By Peter Egwuatu

The shareholders with the exception of a few have said that they do not have the confidence in the Commission’s ability to manage shareholders’ funds as evidence had shown in the past that most funds managed by government officials were mostly misappropriated.


They equally stated that SEC has no business to manage their fund as its plan is to reap where it had not sown. According to the shareholders, the Companies and Allied Matters Act, CAMA 1990 was long overdue for amendment given the ever changing and evolving economic and market conditions in the country.

Shareholders who spoke to Vanguard following calls by the SEC ordering quoted companies and registrars to send comment and input over its proposed rule on application of twelve years and above unclaimed dividend, vehemently opposed the idea of setting up NCMDF, saying that in the past, the Commission had sponsored similar bill on unclaimed dividend and Abandonned Property, which was rejected by the National Assembly when majority of stakeholders kicked against it during public hearing.

According to the proposed rule by SEC “Pursuant to the provisions of Section 313(1)(n) of the Investments and Securities Act (ISA) 2007, the Commission hereby proposes this Rule: Companies and Registrars in custody of dividends which remain unclaimed by shareholders for 12 years after the date of declaration or subsequently attain the 12 years threshold shall upon the coming into effect of this Rule transfer such monies into the Nigerian Capital Market Development Fund (NCMDF).

“All companies and registrars shall not later than 30 days after the end of every calendar year forward to the Commission a report of unclaimed dividends in their custody, which shall specify compliance with Sub Rule (1) of this Rule. Companies shall disclose details of compliance with this Rule in their annual reports. All comments and input should be forwarded to the Secretariat, Rules Committee of the Commission, through the DG, SEC, not later than two (2) weeks from the date of publication.”

Speaking exclusively to Vanguard, the Chairman, Standard Shareholders Association of Nigeria, SSAN, Mr. Godwin Anono said: “Why is SEC interested in shareholders’ money when it does not protect their interests? Why can it provide its own fund to develop the market? Now, they want to use shareholders’ money, absolutely no way.

“My members and I, are seriously against the idea of setting up a Trust Fund. Remember, the National Assembly threw out a proposed bill sponsored by the SEC to establish the Unclaimed Dividend Trust Fund (UDTF) in 2006.

“So, why are they coming up with such plan again? We do not have confidence in them because most funds managed by government in the past were misappropriated or mismanaged. This is shareholder’ money and we are comfortable with where our money is presently; we are not complaining, the areas where we needed urgent intention, the SEC is not looking into those areas. We are going to tell our companies to resist any attempt to return unclaimed dividends to any fund other than as prescribed by the CAMA.”

Also speaking, Ambassador Olufemi Timothy, Chairman, Renaissance Shareholders Association of Nigeria said: “The Commission is seeking the control of the money for their use as any Fund that government initiates or is in anyway involved had been misappropriated. The SEC has no business getting involved in addressing the problem. The CAMA has already made adequate provision for the treatment of unclaimed dividends; even the volume of unclaimed dividend is insignificant with most of these already statute barred.”

Oh his part, Mr. Sunny Nwosu, National Coordinator of Independent Shareholders Association of Nigeria (ISAN) said: “ We had opposed the establishment of UDTF because the money involved is not public money but private investors’ money.

“Government does not respect private sector’s money so we believe it will be mismanaged. Furthermore, How is the composition of the Board member of the Fund going to be as we know it will not reflect representative of the entire stakeholders.”

Continuing, he said, “No rational investor will let his returns go in vain. If somebody did not steal to invest nor launder money to invest then he will not be afraid to come for the returns on his/her investment. So 12 years is enough to track down someone’s investment. We are happy that the UDTF bill was rejected in the past. We have succeeded in forcing companies to publish the names of shareholders that have not claimed their dividend on their annual reports which most of them have been complying. We believe that this will go a long way to reducing the growth of unclaimed dividend.”

Mr. Boniface Okezie, Chairman, Progressive Shareholders Association of Nigeria (PSAN), also said that the entire unclaimed dividends belonged to shareholders. Until the 12-year-old law was reviewed, unclaimed dividends funds still “remains a no-go-area. The unclaimed dividends belong to the shareholders and must remain with the companies until the amendment of the law.

So, I urge the Commission to initiate a bill aimed at reviewing the 12 years statute-barred placed on unclaimed dividends in the market. The stock of unclaimed dividends would continue to increase unless Section 383 of Companies and Allied Matters Act (CAMA) were amended. The issue of unclaimed dividends would be resolved once shareholders are allowed to claim their dividends at any given time.

“The SEC must enact laws that would ensure market vibrancy and not pronouncement that would threaten investors’ confidence. Also, market regulators must avoid over regulation, as over regulation was killing the market. My members and I urge SEC to concentrate more on increasing retail investors’ participation to avoid the experience of 2008.”

However, lending his voice, Dr. Faruk Umar, Chairman, Advancement for Right of Nigerian Shareholders Association, said: “This is a healthy development. The truth of the matter is that bulk of the unclaimed dividends that are more than 12 years belongs to people who are dead; multiple applicants who do not have bank account in their names, or small amounts of money that is not worth claiming. Someone that has not claimed his or her dividend in 12 years is unlikely to do so. So the Trust Fund should be established as this will discourage people from benefiting from the unclaimed dividend.

“Under Buhari’s regime, and with the kind of integrity and transparency being exhibited by the current Director General of SEC, Alhaji Munir Gwarzo, we are going to support the establishment of the Fund this time around. But Alhaji Gbadebo Olatokunbo, a former Publicity Secretary of Nigeria Shareholders Solidarity Association (NSSA), maintained that the entire stock of unclaimed dividends belonged to shareholders and not the Federal Government nor its agency.

According to him, “SEC should work towards reducing the stock of unclaimed dividends in the capital market. SEC should look at the problems of the unclaimed dividends critically and not on ways to disburse the funds. SEC should come out with reforms aimed at addressing the problems of unclaimed dividends and stop looking at how to spend the money. I commended SEC and the Nigerian Stock Exchange (NSE) for the various reforms introduced in the market. The combined reforms of SEC and NSE had boosted investor confidence and enhanced market stability at the moment.”

In the same vein, Adebayo Adeleke, Secretary of Independent Shareholders Association of Nigeria (ISAN), said: “Dividends, once declared, belonged to shareholders and should not be ploughed back into the companies. Already, our group is against the establishment of the Fund as there is an existing legislation, i.e CAMA that regulates unclaimed dividend. So, why are they creating confusion? There is going to be complication if the new rule being proposed by SEC scale through, except if the existing legislation is repealed.”

Meanwhile, the few stakeholders, including the SEC who had supported the establishment of a Trust Fund explained that most unclaimed dividends are being used as working capital by companies contrary to CAMA’s provision that it should be invested outside the company.

According to them, “This tends to distort the company’s actual financial position as it is difficult to forecast their performance without such free funds. Moreover, whenever such companies go under, the unclaimed dividend will also be lost. The effect of these on the investor when dividend cannot be claimed is that they are deprived of their rightful earnings. This could dampen their enthusiasm about investing in the capital market with severe implication for the economy.”

However, since the National Assembly rejected the passage of the Securities and Exchange Commission (SEC) sponsored bill to establish the UDTF, there have been concerns among investors about the status of the huge amount of unclaimed dividend floating in the books of listed companies.

Investigation by Financial Vanguard also revealed that companies have continued to treat unclaimed dividend as stipulated in the Companies and Allied Matters Act (CAMA) 1990. The CAMA states that dividends which remain unclaimed after fifteen months of being declared are supposed to have been returned to the company from which the beneficiary/investor may make a claim not latter than twelve years afterwards. Subsequently, such unclaimed dividends are considered statute-barred and thus forfeited by the shareholders.

According to sections 379 – 386 of CAMA: (a) Where dividends are returned to the company unclaimed, the company shall send a list of the names of the persons entitled with notice of the next annual general meeting to the members, (b) After the expiration of three months notice, the company may invest the unclaimed dividend for its own benefit in an investment outside the company and no interest shall accrue on the dividends against the company. (c) Such dividends are to be regarded as special debts due to and recoverable by shareholders within 12 years and actionable only when declared.



Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.