Shareholders caution FG against borrowing unclaimed dividend

By Helen Oji |   19 January 2021   |   4:20 am  

Divergent views have continued to trail the Federal Government’s moves to borrow N895 billion from unclaimed dividends and dormant account balances, as shareholders insisted that the decision is a disincentive to investment.

Apparently in dire need for cheap funds to finance its huge fiscal deficit and mitigate further economic crisis arising from the COVID-19 pandemic, the government, had, in the 2020 Finance Act (Amendment) Bill, declared its intention to borrow from unclaimed dividends and dormant account balances under the Unclaimed Dividend Trust Fund.

But shareholders under the aegis of Independent Shareholders Association of Nigeria (ISAN), and New Dimension Shareholders Association, urged the Federal Government to shelve the plan, as it has not been a good borrower and cannot be trusted given its inability to curb corruption and wastage in its various agencies.

The Publicity Secretary of ISAN, Moses igbrude, noted that most assets managed by the government in the past were misappropriated and marred by corruption.

Besides, he said: “Government that is supposed to protect its citizens wants to rob shareholders through this Unclaimed Dividend Trust Fund. The same government that wants investors to invest and grow the economy is the same government that wants to take away the proceeds of the investment just because shareholders did not claim it on time.

“Government has forgotten that it had taken over 30% tax from the companies that generated the dividends from profit before tax, and another 10% from the individual investors through withholding tax on any dividends declared by companies. What moral right does the government have to take the money?”

He continued: “Section 39 (f) of the Finance Bill stated, ‘All unclaimed dividend that has remained unclaimed for a period of not less than 12 years shall lapse into government revenue and shall be transferred from the Unclaimed Dividends Trust Fund to the Federal Account as Federal Revenue.

“This is unacceptable and an inhumanity to man. This would definitely erode investors’ confidence and militate against investment in Nigeria. We want those behind this proposal to have a rethink, otherwise, they will be in for a long legal battle with the shareholders.

“We are appealing to the National Assembly to reject and expunge in its entirety that section of the Bill, because from all intention and purpose the Unclaimed Dividend Trust Fund is designed to rob innocent Nigerians of their hard earned money.”

The President, New Dimension Shareholders Association, Patrick Ajudua, argued that borrowing or setting up a trust fund for unclaimed dividends would create another opportunity for wasteful spending, insisting that the unclaimed dividends should go back to the companies.

He decried that government has remained insensitive to the plight of listed firms and the capital market that generated the dividends through the years.

He said it was not only unacceptable but a disincentive to investment, and appealed to the National Assembly to reject and expunge the section of the bill, adding that borrowing it is another means of robbing shareholders of their hard earned money.

“For us shareholders, it is unfortunate that the government has decided to annex money that does not belong to them to cover their hidden intentions.”

“Initially it was setting up a trust fund, and now they want to borrow; do you borrow money not given to you freely?

“Rather than encourage listed firms by to ploughing it back into these companies to boost their operations in this era of pandemic, they decided to annex it forcefully, thereby discouraging retail investors from investing in the market,” he said.

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