A fresh dimension is unfolding over unclaimed dividends as the Securities and Exchange Commission (SEC) has issued a circular ordering capital market registrars to return to originating companies every kobo unclaimed for 15 months and over.
The circular, dated June 1, asked registrars of quoted companies to file evidence of remittance with the SEC not later than June 30. Failure to comply will attract sanction without further recourse.
TheNiche reported exclusively in September 2014 moves by the SEC to hijack unclaimed dividends worth over N60 billion.
The report said the SEC had ordered registrars of quoted companies to return the monies in their unclaimed dividend accounts. That was about six months to the end of the tenure of Arunma Oteh as SEC Director General (DG).
A year earlier, the capital market regulator had issued a circular ordering shareholders of quoted companies to forward bank account details to their registrars and stockbrokers by June 3, 2013, or forfeit future dividend payments.
In 2012, an attempt to legislate a bill seeking to establish Unclaimed Dividend Trust Fund where the over N50 billion pool of funds would be entrusted and managed by a commission intended for that purpose was greeted by outcry by stakeholders.
Lingering unclaimed dividends debacle has defied solutions proffered by successive administrations at the SEC, giving room for fresh moves by its DG, Munir Gwarzo, to renew demand to take custody of the huge sums belonging to unidentified shareholders.
Independent Shareholders Association (ISAN) National Coordinator, Sunny Nwosu, described the decision as unconstitutional and unfair to shareholders.
Nwosu said the SEC would be acting outside the law if it gave such an instruction.
He urged that once a company declares dividend and it is approved by shareholders the money no longer belongs to the company and there is no law which gives the SEC the authorisation for such money to be returned until after 12 years after it becomes statue barred.
“Sometimes regulators in this market behave as if they don’t know what they are doing. What gave the SEC the authority to ask the registrars to return such money?” Nwosu wondered.
He advised affected shareholders to seek redress in the law court, threatening that ISAN will go to court if the SEC carries out its decision.
Under the current system, a dividend warrant becomes statute-barred, that is, unclaimed and due for return to the originating company after 12 years.
It only becomes temporarily invalid after six months and this could be solved by simply taking it to the registrars for revalidation. Revalidation can be for as many times as possible.
FBN Registrar Managing Director and Chief Executive Officer, Bayo Olugbemi, insisted that it is not possible for any to usurp the funds.
On the directive by the SEC to return all unclaimed dividends to originating companies, he said: “The dividend account must be there; you cannot take everything. If you take everything it means that when shareholders come for it they will see nothing to claim.
“How will the shareholders be paid? We have some dividend warrants that are already issued out there which shareholders revalidate and when they come we pay them.”
Olugbemi, who is also Institute of Capital Market Registrars (ICMR) President, warned that “we need to be careful how we handle it. Some of the dividends are returned to the originating companies after about 15 months or 12 years.
“After 12 years it becomes statue-barred but after 15 months, the companies can take part of it back on request; the law allows that.
“The dividend account must be there; you cannot take everything. If you take everything it means that when shareholders come for it they will see nothing to claim.
“That is one issue that is in the burner now as the SEC said that every kobo should be sent back to the companies. If we do, how will the shareholders be paid?
“We have some dividend warrant that are already issued out there which shareholders revalidate, and when they come we pay them.
“I think what every stakeholder, including financial journalists, should do more is to encourage every shareholder to have a bank account so that e-dividend payment can be possible.
“But if the shareholder cannot do e-dividend, at worst, let them subscribe to our dividend prepaid card that allows dividends go straight to the card.”