Says unclaimed dividends were being transferred into a trust fund
The Securities and Exchange Commission (SEC) has voiced concern about the market’s high proportion of unclaimed dividends.
This was disclosed by Mr. Lamido Yuguda, the Director-General of the SEC during the Post Capital Market Committee (CMC) webinar press briefing on Thursday.
Unclaimed dividends, according to the DG, were caused by multiple subscriptions, in which some investors used various methods to subscribe for more than the allowed amount of shares during public offerings.
What has been said
Despite the fact that dividends are now issued electronically, Yuguda claims that there is still a large number of unclaimed dividends. He said that the number of unclaimed dividends would plummet if everyone mandated their accounts.
He said the SEC has put a lot of effort into investor education in order to ensure that consumers manage their accounts.
”This process is still open, you can do that with the registrar, from commercial banks.
”We also have on our website, a tool which helps you to determine any unclaimed dividend that you may have and I will encourage everyone to take advantage of these tools,” he said.
Yuguda said that dividends that had not been claimed over a certain period were being transferred into the trust fund.
According to him, if anyone comes forward at any given time to claim their unclaimed dividend, this fund will be able to repay those dividends without any problems.
The DG said that any investment scheme not registered with the Commission was not a bonafide capital market operator.
He urged investors to always check with SEC to know the licensed operators before investing.
”SEC can register a capital market operator and that operator in the cause of his business begins to show signs of distress, the SEC has adequate mechanism to deal with this through our monitoring and enforcement arm,” he said.
What you should know
- Concerns have grown after the Federal Government of Nigeria decided to securitize unclaimed dividends and inactive account balances in the country for up to six (6) years.
- The management of unclaimed dividends and dormant account balances has been included in the recently assented 2020 Finance Bill, along with many other provisions intended by the Federal Government of Nigeria to mitigate Nigeria’s fiscal frailties and economic crunch caused by the emergence of Covid-19.
- The funds realised will be placed in a trust fund, managed by the Debt Management Office (DMO). The DMO’s responsibility also includes payment of claims for such dividends and the accompanying compensation for accrued interest.
- The SEC revealed that unclaimed dividends in the Nigerian Capital Markets rose to N170 billion as at December 2020.
- The figure rose from N158.44 billion total unclaimed dividends as of December 2019, citing issues related to poor identity management.
- The SEC issued a circular in 2015 requiring business registrars to refund unclaimed dividends kept for up to 15 months to the paying corporations.
- Similarly, the Companies and Allied Matters Act (CAMA) 1990 (updated 2020) required corporations to publish a list of unclaimed dividends that included the names of all intended recipients. Unclaimed dividends could then be repurposed for investment purposes.
Culled from Nairametrics