SEC Welcomes House's Proposed Investigation Of Unclaimed Dividends
ABUJA, April 22, (THEWILL) - The Securities and Exchange Commission (SEC) has welcomed the decision of the Federal House of Representatives, reached at is plenary session of Wednesday April 18, 2012, to investigate the high volume of unclaimed dividends in quoted companies in the country.
The House Committee on Capital Market and Other Financial Institutions was tasked with the assignment and asked to submit a report within four weeks, after a motion sponsored by Hon. Akpan Micah Umoh revealed that unclaimed dividends were gradually mounting up to over N40 Billion.
“This legislative attention to the intractable issue of unclaimed dividends is a positive development,” SEC said in a Sunday statement signed by its Communications Adviser, Mr. Obi Adindu. “The size of the problem has surpassed the N40b referred to by Hon. Umoh because as at December 2011, the size of unclaimed dividends was N52.2b. Out of this figure, 84.7 per cent (that is N42.5b) was held by nine out of 23 registrars who submitted their returns.”
SEC said that its concern for the resolution of the trend was the reason it sponsored a bill in 2002 to the National Assembly for an act of parliament to set up the “Unclaimed Dividend Trust Fund” — one 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,” the statement said.
“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 also urged the legislators to focus attention on 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.