The Security and Exchange Commission (SEC) and shareholders have faulted the Nigerian government’s bid to take control of investors’ unclaimed dividends and dormant funds in bank customers’ accounts in the country.
SEC and shareholders voiced their displeasure against the move on Thursday in Abuja at a public hearing on the Finance Bill 2020 put together by the joint Senate committee on finance, customs and excise, trade and investment and national planning.
The legislation plans to modify 12 acts of parliament involving personal income tax, customs and excise tariff, capital gains tax, value added tax, companies income tax and stamp duties.
Minister of Finance, Budget and National Planning Zainab Ahmed stated at the hearing that government had the right to borrow any unclaimed dividends that were idle but shareholders affirmed that such funds ought to be returned to the companies, which issued the dividends originally.
Mrs Ahmed’s remark followed a question posed by Deputy Senate President Ovie Omo-Agege on whether government wanted to take over the money in dormant accounts.
“The same provision that affects unclaimed dividends will also affect unclaimed deposit in the dormant accounts.
“On the issue of unclaimed dividends, what the government is proposing is in line with the provisions of the Constitution. Any fund that is lying fallow after a certain period of time cannot be taken over but such funds could be borrowed. The Unit Trust being proposed is a borrowing arrangement of the government.
“The reason the Debt Management Office would be in charge of the unclaimed dividends and deposit in dormant accounts is because it has the mandate to manage debts on behalf of the government. “That is why we recommend that the DMO as against the SEC should manage the funds.”
“Rather than the companies to collect back the money and redistribute, the government want to manage the funds,” the minister said.
The move is out of tune with Sections 429 and 432 of the Companies and Allied Matters Act 2020, which authorises a company declaring a dividend to invest the fund in a business separate from its line of operation after the three months of publication of the unclaimed dividends have expired.
Unclaimed dividends in the country are currently in excess of N150 billion.
Solomon Adeola, chair of the Senate committee on finance, asked the finance minister what would happen when owners of the unclaimed dividends or dormant funds came forward after the DMO had taken over the management of the money.
Ahmed stated that a trust fund management to be established would provide the guidelines of how the funds would be managed.
Abdulkadir Abbas, who represented SEC at the hearing, noted that major stakeholders had sent several complaints to the capital market regulator, over the plan to establish the unclaimed dividends trust fund.
“We are advocating a modification of the provisions with regards to management and governance of the trust fund to avoid possible harm to the capital market which is still struggling to survive.
“We are not against the proposal to set up the unclaimed dividends and balances trust fund.
“What I said is that we have concerns with respect to the governance structure of that proposed fund and appealing for reconsideration,” Abass said.
Join the conversation
Support Ripples Nigeria, hold up solutions journalism
Balanced, fearless journalism driven by data comes at huge financial costs.
As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.
If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.
Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.
SPECIAL REPORT: Lack of legal provisions, cultural sentiments fueling marital r*pe in Nigeria
By Arinze Chijioke In the early days of Sandra Izuckukwu’s marriage in 2019, her husband, Sunday Izuchukwu, did everything she...
INVESTIGATION… LIVES ON THE LINE (IV): Surviving in a dangerous media environment
This investigation is on the unresolved killing of three Nigerian journalists while on assignments between 2019 and 2020. For six...
INVESTIGATION… LIVES ON THE LINE (III): Precious Owolabi was killed covering a protest
This investigation is on the unresolved killing of three Nigerian journalists while on assignments between 2019-2020. For six months, Nigerian...
INVESTIGATION… LIVES ON THE LINE (II): Alex Ogbu was telling a story but became the story
This four-part series investigation is on the unresolved killing of three Nigerian journalists while on assignments between 2019 and 2020....
SPECIAL REPORT… TELECOMS BLACKOUT: Nigeria’s latest tactic against banditry grounds businesses, forcing residents beyond borders
The fight against notorious bandits raining terror and kidnapping students in Northwest Nigeria took a new dimension in September as...