SEC plans special treasury for N80b unclaimed dividends

Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC), is planning to set up a special treasury to hold unclaimed dividends that have remained unclaimed for more than 12 years.

Ripples Nigeria reports that SEC on Tuesday sent a circular to stakeholders in the capital market on a “proposed rule – rule on application of 12 years and above unclaimed dividends”, which would lead to the creation of a Nigerian Capital Market Development Fund (NCMDF) where statute-barred unclaimed dividends will be transferred.

Under the existing laws and rules, unclaimed dividends will remain collectable by their owners for a period of 12 years after which they become statute-barred and revert to the companies that paid the dividends.

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SEC, which stated that it relied on provisions of Section 313(1)(n) of the Investments and Securities Act (ISA) 2007, is proposing that “companies and registrars in custody of dividends which remain unclaimed by shareholders 12 years after the date of declaration or subsequently attain the 12 years threshold shall upon the coming into effect of this Rule transfer such monies into the Nigerian Capital Market Development Fund (NCMDF)”.

“All companies and registrars shall not later than 30 days after the end of every calendar year forward to the Commission a report of unclaimed dividends in their custody, which shall specify compliance with Sub Rule (1) of this Rule. Companies shall disclose details of compliance with this Rule in their annual reports,” SEC stated.

Unclaimed dividends are currently estimated at more than N80 billion, out of which about N60 billion are estimated to be in line for statute-barred. Hundreds of thousands of retail shareholders and some multiple applicants have created a yearly deluge of unclaimed dividends.

SEC’s proposed rule will undergo a two-week review by stakeholders after which the apex capital market regulator will consider its next move in the rule-making process.