MEMBERS of the House of Representatives yesterday expressed concern that unclaimed dividends may hit over N200 billion at the end of the 2020 financial year. The concern was expressed by the Chairman, House Committee on Capital Markets and Institutions, Babangida Ibrahim, at an investigative public hearing in Abuja.
The committee is investigating the ‘Rising Value of Unclaimed Dividends, Unremitted Withholding Tax on Dividends and their Attendant Effects on the Nation’s Economy.’ Ibrahim, who noted that the development does not paint a good picture of the state of Nigeria’s capital market for regulators and strategic stakeholders, recalled that in 1999, the value of unclaimed dividends recorded N2.09 billion; In 2017 it was N100 billion and N120 billion in 2018 and at the end of 2019, it rose to N158.44 billion.
He warned that further piling of unclaimed dividends has devastating consequences on the economy, especially the development of the capital market notwithstanding the efforts of capital market regulators to straighten the process of quick disbursement. “We are aware of measures that have been taken by capital market regulators in the past to address the problem, but we can all see that it remains and in fact, the situation is worsening by the day.
“Some measures include e-dividend, dematerialization of share certificates, the publication of names of owners of unclaimed dividends among others. “All these measures are commendable especially the fact that they are primarily aimed at ensuring that shareholders who are owners of the dividends get the benefits. It is important to underscore this point. Dividends are distributions of earnings to shareholders. Dividends whether cash or share also known as bonus shares belong to the shareholders and not to the company who distributed them neither to the government.
‘‘Therefore, every effort must be made to ensure that shareholders get their dividends from their hard-earned investment,” he said. He said lawmakers must also be interested in knowing what happens to dividends when they remain unclaimed. “You may recall that the Securities and Exchange Commission, SEC, had attempted to address this issue in 2006 when it sponsored a bill to establish the Unclaimed Dividends Trust Fund, UDTF. In his remarks, the DirectorGeneral, Security and Exchange Commission, SEC, Lamido Yuguda said about N29 billion unclaimed dividends were delivered through regularization of multiple accounts to some investors.
According to him, SEC is currently working on an initiative to ensure the consolidation of By Aaron Ossai multiple accounts which involves the verification and isolation of account beneficiaries with a deadline of the first quarter of 2021, and accumulated unclaimed dividends should be invested through a capital market vehicle that will focus on critical infrastructural development for the benefit of investors.