By Peter Egwuatu
Shareholders have explained their persistent opposition to  the establishment of Unclaimed Dividend Trust Fund (UDTF), proposed to address the  growing rate of unclaimed dividend  presently estimated to be N17.9 billion.

In 2006, the National Assembly threw out a proposed bill sponsored by the Securities and Exchange Commission (SEC) to establish the Unclaimed Dividend Trust  Fund (UDTF).

Shareholders, with the exception of a few, had vehemently opposed the establishment the  Trust  Fund. Their argument is that (1) The Securities and Exchange Commission and the government was seeking the control of the fund for their use. (II) That any fund that government initiates or is in anyway involved in will be misappropriated. (III).

That SEC has no business getting involved in addressing the problem. IV. That SEC had not exploited other options to address the problem. (V). That CAMA has already made adequate provision for the treatment of unclaimed dividends. (VI). That the volume of unclaimed dividend is insignificant with most of these already statute barred.

Shareholders who spoke with Vanguard said the bill was not passed by the National Assembly because they bought the views of the majority of shareholders given the cogent reasons stated above.

Mr. Sunny Nwosu, National Coordinator of Independent Shareholders Association of Nigeria (ISAN)  said, ” We 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, the composition of the Board member was not all encompassing because it did not reflect representative of the entire stakeholders. Most of the shareholders involved were picked from the Zonal shareholders association that was formed by government.”

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. 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.

Meanwhile, the few stakeholders, including the SEC who supported the establishment of UDTF 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.”
Meanwhile, 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 however 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.