Shareholders wary of SEC’s unclaimed dividend trust fund
Discordant tunes have continued to trail the Securities and Exchange Commission (SEC’s) move to establish Unclaimed Dividend Trust Fund (UDTF), even as capital market investors urge the regulators to simplify letters of administration for the families of deceased persons to facilitate access to dividend claims.
Investors, who spoke in a separate interview with The Guardian, described the trust fund as unnecessary and conflicts with the provisions of the Companies and Allied Matters Act (CAMA), upon which the laws governing shareholders’ unclaimed dividend in the nation’s capital market is currently derived.
The law guarantees a 12 year statute of limitation on unclaimed dividends, after which the fund is ploughed back into the company that declared the dividend.
Explaining their aversion to the proposed fund, investors noted that experiences in the past have shown that any fund under the supervision or control of the government is misappropriated and converted for other uses.
Besides, they argued, the value of the unclaimed dividend estimated at 117 billion had reduced significantly with the application of the already existing CAMA law on unclaimed dividend.
The SEC, in an effort to reduce the incidence of unclaimed dividend, recommended the establishment of the UDTF, to be managed by an independent Fund Manager, supervised by the Board of Trustees, and regulated by the Commission.
It also recommended that members of the Board of Trustees be selected from the capital market with representation from the following institutions: Federal Ministry of Finance, SEC, Institute of Capital Market Registrars, Shareholders’ associations recognised by the Commission, Nigerian Employees Consultative Association (NECA), and such other persons as may be determined by the Minister of Finance.
But market investors suggested that instead of creating a trust fund for the unclaimed dividends, a little fine-tuning of the existing law. Particular focus should be in the areas of simplifying letters of administration for the deceased family, and making the process of claims less cumbersome and rigorous will reduce the high level of unclaimed dividend to the barest minimum.
Furthermore, they opined that the existing law on unclaimed dividend has not been reviewed; therefore, pending which there should be no amendment on the matter.
Specifically, the National Coordinator, Renaissance Shareholders Association, Olufemi Timothy, described the establishment of the trust fund as unnecessary.
“The issue of unclaimed dividend trust fund is not necessary. This fund actually belongs to shareholders and shareholders have not been complaining. I think the regulators could only interfere when people are complaining, but when people don’t have complaints, and you just discover that there is a bulk money somewhere, and some people are interested in taking the money which does not belong to them is wrong, its corruption, its fraud.
“After 12 years, you return the dividend to the company. In Nigeria, anything being handled by government is not always being handled well. If you look at it, this money is from the private sector, and how do you want to take private sector money to public sector to run? It is wrong.”
The National Coordinator Emeritus, Independent shareholders Association of Nigeria. Sir Sunny Nwosu, insisted that the existing law on unclaimed dividend must remain binding until it is reviewed.
According to him, “I want to always live with the existing laws until such laws are reviewed, and I do not believe in a regulation that conflicts with the law.
“The fact remains that the law said the money resides with the registrars, who are acting on behalf of shareholders, and now they have gone ahead to conflict that regulation by asking registrars to relieve some of the monies to the companies to reinvest them.
“That money does not belong to the companies, it is through that it was paid by the company, and it is paid out from the company on year to year basis for the shareholders.
“The registrars are the custodians of the shareholders. Now, any shareholder that wants to ask for his dividend would not go to the company at the first step, they go to the registrar who are acting on behalf of shareholders.
“So I feel strongly that we are not following the law, where is the pillar that holds such regulation when the law says that after 12 years, it should be reverted back to the company that pays it, by the time it is 12 years, nothing much will be left on that account.
“There is evidence to show for that this is pursuing shadows. What the regulators should do is to go and pursue a change of the law, let it be debated. The trust fund is not okay by shareholders, people’s money is nobody’s money before government. Before you know it, somebody who had N200 as unclaimed dividend would be asked to come to Abuja, and prove it to those people who are not registrars, who may not have a clear idea of how to handle such law. We are going by the law, the public hearing is misguided, the lawmakers may not understand it from the real point of view; they should research it and seek the views of those that own the money.
“Again if they want to ensure that this thing works well according to the law, a letter of administration should be simplified to enable the families of those dead to have access to letter of administration, regulations shall not be enforced on registrars.”
The President/National Coordinator, Proactive Shareholders Association of Nigeria, Taiwo Oderinde, said rather than a trust fund, his group proposed the establishment of unclaimed dividend investment company Plc.According to him, “We were at the public hearing and we instead of the Trust fund. Our experience showed that previous Trust Funds are marred by corruption and this one will go in the same way.”
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