The proposed controversial plan by the Federal government to manage unclaimed dividends which is projected to hit N200 Billion by the end of this year has drawn the ire of capital market operators on the adverse effects on investor confidence and future growth of the market.
Perhaps one of its last options to fund the economy, the Federal Government has in Section 39 of the 2020 Finance Act proposed that unclaimed dividends of less than 12 years be managed on behalf shareholders through Unclaimed Dividend Trust Fund while after 12 years, the money becomes forfeited to the Government as perpetual debt to shareholders.
Addressing the Investigative Arm of House Committee on Capital Market and Institutions recently, the Chairman, Association of Securities Dealing Houses of Nigeria (ASHON), Chief Onyenwechukwu Ezeagu, explained that Capital Market Regulators and Operators had leveraged technology to put in place many initiatives to address the issue of unclaimed dividends.
According to him, the initiatives include: Dematerialization of shares which entails upload of quoted companies’ shares in the Central Securities Clearing System (CSCS) for ease of reconciliation, adoption of E-Dividend and E-Mandate, consolidation of multiple accounts, identity management engagements, introduction of electronic Initial Public offering (e-IPO), adoption of Minimum Operating Standards (MOS) for operators to enhance efficiency, intensified Investor Education, continuous Stakeholders’ Engagements, Process Reform and Streamlining and KYC Update on Clients’ accounts among others.
Corroborating him, the President, Chartered Institute of Stockbrokers, Mr Olatunde Amolegbe, who spoke on behalf of the Institute said the Securities and Exchange Commission (SEC) would always ensure that unclaimed dividend is transferred to capital reserve of the company for restricted utilization such as capital expansion and issuance of bonus shares to the company’s shareholders. Amolegbe described the Bill as objectionable at this level of the market.
The Chief Executive Officer, Wyoming Capital, Mr Tajudeen Olayinka expressed dismay at the Bill, saying “if passed by the National Assembly, would amount to deleveraging the banking system, whose stock-in-trade is cash, while at the same time, putting too much pressure on public companies’ additional source of finance. Capital formation and investor confidence are at stakeas well.”