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Debt Securities

N200 billion Unclaimed Dividend: Securities dealers reject FG’s plan to manage fund

ASHON has rejected plans by the Federal Government of Nigeria to manage the N200 million unclaimed dividends.

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Some capital market experts, represented by the Chairman of the Association of Securities Dealing Houses of Nigeria, have rejected plans by the Federal Government of Nigeria to manage unclaimed dividends – which is projected to hit N200bn by the end of this year, according to a report by Punch.

The Chairman, Association of Securities Dealing Houses of Nigeria, Onyenwechukwu Ezeagu, explained that capital market regulators and operators had leveraged technology to put in place many initiatives to address the issue of unclaimed dividends. Some of these initiatives include de-materialization of shares, which entails upload of quoted companies share in the Central Securities Clearing System for ease of reconciliation, adoption of e-dividend and e-mandate, consolidation of multiple accounts, identity management engagements, and introduction of electronic Initial Public Offering.

(READ MORE: Nigeria needs $5billion for National Broadband Plan – Chairman, BISC)

What they are saying

Commenting on the recent development, Mr. Ezeagu said, “Generally, the incentives for savers and capital providers in the capital market is the expectation of dividends and capital appreciation.

It is, therefore, our considered view that the proposed legislation, if passed, will be a great disincentive to savings, long-term capital mobilization, and serious disruption of the Nigerian economy, since it will take away the only expectation of investors in the market.”

Corroborating him, the President, Chartered Institute of Stockbrokers, Mr. Olatunde Amolegbe, said the Securities and Exchange Commission would always ensure the transfer of unclaimed dividends to the capital reserves of the company for restricted utilization, such as capital expansion and issuance of bonus shares to the company’s shareholders.

What you should know

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Nairametrics had earlier reported that some law makers (Reps) raised alarm over N200 billion unclaimed dividends in 2020. In lieu of this perceived need, a proposal for the creation of an unclaimed dividend and utilized bank balance trust fund was emphasized in the 2020 Finance Bill — wherein, dividends declared and unclaimed would be warehoused and owed as a perpetual debt to shareholders.

Chidi Emenike is a graduate of economics, a Young African Leadership Initiative Fellow and an Investment Foundations certificate holder. He worked as a graduate Teaching Assistant in the Federal College of Education Kano and is also a trained National Peer Group Educator on Financial Inclusion

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    Business

    DMO reveals what infrastructure Sukuk Fund is financing

    The Debt Management Office revealed that Sukuk funding is currently rehabilitating the Outer Marina Road in Lagos.

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    The Debt Management Office revealed that Sukuk funding is currently rehabilitating the Outer Marina Road which is a major road connecting Lagos Island to Victoria Island, Falomo and Ikoyi.

    The DMO disclosed this in a statement on Wednesday evening.

    “While the Outer Marina Road is a major artery on its own, It will also be instrumental to easing the traffic in Lagos during the repair of Falomo Bridge. Thanks to the SUKUK, we are able to rebuild Nigeria one infrastructure at a time,” it said.

    READ: Investors scramble for DMO sovereign sukuk as it records 446% oversubscription

    READ: Abigail Johnson is the world’s richest in finance, manages a $5 trillion investment company

    What you should know 

    The Debt Management Office (DMO) announced last month that it listed its third sovereign Sukuk, N162.557bn 7-year 11.200% AL Ijarah Sovereign Sukuk due 2027, on the Nigerian Stock Exchange and the FMDQ Securities Exchange.

    Sigma Pensions

     

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    Debt Securities

    FG moves to issue Eurobonds, to select advisers through open bid

    The amount to be raised is expected to be within the external borrowing plans for 2021.

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    Debt Management Office resumes FGN savings bond offer on August 10, Eurobonds, Patience Oniha, DMO, External debt servicing

    The Federal Government has concluded plans to issue Eurobonds for 2021 and is going to pick advisers to the transaction through an open bid process.

    The amount to be raised is expected to be within the external borrowing plans for 2021. The Federal Government in 2021 plans to raise $6.14 billion (N2.34 trillion) from foreign sources.

    This disclosure was made by the Director-General of the Debt Management Office (DMO), Patience Oniha, during a chat with Reuters on Wednesday, April 7, 2021.

    The Federal Government, who had earlier planned a Eurobond issue early last year after its sixth sale in 2018 where it raised $2.86 billion, deferred such plans due to the disruptions caused by the outbreak of the coronavirus pandemic.

    The DMO boss at an investors conference with the Federal Government put together by Citibank, last year, said that the Federal Government had no plans to source debt from Eurobond in 2020 as it is going to shift its focus to domestic borrowing and sourcing from concessionary sources.

    Earlier this year, Nigeria reduced its external borrowings in a new debt strategy after it redeemed its 6.75% $500 million Eurobond in January with Oniha saying that the DMO was monitoring international markets for new issues by frontier countries.

    What you should know

    • Ghana had some time last week raised $3 billion from Eurobonds, a year after the outbreak of the coronavirus pandemic, which disrupted economic activities globally.
    • This will be a huge boost for Nigeria especially at a time the Federal Government is still struggling to get approval for the $1.5 billion loan from the World Bank due to issues on currency reforms.
    • The Institute of International Finance had said it expected African governments to return to capital markets this year to sell bonds as investors embrace more risk.

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