What Does Employee Share Scheme Administration Involve in Nigeria?

Setting up an employee share scheme is just the beginning. The ongoing administration of the scheme — processing allotments, registering shares, handling dividends, managing leavers, and providing compliance reporting — requires dedicated expertise and a reliable administration platform. Here is what that administration involves.

1. Share Allotment Processing

Every round of share allotments must be processed accurately: which employees receive how many shares, on which date, under which scheme round. The administrator receives the allotment instructions from the company, validates them against the scheme rules, and processes the allotment — providing full documentation to the company and notifying each employee.

2. CSCS Registration

This is the most critical administrative step. Each employee's allotted shares must be registered through the Central Securities Clearing System (CSCS) in that employee's own legal name, under their CHN (Central Holder Number). Registration creates the official ownership record. The administrator coordinates with the company's registrar to complete this step and provides confirmation once each registration is in place.

3. Dividend Administration

When the company declares a dividend, each employee who is a registered shareholder is entitled to receive it. The administrator supports the process of ensuring each employee's bank details are registered with the company registrar through the NGX e-dividend system — so dividends flow directly to the employee's bank account, not through an intermediary.

4. Leaver Management

When an employee leaves, the administrator must process their departure in line with the scheme rules: confirm which shares have vested (and therefore remain the employee's property), manage any unvested share forfeiture, update the CSCS records, and ensure the company's allotment register is accurate. This must be done promptly and with a clear audit trail.

5. Employee Account Management

Employees need to be able to access information about their shares — how many they hold, the current value, their vesting status, and their ownership documentation. The administrator provides the platform for this access, handles employee queries, and ensures each employee's account remains accurate.

6. Compliance Reporting

The company secretary, board, auditors, and SEC need complete and accurate records of the scheme. The administrator provides: allotment registers, CSCS registration confirmations, leaver reports, dividend records, and any documentation needed for regulatory filings or AGM materials.

Questions to Ask Your Administrator

• Do you register shares directly in each employee's name through CSCS — or in a pooled structure?
• How quickly are allotments processed and confirmed after we submit instructions?
• How do you handle the e-dividend registration process for new scheme participants?
• What is your standard process when an employee leaves before their shares have vested?
• What compliance reports do you provide, and how frequently?
• Can you provide a sample allotment register and CSCS confirmation document?