Moses Ofodeme
The Securities Exchange Commission (SEC), is mounting strong resistance towards the plans by the Federal Government to take over unclaimed dividends worth N150billion.
The SEC spokesman, Abdulkadir Abbas at the public hearing on the Finance Bill on Thursday expressed concerns on the federal government’s proposal as contained in the Bill.
Abbas disagreed with the Minister of Finance, Zainab Ahmed on the issue.
He said: “We are not against the proposal to set up the unclaimed dividends and balances trust fund. What I said is that we have concerns concerning the governance structure of that proposed fund; and appealing for reconsideration.
“SEC being the capital market regulator and mandated by the Investment securities act to protect the interest of the investors, to be the one to administer or to manage or to supervise the operation of that fund. That is what I stated.”
Responding to SEC’s submission, Ahmed noted that what the government is proposing is in line with the provisions of the 1999 Constitution adding the Debt Management Office will supervise it
“Any funds that are lying fallow after a certain period cannot be taken over; but such funds could be borrowed. The Unit Trust is a borrowing arrangement of the government.
“At the moment, the Debt Management Office issues securities to the registrars in case owners of such unclaimed dividends; or deposit in dormant accounts come forward to claim their entitlement.
“The reason the Debt Management Office would be in charge of the unclaimed dividends and deposit in dormant accounts is that it has the mandate to manage debts on behalf of the government.
“That is why we recommend that the DMO as against to SEC, should manage the funds. It is possible that a different arrangement is in place in other jurisdictions but I want to state that in the amended CAMA.
“There is a provision that had modified the section that mandates the registrars to return unclaimed dividends after 12 years to the Companies that paid the dividends in the first instance rather than the companies to collect back the money and redistribute, the government wanted to manage the funds.”
The Finance Minister had earlier stated, “It is proposed that such unclaimed dividends should be handed over to the Government as trustee; in a perpetual fund created under supervision or the CBN and DMO, etc with private sector involvement in the governance of the fund.
“The liability to shareholders of public companies will no longer be extinguished after 12 years; as currently provided for in the CAMA”, she said.
She also explained that “We have funds sitting in the registrars and funds sitting in the banks which are not helpful to the system.
“The government is just trying to make use of the funds in the interest of Nigerians; because there is no point having idle funds in the banks; whereas the government needs money to carry out many developmental projects.
“This is well-intended, some shareholders may not be happy. Certainly, no regulator is happy. This is our proposal and we believe that the National Assembly would take the right decisions; for the benefit of the greater good of Nigerians. The United Kingdom also has a provision that dividends not claimed after four years; revert to the Companies that issued them.
“We are now proposing to reduce the length of time that the unclaimed dividends could revert to the Companies; we are proposing six years. It would be a pool of funds; and whoever comes up with a refund request would have enough to collect.”
The Deputy Senate President, Ovie Omo-Agege who was also present at the hearing tasked the Federal government to also claim funds from dormant accounts.
He said: “I looked at the reforms you proposed especially with respect to unclaimed dividends. I was curious why you d not also include dormant accounts. That is even more revenue to the government than you get from unclaimed dividends.
“I know it is very controversial. There was a bill in the 8th Senate to address this issue. We would appreciate if you show more interest in addressing this very issue.”