Editor
By Fatima Saka
The Nigerian Senate has urged for transparency, accountability, and equity in steering the complexity of unclaimed dividend funds within the Nigerian Capital Market, aiming to create a business environment that will attract foreign investments and foster sustainable economic growth in the nation.
Senator Godswill Оbоt Аkpabio, the President of the Senate, articulated this imperative during a public hearing held by the Senate Committee on Capital Market on Monday in Abuja.
In his opening address at the public hearing, Senator Аkpabio, represented by Binos Dauda Yaroe, the Senator representing Adamawa South Senatorial District, underscored the significance of addressing the pressing issue of unclaimed dividend funds.
He emphasized that the issue significantly impacts the financial markets and the economic landscape of the nation. “It serves as a clarion call to action, a call to reclaim what rightfully belongs to us, and a call to pave the way for a more robust and prosperous future for Nigeria.
“Unclaimed dividends symbolize not merely a financial setback, but also a breach of trust in our capital market. They embody lost opportunities, deferred dreams, and a stagnant economy. This status quo is unsustainable. We must rise to the challenge, confront the intricacies, and devise innovative solutions that will reinstate confidence in our financial systems and empower our investors.
“We currently stand at a pivotal juncture where the decisions we make will determine the fate of our capital market and the trajectory of our nation. The exponential growth of unclaimed dividends that we have witnessed underscores the systemic issues that have long afflicted our financial sector. It is imperative to break free from the constraints of the past and embrace a new era characterized by transparency, efficiency, and accountability,” Senator Акрαbιо added.
In his remarks, Chairman of the Senate Committee on Capital Market, Senator Osita Izunaso, highlighted the challenges associated with Unclaimed Dividend Funds.
He accentuated the comprehensive challenges outlined in the CAMA provisions, indicating that unclaimed dividends remaining unsettled for fifteen months post-declaration are mandated to be returned to the issuing company.
“Shareholders maintain the right to claim these dividends within twelve years of declaration. Subsequent to this timeframe, unclaimed dividends are deemed statute-barred and forfeited by the shareholders.
“To address these issues, the chairman noted that the SEC has implemented various measures. These include prohibiting in-house registrars to enhance transparency and mitigate conflicts of interest. Rule 108 (1) &(2) stipulates that dividends must be paid en-bloc to registrars within 24 hours of approval at Annual General Meetings, with prompt distribution to shareholders thereafter. Registrars are now mandated to effect electronic dividend payments directly into shareholders’ accounts, and the SEC has collaborated with probate registries to streamline probate processes.
“Apprehensions have continued to mount following the Federal Government of Nigeria’s decision to securitize unclaimed dividends and dormant account balances of up to six (6) years in the nation. The management of unclaimed dividends and dormant account balances has been incorporated as part of the provisions outlined in the 2020 Finance Act, intended by the Federal Government of Nigeria to alleviate Nigeria’s fiscal vulnerabilities and economic challenges.
“The public hearing convened today is dedicated to addressing critical issues surrounding unclaimed dividend funds in Nigeria’s capital market. Deliberations will focus on regulatory reforms aimed at bolstering transparency and efficiency in dividend payments, tackling the repercussions of multiple subscriptions on investor rights, and implementing measures to minimize unclaimed dividends. The overarching objective is to cultivate a robust investment environment that upholds investor confidence and market integrity.”
In response, Emomotimi Agama, Director General of Nigeria Securities And Exchange Commission, identified several reasons for the prevalence of unclaimed dividends in the Nigerian capital market.
These include the utilization of multiple identities, lack of adequate information about shareholders, acquisition of shares under fictitious names, failure to notify registrars, alterations in shareholders’ addresses, and the demise of shareholders.
Additionally, he mentioned the absence of proactive follow-up by the families of deceased shareholders, non-presentation of dividend warrants for minimal amounts or lack of awareness on how to handle dividend warrants, diversion of dividend warrants by illicit entities, loss of dividend warrants, reluctance of heirs to accept payment of dividend warrants into a savings account, declaration of unfunded dividends by paying companies, piecemeal payment of dividends, and the utilization of in-house registrars by paying companies.
He underscored the inefficiencies in the dental system and the non-registration for electronic e-dividends, known as e-dividend. Legal provisions on unclaimed dividends are also in place.
Concluding the public hearing, Chairman of the Senate Committee on Capital Market, Senator Osita Izunaso, announced the committee’s intention to segregate the accrued interest rate from dormant accounts to prevent the CBN from claiming dormant accounts.
Also, He emphasized the necessity to amend the Finance Act.
