After unsuccessful attempts in the past two decades to push it through, the Federal Government is once again proposing the unpopular Unclaimed Dividend Trust amendment to the Companies & Allied Matters Act.
The latest amendment, titled Unclaimed Dividends & Balance Trust Fund and is aimed at creating “an unclaimed dividend and unutilized bank balance trust fund wherein dividends declared and unclaimed would be warehoused.”
Fielding questions on the sidelines of a parley with senior journalists in Lagos, Ms. Mary Uduk, the then acting Director-General of the commission, had told Investdata News that unclaimed dividends in the country stood at N153bn at the end of January 2020 (READ MORE).
Those who know fear this may just be a prelude by a government, pressed by revenue shortfalls and rising expenditure but unwilling to plug its yearning gorges dug by corruption, to eventually laying its hands on dormant accounts held over the years by banks in the country.
The source told our correspondent that the government in this proposed amendment to CAMA, does “not want to say dormant account, hence the use of ‘unclaimed balances’ which are held by banks and will ultimately end up being interpreted by the CBN as dormant accounts.”
That, the source says, “is the real catch for them…”
Previous administrations, he continued, “have tried to do this in the past, and were resisted, but with the backing of the law, they will desperately want to push it through this time,” he added.
Perhaps, to make it attractive to shareholders, the amendment this time, unlike in the previous attempt, seeks that the unclaimed dividend is “owed as a perpetual debt to shareholders.”
The amendment, the government says in a document seen by Investdata News, seeks to correct an anomaly under the CAMA which extinguishes shareholder’s right to dividend after 12 years and return the money to the company for operations and redistribution to other shareholders.
The amendment proposes that such unclaimed dividends should be handed over to the government as trustee in a perpetual fund created under the supervision of the CBN (Central Bank of Nigeria) and DMO (Debt Management Office), etc with private sector involvement in the governance of the fund.
Investdata News recalls that as part of efforts to reduce the unclaimed dividend menace, the then Finance Minister, Dr. Shamsudeen Usman, on Thursday, February 28, 2008, in Abuja launched the electronic dividend payment system in the nation’s capital market.
The proposed e-dividend payment system refers to the payment of dividends due to shareholders through direct credit (electronic means) into their nominated bank accounts, implying same-day clearance for dividend payment.
Sylvester Akele, the then director, Research and Planning, Securities & Exchange Commission (SEC) said then that it allows for dividends to be credited directly into shareholders’ accounts within 24 hours of payment by the company, to drastically tackle the problems of unclaimed dividends.
But shareholders, led by the late Chief Akintunde Asalu, founder of the Nigerian Shareholders Solidarity Association (NSSA), had kicked against the attempt to create another government bureaucracy using money belonging to shareholders. This may have influenced the government to this time make the CBN and DMO managers of the fund, which also offer a cheap pool of funds to the Muhammadu Buhari administration which many say is already over-borrowed.
Boniface Okezie, another shareholders’ rights advocate had told this journalist at the time also that the entire unclaimed dividend problem should be blamed on regulatory failure, because, for him, “if the SEC knows that it is doing, the registrars should not live above the law.”
He had called for an amendment to the CAMA by specifically expunging the clause on the dividend becoming statute-barred after 12 years of being unclaimed.
