The Securities and Exchange Commission (SEC) Nigeria has said in a statement made available to Newsdiaryonline that it welcomes the House of Representatives’ Committee on Capital Markets and Institutions’ resolution to investigate unclaimed dividends which came about through a motion sponsored by one Hon. Akpan Micah Umoh. His motion was in turn predicated on the efforts of the SEC which, in his words “revealed” that “…unclaimed dividends were gradually mounting up to over N40 Billion”. SEC also revealed ahead of the probe that in fact, the unclaimed dividends had risen beyond N40 billion to about N52.2billion as at December 2011.By implication, the amount should have risen further by now
At a plenary session which took place on Wednesday, April 18, 2012, the House of Representatives passed a resolution mandating its House Committee on Capital Markets and Institutions “…to investigate the high volume of unclaimed dividends in quoted companies in Nigeria and report to the House within four (4) weeks”.
SEC said this legislative attention to the intractable issue of unclaimed dividends is a positive development. According to SEC, the size of the problem has since surpassed the N40 Billion referred to by Hon. Umoh since as at December 2011, the size of unclaimed dividends was N52.2 Billion. Out of this figure, 84.7% i.e. N42.5 Billion was held by nine out of 23 registrars who submitted their returns.
It was out of concern for this unfortunate situation in which return on shareholders’ investment by way of dividends is perennially locked in the unclaimed dividends saga that as far back as in 2002, the SEC sponsored a bill in the National Assembly for an act of parliament which will set up the “Unclaimed Dividend Trust Fund”. This Fund and the Act of Parliament which set it up were intended to drastically reduce or completely eliminate the incidence of unclaimed dividend by providing alternative domicile for funds deriving from unclaimed dividends to what was stipulated in Section 382(1) of the Companies and Allied Matters Act that:
“Where dividends are returned to the company unclaimed, the company shall send a list of the names of the persons entitled with the notice of the AGM to the members. After the expiration of three months of the notice mentioned in 382(1), the company may invest the unclaimed dividends in an investment outside the company. No interest shall accrue on the dividend against the company”.
If passed into law, the “Unclaimed Dividend Bill” would have removed the point of domicile for unclaimed dividends from their originating companies to another party managed Trust Fund and removed the incentive which feeds the collusion between certain players in the market to frustrate shareholder access to dividend accruals on their investment.
SEC made a startling revelation on why the unclaimed probe should be thorough.”If diligently prosecuted, the investigation may well hold the key to unlocking the challenge posed to the Nigerian capital markets and investor public by this phenomenon which contributes to the erosion of confidence in the market by denying investors their rightful returns on investment” SEC said .
“Also deserving of urgent legislative attention is Section 385 of CAMA which provides that the right of a shareholder to sue for dividends subsists only for 12 years beyond which such action becomes statute barred. This deserves review. The establishment of an Unclaimed Dividend Trust Fund will cure this defect by making it possible for shareholders to recover their dividends however long this may take.
“Certainly, a more proactive legislative oversight will complement the efforts which the SEC has made and sustained against unclaimed dividends over the years.