder rights and investor protection are a key element
of Corporate Governance. The CMA Code of Corporate
Governance Practices for Issuers of Securities to the Public
2015 provides for the rights of shareholders under Chapter 3.
• The Registrar plays a key role in shareholder relations being
the link between the Issuer and the investor. Thus the need for
good relationship management of shareholders.
• This would involve ensuring full and timely disclosures to
shareholders on pertinent matters that touch on their
investment, e.g. company performance.
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MANAGING SHAREHOLDER
RELATIONS…
Need for Relationship Management…
• Shareholders should be provided with the
opportunity to participate in decision making of the
Company by being invited to general meetings.
• The Registrar should also be proactive in resolving
any shareholder issues that may arise.
• Investor relationship has now become a key
department for issuers. Some of the activities under
this department include investor engagement and
education forums, shareholder tours to company
installations, etc.
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MANAGING SHAREHOLDER
RELATIONS …
Types of Shareholder Interaction
•Face to face
•Telephone calls
•Email
•Online Portal
•Social Media Platforms
•Road Shows
•Shareholder Tours
•Shareholder Circulars
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5. MANAGEMENT OF BONDS
 Definition:
A corporate bond is a debt security issued by
a corporation and sold to investors. The backing for
the bond is usually the payment ability of the company,
which is typically money to be earned from future
operations. In some cases, the company's physical assets
may be used as collateral for bonds.
 Difference between Bonds and Shares:
Shares represent an ownership interest in
a corporation. Bonds are a form of long-term debt in which
the issuing corporation promises to pay the principal
amount at a specific future date.
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MANAGEMENT OF BONDS…
Types of Bonds:
 In general, fixed-income securities are classified
according to the length of time before maturity.
The three main categories are:
 Bills - debt securities maturing in less than one
year.
 Notes - debt securities maturing in one to 10
years.
 Bonds - debt securities maturing in more than
10 years.
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MANAGEMENT OF BONDS…
 Duties of a Bond RegistrarCorrespondence
Reporting – monthly and quarterly
reports
Calculation and Payment of Interest
and Redemption
Transfers
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6. MANAGEMENT AND PROCESSING
OF DIVIDENDS
 Types of Dividends:
 Interim Dividend – normally declared and paid after
half year results. This is based on Board approval but
should be ratified in the next AGM.
 Final Dividend – normally declared and paid after full
year results but upon approval by Shareholders at the
AGM.
 Special Dividend – may be declared by a Company if
they realized an abnormal gain outside their normal
business operations, e.g. disposal of an asset, gains
from investments, etc.
 Scrip Dividend - is a dividend payment made in the
form of additional shares rather than cash payout.
Companies may decide to distribute this type of
dividend if the company’s availability of liquid cash is
in short supply.
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MANAGEMENT AND
PROCESSING OF DIVIDENDS…
Types of Payment Modes:
Cheque
RTGS/ EFT
Mobile Money
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MANAGEMENT AND
PROCESSING OF DIVIDENDS…
Dividend payment process
 The registrar will prepare a payment list showing
different payment modes such as cheque payment,
Electronic Funds Transfer, cash, Mpesa, etc.
 The registrar will prepare and dispatch payment
warrants and notices to shareholders within 90 days
from the date of payment.
 The registrar will also submit a withholding tax file to
the Issuer for submission to KRA within 30 days from
date of payment.
 In some cases and depending on the agreements
between the registrar and the listed company, the
registrar will also reconcile the dividend payment
account by virtue of their role in the overall dividend
process.
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MANAGEMENT AND
PROCESSING OF DIVIDENDS…
 Dividend Reconciliation:
 This is an important process in ensuring that the dividend
register is up to date. It enables the registrar to handle
shareholder queries on dividends more effectively. It
also helps determine what should be surrendered to the
UFAA at any one time.
 Challenges:
 Frauds
 Incomplete address information
 Wrong bank details
 Inefficient postal system
 Unclaimed dividends
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7. SHARE TRANSFERS, TRANSMISSIONS
AND IMMOBLISATIONS
Verification and Immobilization Process:
• Share certificates and the deposit form (CDS2) will be forwarded
to the registrars, for verification of authenticity of the certificate,
shareholder details and signature.
• The registrar will acknowledge receipt of the documents and
verify them, by checking that:
•
The share certificate is valid, i.e. shares, date, seal, security features
•
The CDS2 form is duly filled, i.e. all required details, CDA declaration,
CDSC approval
•
The names on the share certificate are the same as in the register and
on the CDS2 form
•
The signature and ID number on the CDS2 form are the same as those in
the register
• The registrar is expected to accept or reject the documents within
4 working (market) days and inform the CDA accordingly
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SHARE TRANSFERS, TRANSMISSIONS
AND IMMOBLISATIONS…
Verification and Immobilization Process…
 If accepted the registrar shall prepare the documents
to be forwarded to CDSC for electronic crediting of
the shares to the respective accounts.
 If rejected the registrar shall return the documents to
the CDA indicating clearly the rejection reason
 Possible rejection reasons include:
 Signature differs
 Wrong ID number
 Names and other details differ
 Invalid certificate, etc.
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SHARE TRANSFERS, TRANSMISSIONS
AND IMMOBLISATIONS…
Share Transfers and Transmissions
 Transfer of shares refers to the transfer of title to shares,
voluntarily, by one party to another.
Transmission of shares means the transfer of title to
shares by the operation of law e.g. Insolvency, death,
inheritance or lunacy of the member.
 Share Transfers and transmissions under the
dematerialised market are carried out electronically at
the CDSC. However, the Registrar has the obligation to
verify the supporting documents before the CDSC
accepts to act on them.
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SHARE TRANSFERS, TRANSMISSIONS
AND IMMOBLISATIONS…
Share Transfers and Transmissions…
 Private Transfers include:
A gift to a close relation: A close relation is
specifically defined to include spouse, parents,
siblings, child, father-in-law, son-in-law,
daughter-in-law, mother-in-law, brother-in-law,
grandchild or spouse of a grandchild
Settlement of will or estate of a deceased
person;
Restructuring/Merger/acquisition approved by
the CMA
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SHARE TRANSFERS, TRANSMISSIONS
AND IMMOBLISATIONS…
 Transfer of shares as a gift:
 A shareholder is required to submit specific documents
to enable the approval process to be concluded;
 Share transfer form signed by both the shareholder
and the recipient in the presence of a witness. if the
shares are already immobilized, the shareholder will
have to complete CDS form 7 available from his/her
CDA.
 All the original share certificates. Incase of
misplaced or lost certificates, the shareholder will
need to sign an indemnity form to be sworn before
a commissioner of oaths or a notary public.
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SHARE TRANSFERS, TRANSMISSIONS
AND IMMOBLISATIONS…
 Transfer of shares as a gift:
 An affidavit sworn in the presence of a
commissioner of oaths or a notary public
confirming that the shares have been given as a
gift. This affidavit must also specify the relation
between the transferor and the transferee of
shares.
 A certified copy of the shareholder’s
identification card/ passport
 A certified copy of the new shareholder’s
identification card/passport and birth/marriage
certificate as evidence of a close relationship.
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SHARE TRANSFERS, TRANSMISSIONS
AND IMMOBLISATIONS…
 Transfer of shares from the estate of a deceased:
 Share transfer form signed by both the administrator of
the estate of the deceased and transferee/beneficiary
( CDS2, CDS7, sale & purchase form);
 A certified copy of the death certificate;
 Original share certificates . In the case of lost/misplaced
certificates, the Executor/Administrator needs to sign an
indemnity form before a commissioner of Oaths or a
Notary Public;
 A certified copy of the identification card/ passport of
the Executor/Administrator;
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SHARE TRANSFERS, TRANSMISSIONS
AND IMMOBLISATIONS…
Transfer of shares from the estate of a deceased…
 A certified copy of the identification card/
passport of the transferee/beneficiary;
 A certified copy of grant of probate with written
will or letters of administration;
 A certified copy of the confirmation of grant of
probate/grant of letters of administration (if grant
has been issued outside Kenya, it must further
undergo the re-sealing process by the high court of
Kenya, at the executor’s/administrator’s cost in
accordance with the Kenyan laws of succession)
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SHARE TRANSFERS, TRANSMISSIONS
AND IMMOBLISATIONS…
Transfers and Transmissions Process
 Current shareholder or administrator of an estate fills the
details of the securities being transferred, signs and gives
the sale transfer form together with the other necessary
transfer documents to the transferee.
 Transferee (or the prospective beneficiary) completes
the purchase part of the securities transfer form, and
forwards completed to a licensed broker who forwards
the same to the company whose shares are being
transferred through the company’s registrar.
 The company registrar goes through the documents and
certifies that they are in order before sending them back
to the licensed broker, who forwards the same forms to
the NSE.
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SHARE TRANSFERS, TRANSMISSIONS
AND IMMOBLISATIONS…
Transfers and Transmissions Process…
 The NSE checks the accuracy and authenticity
of the documents NSE will then stamp the
documents and forward the same to the
registrar.
 The registrar will thereafter forward the
documents to CDSC to credit the shares direct
to the beneficiary account.
 The CDSC will forward to the registrar confirmed
PTS for transfer to be effected in the system.
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THANK YOU
Q&A
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