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It's time to talk about dividends

Friday, 10 October 2014

Equiniti’s Director Mark Bullen describes how we’re making paying shareholders easier and more effective

In 2013, Equiniti were responsible for dividend payments in excess of £24 billion, across more than 1,100 tasks. Specific activities ranging from Task Planning, Document Design, Technical Advice & Project Management, Process Control and Central Reconciliation were all involved.  Our combination of passion and more than 350 years of experience across the team ensured shareholders received the right dividend payments at the right time.

Continually improving service levels is vitally important to us. In response to customer feedback we have changed our processes to include a single point of contact for planning and proofing, whilst more than 1,200 hours have been dedicated to staff training, and dividend stationery has been redesigned to make it clearer and more appealing to shareholders.

Equiniti currently manages 63 DRiP schemes and the majority of these operate a minimum commission shareholder fee, which spreads the cost more equitably. For 17 clients, we operate Scrip, which has increased in popularity in recent years as PLCs consider the benefits of cash retention.

Working pro-actively with clients is essential to determine which scheme is more appropriate for their needs. As part of this process, we work in partnership with clients to consciously decide whether the DRiP or Scrip scheme is the best option, or whether moving to a different scheme would have greater benefits.

A number of things need to be considered if a change in scheme is the best way forward, such as:

  • Can existing scheme mandate instructions be carried forward?
  • What is the best way to manage the residue funds from the outgoing scheme?
  • What is the optimum balance between cost management and shareholder experience/shareholder participation?
  • What are the PLC’s key performance indicators for the new scheme

The earlier in the process Equiniti’s expertise comes into play, the more value we can add.

Our communications have recently been further enhanced after working with specialised consultants and our stationery now has the maximum impact when it reaches shareholders. There are only 15 seconds from the point a shareholder opens their mail to capture their interest and motivate them to act and since revamping our stationery with this in mind we are experiencing significant increases in positive shareholder response levels.

Including an ‘unclaimed monies’ notification has proved a great way to increase shareholder engagement – following a recently improved client campaign - we saw a 200% uptake on the previous dividends. However, there is still more engagement +BACS authorities to gain, as a number of shareholders still prefer the 'security' of knowing the dividend has been received via the physical traditional cheque. We recognise there is still work to do to sell the concept of BACS dividend payments to a wider audience and we accept that challenge.

Dividend payments to overseas shareholders are paid via Equiniti’s Overseas Payment Service, directly into nominated overseas accounts in the local currency. This service is secure, reduces costs for the shareholder and avoids the build-up of unclaimed payments. With such a range of benefits, Equiniti is currently developing a revised promotion of this service to reach out to more overseas shareholders.

For further information on the practical issues around articles of association relating to dividend distributions we have provided a copy of the ICSA Registrars Group Guidance Note available to download below.

Innovation is key to our business and with that in mind, there are currently a number of exciting and valuable things in the pipeline, such as value added dividends and payment by mobile. These are just some of the areas that Equiniti is looking into for the future.

For more information on this topic, please contact your relationship manager.

Ezine issue: October 2014