Worried by the increasing volume of unclaimed dividend, the House of Representatives has mandated its committee on capital markets to conduct an investigation.
Unclaimed dividends in the Nigerian capital market stood at N52.2 billion as at December 31, 2011, according to the Securities and Exchange Commission (SEC).
SEC has accordingly welcomed the decision of the House, which followed a motion sponsored by one Akpan Micah Umoh. Umoh had in his motion, said the unclaimed dividends were gradually mounting up to over N40 billion.
But SEC in a statement issued following the House resolution said that the unclaimed dividends actually stood at N52.2 billion, saying that out of this figure, 84.7 per cent (N42.5 billion) was held by nine out of 23 registrars who submitted their returns.
The statement said: “This legislative attention to the intractable issue of unclaimed dividends is a positive development. 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,” SEC said.
That section of CAMA stated 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.’
However, the apex regulator of the capital explained that 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 noted that if diligently prosecuted, the investigation by committee 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 declared: “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,” the body added.