The Securities and Exchange Commission (SEC) has issued a directive instructing all public companies and Registrars to stop treating dividends older than 12 years as “statute-barred.”
A claim is “statute-barred” when a legal action to enforce it cannot be taken because the deadline set by the statute of limitations has passed.
SEC emphasized that dividends declared before the enactment of the Finance Act 2020 must be handled in accordance with existing legal provisions, ensuring shareholders retain their rights to claim them.
In a statement on Tuesday, the regulatory body reaffirmed the importance of compliance with Section 60 of the Finance Act 2020, which outlines the treatment of unclaimed dividends.
According to the Act, dividends that remain unclaimed for more than six years must be transferred to the Unclaimed Funds Trust Fund (UFTF), where they are held until rightful shareholders come forward to claim them.
Clarification on Dividend Eligibility
SEC Director-General Emomotimi Agama emphasized the significance of this directive, noting that numerous companies and Registrars have incorrectly categorized dividends older than 12 years as statute-barred.
This misinterpretation has led to some shareholders being denied their rightful payments.
Agama explained that shareholders may still claim dividends issued up to 12 years prior to December 31, 2020, contrary to the incorrect assumptions held by some entities.
“In response to ongoing inquiries, the Commission wishes to clarify the correct interpretation and handling of unclaimed dividends,” Agama stated.
He stressed that the Finance Act mandates that unclaimed dividends exceeding six years must be moved to the UFTF, ensuring they remain accessible for legitimate claims at any time in the future.
Enforcement and Compliance Measures
While the UFTF is not yet fully operational, the SEC has mandated that all affected companies and Registrars must honor valid dividend claims dating back to December 31, 2020.
The Commission expects immediate compliance with this directive, ensuring shareholders are not deprived of their entitlements due to incorrect interpretations of the law.
Furthermore, the SEC has instructed companies and Registrars to submit regular reports detailing their adherence to this directive, in accordance with the Commission’s regulatory requirements.
By enforcing these measures, the SEC aims to uphold investor rights, foster greater transparency, and maintain trust within Nigeria’s capital market.
What you should know
- This directive serves as a safeguard for shareholders, reinforcing their rights to claim dividends that would otherwise have been categorized as unclaimable.
- Investors are encouraged to review their financial records and engage with companies or Registrars if they believe they are entitled to dividends previously deemed statute-barred.
- The SEC’s actions underline its commitment to ensuring that shareholders receive their rightful earnings while addressing regulatory gaps that have led to misinterpretations of the Finance Act 2020.
