… say it negates constitutional provision to own private wealth
By Peter Egwuatu
Against the backdrop of transferring unclaimed dividend into the Federal Government federation account as proposed in the Finance Act 2021, the shareholders under the aegis of Independent Shareholder Association of Nigeria, ISAN have pleaded to the government that Part V of the Act be expunged as the idea of converting private wealth to government revenue negates the country’s constitutional provisions.
The shareholders after attending the public hearing of the Senate Committee on Finance, Trade & Investment and Public Procurement on the Finance Bill held last week, stated that the proposed bill will not serve their interest now and in the foreseeable future and fact could cause unwarranted hardship and misappropriation of their investments.
To this development, ISAN said: “For this and other numerous reasons, we plead that the Finance Bill 2021 (Part V) be expunged. ISAN as a proactive economic and investment pressure group, categorically state our position on unclaimed dividends as follows: This idea of converting such private wealth to Federal Government revenue negates the relevant provisions of the rights to own property/asset as guaranteed by the 1999 Constitution, as amended.”
In a statement obtained by Vanguard, ISAN said: “ We are an Association of over 10,000 members spread all over Nigeria. Our avowed interest is the protection of the cherished values and welfare of shareholders in general – members and non-members alike, nationwide.”
The statement signed by Prince (Dr) Anthony O. Omojola, National Coordinator, and Sir Sunday N. Nwosu, National Coordinator Coordinator (Emeritus) of ISAN respectively stated that: Dividends are a private wealth of investors, either individuals or corporate entities. The idea of converting such private wealth to Federal Government revenue negates the relevant provisions of the rights to own property/asset as guaranteed by the 1999 Constitution, as amended. Our opinion is that S39 to the extent of its inconsistency with S44 of 1999 (as amended) is null and void. The law expressly states that there shall be no forceful takeover of any private moveable or immovable property of any Nigerian without due and appropriate compensation and/or valid court order.”
Continuing ISAN said: “ It is nothing short of expropriation which the constitution forbids. Dividends (including unclaimed dividends) are funds generated by private companies and made available to its shareholders in line with the provisions of CAMA and the Company Mart. That these funds are available only after the company has paid a host of taxes, including Companies Income Tax Act (CITA), Educational Trust Fund (ETF) and tax of about 32 percent of gross profit is paid to the federal government and 10 percent withholding tax on the shareholders for every dividend declared.
“ It is overreaching and unacceptable for the government to seek to expropriate the unclaimed dividends under the subterfuge of any revenue. Companies and individuals have a right to private properties and assets of which unclaimed dividends funds fall.
“ The philosophy behind the decision to appropriate unclaimed dividends is wrong, as returns on investments cannot be time-barred by any progressive government. The thinking that the cancellation of rights after 12 (twelve) years is unconstitutional and the notion that expropriation is to cure an alleged unconstitutional wrong is also wrong. This is inverse legal thinking and will lead to another unconstitutional mess. These unconstitutional wrongs (if the right-thinking members of the public accept the argument behind this philosophy) will not make it right. The Memorandum and Articles of Association of a company is a contract between the shareholders and the company. Thus, the rights of the shareholders are contractual, and entered into with their knowledge and cannot be legislated upon to the detriment of the other party.”
“ The statute of limitation provides for expiration of debts after 6 (six) years. CAMA 2020 by S432 increased the limitation to 12 (twelve) years. Is government by any chance taking the position that the statute of limitation is unconstitutional?” the shareholders further asked.
ISAN further states:” The unclaimed dividends belong to shareholders of companies and there is the adequate provision that in the event of failure to claim; that such fund should revert to the operations of the company. There are good structures around this position. Further, recovery by shareholders has thus been seamless. Rather than try to expropriate, the government should enhance the structures. To us in ISAN, the National Assembly and the Federal Government have shown a lack of understanding of the mechanics of business and corporate Nigeria. The structure proposed around the unclaimed dividend Trust Fund to be expropriated also underscores that the Minister of Finance being in charge of unclaimed returns on investments of individuals and not government finances is an anomaly. In the same vein and categorically stated, the government lacks the capacity to manage unclaimed dividends and has equally demonstrated a poor understanding of the administrative issues surrounding the unclaimed dividend as existed in the subsisting statutes.
“ Furthermore, the issue of creating unclaimed Dividend Trust Fund and transfer of the unclaimed dividends into the Federation Account is uncalled for as the process will encourage corruption and nepotism to the detriment of the shareholders/beneficiaries of returns on investments.”