The House Committee on Capital Markets and Institutions has raised alarm over the growing unclaimed dividends in the capital market, projected to cross the N200 billion mark at the close of 2020.
This projection was made by the Chairman of the House of Representatives Committee on Capital Markets and Institutions, Babangida Ibrahim, during an investigative public hearing on the “Need to Investigate the Rising Value of Unclaimed Dividends, Unremitted Withholding Tax on Dividends and their Attendant Effects on Nation’s Economy,” which held at the National Assembly Complex, Abuja.
According to a news report by NAN, he explained that the projection was not in the best interest of the market as well as market participants, since the problem of huge accumulated unclaimed dividends was a major challenge to the development of the Nigerian Capital market, as it had lingered for so long despite the best efforts of market regulators.
In his statement at the investigative public hearing, he said that in 1999, the value of unclaimed dividends was N2.09 billion, and by 2017 it had risen to N100 billion. In 2018, the value was N120 billion, but at the close of 2019, it had risen to N158.44 billion.
Rep. Babangida Ibrahim disclosed that the problem of the huge volume of unclaimed dividends could adversely affect investor confidence, decrease the availability of long-term capital for economic development, and likely trigger volatility in the regulation of the capital market.
What you should know
Recall that the Securities and Exchange Commission (SEC) had attempted to address the issue in 2006, when it sponsored a bill to establish the Unclaimed Dividends Trust Fund (UDTF), but the National Assembly at the time had not passed the bill because of opposition from the body of shareholders.
The Director-General of SEC at the investigative public hearing, Mr Lamido Yuguda, said about N29 billion of unclaimed dividends were, however, claimed by investors through the introduction of regularization of multiple accounts.
He said SEC introduced the regularization of multiple accounts in 2015, where it requested all shareholders with multiple accounts to harmonize them by filling e-dividend mandate forms.
According to him, the commission had begun mulling an initiative, to ensure consolidation of multiple accounts which involved the verification and isolation of the account beneficiaries, with a deadline of the first quarter of 2021, as the commission seeks to bring to an end the issue of unclaimed dividends.
What they are saying
Speaking on the steps taken by SEC to improve the efficiency of dividend payment, the DG of SEC, Mr Lamido Yuguda said:
“Some of these initiatives are the creation of a rule requiring Registrars to make electronic payments of dividends directly into shareholders’ accounts, and engagement with the probate registry to improve the process of obtaining and administering probate.
“All these initiatives are aimed at improving the efficiency of dividend payments, reduce the quantum of unclaimed dividends and, as a consequence, grow and sustain the confidence of existing and potential investors,”
Rep. Babangida Ibrahim said: “We are aware of measures that have been taken by the capital market regulator in the past to address the problem, but we can all see that the problem remains. In fact, the situation is worsening by the day.
“Some of the measures include e-dividend, dematerialization of share certificates, publication of names of owners of unclaimed dividends, among others. All these measures are very commendable, especially the fact that they are primarily aimed at ensuring that the shareholders, who are owners of the dividends, get the benefits of their investments.”
He added: “Dividends are distributions of earnings to shareholders, whether cash dividends or share dividends, also known as bonus shares, belongs to the shareholders and not to the company who distributed them or to the government. Therefore, every effort must be made to ensure that the shareholders gets their dividends from their hard-earned investment.”
FEC okays FMBN’s request to purchase banking application software for N487.39 million
The FEC has approved the request made by the FMBN to purchase core banking application software from FINTAX at about N487.39million.
The Federal Executive Council has approved the request made by the Federal Mortgage Bank of Nigeria to purchase core banking application software from Messrs FINTAX, worth N487.39million.
This disclosure was made by the Honourable Minister of Works and Housing, Mr. Babatunde Raji Fashola (SAN), as revealed by the Government of Nigeria, and seen by Nairametrics.
What they are saying
Commenting on the recent development, the Minister said: “The other memorandum I presented, which was approved for the procurement of a core banking application software for the Federal Mortgage Bank in the sum of N487, 394,285.71 to enable the bank provide all of the frontline services that other banks now provide in all of its branches.
“Unlike other banks, the Federal Mortgage Bank is still unable to send automated notices, statements, and all those things to National Housing Fund contributors; all the types of alerts you get and operating accounts from any branch irrespective of where you maintain your accounts.’’
Why it matters
The recent announcement is a welcome development, especially as it aims to digitalize the operations of the bank and reposition it to be more effective and efficient in carrying out its tasks.
Empirical studies have also shown that with technology, the growth boundary of any firm is limitless. As a result, Nairametrics believes that if adequately employed, the purchase and subsequent use of the software could be a game-changer for the bank.
What you should know
- The Federal Executive Council approved the sum of N120.72billion to facilitate sundry projects and purchases for effective delivery.
- Of this amount, Nairametrics had earlier reported that the Federal Government of Nigeria had approved the sum of N117 billion for road rehabilitation nationwide.
- The sum of N2.1 billion contract was awarded to Julius Berger to furnish the NIS Technology building, which houses the service’s data communication command and control center.
Intels is operating above the law due to its political influence – NPA Boss
The MD of the NPA has stated that Intels has been using its political influence to disregard government policies.
The Managing Director of the Nigerian Port Authority, Hadiza Bala-Usman has said that Integrated Logistics Services (Intels), has been using its political influence to operate outside of the legal framework of the Nigerian maritime regulations.
The NPA boss disclosed this in an interview with Arise TV on Thursday, in response to the contractual and TSA issues between the FG and Intels.
In her interview with Arise News, she said there is nothing political about the FG telling a company to pay what it owes to the TSA.
She said, “I don’t see what is political about a company complying with TSA. So, if government says all revenue of government should go into the Treasury Single Account and a private company refuses to comply, and government says you must comply, what’s political about that?
“In fact, who’s being political here? it is Intels, which has always had political advantage and always difficult to get them to comply with government’s directives. So, can we look at it that way, because I am curious as to what’s political about the fact that your contract ended and the NPA is reclaiming back its service.
“How is it political that your contract ended on August 9 and government said now that your contract has ended, we will continue that service you rendered and pay that your sister company for any revenue that arises and you say ‘No, I must be the service provider’. So, what’s political about that?
She said the political angle to the dispute was caused by Intels’ thinking that it is above regulatory scrutiny, because of its political influence.
“For me, what’s even political is the fact that a company thinks it is above the law, because it has been using its own political influence to operate outside of the legal framework. So, we should be asking Intels why it’s been political with its operations,” she said.
She added that the Service Boats relationship was another added layer to the conflict between the FG and Intels, citing that Intels sued the FG to remain as 3rd party service provider for Service Boats.
“On Intels, we have layers of relations. The noncompliance to TSA after a lot of pushback, and now their contract relationship with us on Service Boats has expired.
“They have gone to court to request for them to remain as the 3rd party provider, which is ridiculous. You can’t force government to allow you provide a service.
“Of course, we have another project to do with them regarding an amortization project. Revenues made from Service Boats is meant to pay for the amortization. But, the point is that Intels need not be the service provider for that service, to enable government repay them for that amortization.
“But of course, they have gone to court, and we are challenging it to ensure the FG gets value for their money,” she added.
What you should know
- Nairametrics reported in 2018 that Ms. Hadiza Bala-Usman revealed how the revenue from the pilotage agreement between the Federal Government, Ports Authority, and Integrated Logistics Services was shared.
- According to Bala-Usman, the agreement allowed Intels to take 28 percent of the generated revenue for its services, while noting that the agreement was silent on the sharing formula for the 72 percent balance between Intels and NPA. This loophole made Intels remit arbitrary payments to the government through NPA at its discretion.
- Intels, in October 2017 had been drawn into a battle with the NPA over the termination of the pilotage agreement with the firm, based on advice by Abubakar Malami, the Attorney General of the Federation (AGF).
- The company had threatened legal action, but later backed down and made assurances that it would comply with the Treasury Single Account (TSA) rules. This led to the issuance of ultimatum to Intels to pay $48million into the TSA.
- The NPA boss said the $48 million is the amount Intels ought to have remitted to the government between November 2016 and December 2017.
FIRS to commence recovery of all outstanding tax debts and penalties from January 1, 2021
The FIRS has stated that it shall recover all outstanding debt with penalties and interest from January 1, 2021.
The Federal Inland Revenue Service (FIRS) has disclosed that its waivers on penalties and interest on outstanding taxes arising from desk examinations, audit exercises, investigations, or all other forms of tax assessment will close on December 31, 2020.
Hence, effective from January 1, 2021 the Service shall recover all outstanding debt with penalties and interest, in accordance with the provisions of the extant tax laws.
This disclosure was made by Abdullahi Ismaila Ahmad, the Director of Communications and Liaison Department, Federal Inland Revenue Service, in a press release issued on December 2, 2020.
Consequently, the Executive Chairman, FIRS, Mr. Muhammad Nami, in a notice urged taxpayers to use the advantage of the remaining days of this month to settle their tax obligations in order to enjoy all subsisting waivers offered thereof by the Service.
The Executive Chairman in the reminder notice tagged “Public Notice on the Recovery of Outstanding Taxes from Taxpayers”, disclosed that FIRS in recent times, has issued a series of palliatives for the waivers of penalties and interest on outstanding taxes.
He explained that the Service had noticed that some taxpayers are yet to take advantage of the palliative windows opened to cushion the effect of the challenges of the economy on taxpayers.
Mr. Nami, however, called the attention of taxpayers to the last window of opportunity for the waiver of outstanding penalties and interest on all taxes collectible by the Federal Inland Revenue Service, which will close on 31st December 2020.
What they are saying
Mr. Muhammad Nami, in the reminder notice, said:
“The Service has observed that some taxpayers are yet to take advantage of the palliative windows opened to cushion the effect of the challenges of the economy on taxpayers.
“Furthermore, the Service wishes to put all taxpayers on notice that the last window of opportunity for the waiver of outstanding penalties and interest on all taxes collectible by the Federal Inland Revenue Service shall close on 31st December 2020.
“Consequently, all concerned taxpayers are hereby put on notice that after the expiration date of 31st December 2020, the Service shall recover all outstanding debt with penalties and interest, in accordance with the provisions of the extant tax laws such as ‘the power of substitution’ conferred on it by Section 31 of the Federal Inland Revenue Service (Establishment) Act 2007.”