The Securities and Exchange Commission, SEC, on Wednesday advocated the removal of the 12-year Statute of Limitation on Unclaimed Dividends to enable shareholders claim their dividends in perpetuity.
The submission was based on the report of a committee set up in 2016 to review the issue which had been passed to the Senate Committee on Capital Market.
According to a statement by the SEC spokesperson, Naif Abdussalam, the commission also wants the establishment of a Trust Fund as a corporate body, with a Board of Trustees.
The commission stated that the board should administer unclaimed dividends, while the Fund should be managed by an independent manager.
The submission, made at a Senate committee’s public hearing on the market, advocated that members of the board should be selected from the capital market with representation from some institutions.
The institutions include the Federal Ministry of Finance, SEC, Institute of Capital Market Registrars, shareholders association recognised by the commission and Nigerian Employees Consultative Association.
“Upon establishment of the Fund, the Minister of Finance shall issue a directive for all forfeited unclaimed dividends domiciled with the companies and all subsequent unclaimed dividends, 15 months and above to be paid into the fund.
“It shall be the responsibility of the Securities and Exchange Commission to enforce this directive.’’
Other institutions which made submissions at the forum included the Corporate Affairs Commission, Institute of Capital Market Registrars, The Nigerian Stock Exchange and Shareholders Associations.
Mr. Abdussalam added that the participants “alluded to the fact that the viable option of injecting these forfeited unclaimed dividends into the economy was through the establishment of an Unclaimed Dividend Trust Fund’’.
Addressing the forum, the Director-General of SEC, Mounir Gwarzo, said “going by the practices in other jurisdictions, we believe that it is apt for the Nigerian capital market to have a platform for the utilisation of unclaimed dividends funds”.
He said the platform was necessary because the volume of unclaimed dividends had increased geometrically over the years.
Available data estimates that the quantum of unclaimed dividends has grown almost 13 fold, between 2005 and end of 2012.
The News Agency of Nigeria (NAN) reports that majority (about 57 per cent) of the unclaimed monies belonged to small, retail and other low net worth investors.
To mitigate the situation, SEC had in September 2015 issued a directive to all Registrars of Companies to return 90 per cent of unclaimed dividends in their custody for a period of 15 months and above to investors.