Shareholders under the Independent Shareholders Association of Nigeria (ISAN) have rejected the establishment of unclaimed dividend trust fund proposed in the Finance Bill 2021.
This disclosure was made in a statement issued and signed by the National Coordinator of ISAN, Dr Anthony Omojola.
According to a news report by NAN, Dr. Omojola, disclosed that the creation of the trust fund and transfer of unclaimed dividends into the federation account was uncalled for, as the process may encourage corruption and nepotism to the detriment of the shareholders/beneficiaries of returns on investments.
He explained further that dividends were private wealth of investors, either individuals or corporate entities and that the conversion of private wealth to Federal Government revenue is a violation of the right to own property/assets, as guaranteed by the 1999 Constitution.
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According to him, there is an adequate provision that, in the event of failure to claim, such funds should revert to the operations of the companies.
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Dr. Omojola concluded that the proposed bill would not serve the interest of shareholders, as it would only cause unwarranted hardship and misappropriation of shareholders’ investments and funds.
What they are saying
Dr. Omojola, who spoke on behalf of the shareholders under the aegis of ISAN said:
- “Dividends, including unclaimed dividends, are funds generated by private companies and made available to shareholders in line with the provisions of CAMA and the Company Memart. There are good structures around this position, the government should enhance the structures.
- “Our avowed interest is the protection of the cherished values and welfare of shareholders in general – members and non-members, nationwide. We want to state that the proposed bill will not serve our interest now and in the foreseeable future. In fact, it could cause unwarranted hardship and misappropriation of our investments. For this and other numerous reasons, we plead that the Finance Bill 2021 (Part V) be expunged.”
What you should know about the unclaimed dividend trust fund
In line with the information gathered by Nairametrics, the following is the timeline on the creation of an unclaimed dividend and unutilized bank balance trust fund, since 13th of July:
- On July 13th, 2020 Nairametrics reported that recent data collected by Securities and Exchange Commission suggested that the total value of unclaimed dividend in the Nigerian capital market closed 2019 at N158.44 billion and over N100 billion of the amount are from unclaimed shares. The development revealed that the figure has been on the increase despite the introduction of e-dividend, which was introduced by SEC in 2015. From about N100 billion in 2017, unclaimed dividend closed 2018 at over N120 billion.
- According to a news report by The Cable on November 13th, 2020, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, at a webinar organized by KPMG in collaboration with the Ministry of Finance, Budget and National Planning, disclosed that the Federal Government was considering the creation of an unclaimed dividend and unutilized bank balance trust fund where dividends declared and unclaimed will be held.
- Through this, the unclaimed dividends would be handed over to the government, as trustee, in the perpetual fund created under the supervision of the CBN & DMO, with private sector involvement in the governance of the fund.
- However, on November 19th, 2020, the House Committee on Capital Markets and Institutions 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, raised alarm over the growing unclaimed dividends in the capital market, which was projected by the Chairman of Committee, Babangida Ibrahim, to cross the N200 billion mark at the close of 2020.
- Consequently, on November 23rd, 2020, Securities Dealers under the Association of Securities Dealing Houses of Nigeria (ASHON), through the Chairman of the Association, Onyenwechukwu Ezeagu, 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 an earlier statement by the Chairman of the House Committee on Capital Markets and Institutions.
- At the Senate plenary in Abuja, on December 2nd, 2020, during a session on the creation of an unclaimed dividend and unutilized bank balance trust fund, as stipulated in the 2020 Finance Bill, Senator Suleiman Kwari raised an objection against the move. He called for a more sustainable and relatively stable option like the Pension Fund Administrative, noting that the subsequent request of these dividends by the owners would deter the government’s activities if relied on.