Tag: Unclaimed Dividends

Reps query operators of capital market over unclaimed dividends

The House of Representatives Committee on Capital Markets and Institutions has queried operators of the capital market over unclaimed dividends by shareholders.

The committee said that it was necessary to ensure a healthy business environment in Nigeria where investors would be safe and could conduct their businesses with peace of mind.

Rep. Solomon Bob, the Chairman of the committee, said this in Abuja on Wednesday when the operators of the capital market appeared before the committee to answer questions bothering on unclaimed dividends.

He asked the operators why Nigeria is bedeviled with so many unclaimed dividends, while also asking them what they had done in their respective capacities to stem the tide.

“Why do we have such huge amounts of unclaimed dividends, and what are the chairmen doing in their respective positions to ensure that such unclaimed dividends become history?”

He said, “how well are you complying with the law? We need to know the extent to which you have gone to ensure compliance in the payment of unclaimed dividends.

“We want to ensure a healthy business environment in Nigeria where investors are safe and can conduct their business with peace of mind.”

Mr Bayo Olugbemi, the Managing Director, First Registrar and Investor Services Ltd., said the history of unclaimed divides was a long one, adding that there was a time we had as much as 40 per cent unclaimed dividends.

He, however, said that as of today, unclaimed dividends were less than five per cent, adding that the figure was still huge.

Olugbemi, who is also the immediate past president of the Institute of Capital Market Registrar, said that in the past five years, we have put in place a lot of initiatives that have reduced the quantum of unclaimed dividends.

He said, “we do send divided warrants to shareholders, but we stopped in 2015. So, the onus is on shareholders to give us their account details.

He said that in the last five months, N200 million of unclaimed dividends had been paid, adding that on a quarterly basis, they often make returns to the Securities and Exchange Commission on dividends unclaimed below 15 months and above.

According to him, it is difficult to keep this money. When shareholders die, there are processes to claim their dividends, and a lot of people who died and have not collected their dividends did so because their representative refused to come forward.

He said, “We want to make the capture of dividends seamless, and a lot of shareholders have not done so. If shareholders and owners refuse to give us their mandate, they won’t be captured.

Mr. Dele Ilorin, MD, Unity Registrar Ltd., on his part, said the issue of unclaimed dividends had been a serious concern, adding that apart from shareholders who were yet to release their certificates, more than 50 percent were still holding down

He said the issue of dividend warrants had been an issue, adding that some people would never come forward to claim theirs.

“We still need serious enlightenment. On unclaimed dividends, some people have N2.50k, so they see no need to collect it, but if they have a million, it will not be outstanding; it is just the lower ones that refused to collect.

Mr. Ugo Okonkwo, MD, Veritas Registrar Ltd., said the job of the SEC is to ensure that there is no foul play; the challenge is how to get the investors to claim their dividends.

According to him, if they fail to come forward, then what else can we do.

March 7, 2024
Unclaimed dividends in capital market hits N190bn – SEC

The Securities and Exchange Commission (SEC) says that the unclaimed dividends figure in the nation’s capital market currently stands at N190 billion.

Mr Lamido Yuguda, the Director-General of SEC, said this at the second post Capital Market Committee (CMC) media briefing in Abuja on Friday.

He said the figure increased due to issues concerning identity management in the country.

Yuguda also attributed the rising figure to multiple subscriptions by investors during banking consolidation and identity management.

According to him, “we have legacy issues that have aggravated unclaimed dividends.”

Yuguda, however, said the commission was working with the Nigeria Inter-Bank Settlement System (NIBSS), on the e-dividend portal.

He added that the SEC was working with NIBSS to make changes to the electronic dividend portal currently going through some form of upgrading and repair.

“We are working very hard to ensure we reduce the number of unclaimed dividends.

“This is why we are upgrading the e-dividend portal with NIBSS to restore investors’ dividend and reduce unclaimed dividends.

“We reiterate that every person, who has come to the capital market and invested money, should be able to get his dividends as and when due,” he said.

On dollar denominated bonds listed on NGX, the director-general said it was not a problem as long as it was a corporate one.

He said that the road ahead of the market was undeniably challenging but that the capital market would step forward in whatever way to lend its helping hand to the current economic reforms.

“We introduced the Know Your Customer (KYC) requirement so that all information needed will be collated.

“The market must make sacrifices to help drive the economic transformation that will change our nation’s fortunes for the better.

“The Chairman informed the meeting that the Investments and Securities Bill (ISB) 2023 was under consideration by the 10th National Assembly.

“The Bill aims to align regulations with the modern dynamics of the market and it is hoped that if passed into law, it will enable optimal contribution of the capital market to national development,” he said.

The director-general said that market players were urged during the meeting to prioritise cyber-security measures to safeguard sensitive financial data and transactions.

He lamented the trend where companies chose to de-list from the capital market.

Also speaking, the Commissioner, Operations at SEC, Mr Dayo Obisan, said one of the major issues bedeviling the commission was for beneficiaries to get access to claim their dividends.

“We keep putting our efforts to ensure that investors update their bank details, information and claim their dividends.

“But we still have some of them who fill in details wrongly.

“We at SEC are working very hard and we want to ensure bonuses get transferred to beneficiaries, capture everyone who is in the market so that our data is more robust.

“We can be able to work effectively on reducing unclaimed dividends,” Obisan said.

August 25, 2023
Unclaimed dividends hit N180bn as SEC strives to achieve zero%

Alhaji Lamido Yuguda, the Director-General, Security and Exchange Commission (SEC), says the commission is working to ensure it reduces the level of unclaimed dividends to zero per cent.

In an interactive session with editors on Tuesday in Lagos, Yuguda said that unclaimed dividends rose to N180 billion as at Dec. 31, 2021.

“This continues to be an important area of concern for the commission and we have been engaged in tackling it in the capital market,’’ the director-general said.

Although N180 billion unclaimed dividends is a large amount, Yuguda said that the amount constituted only five per cent of the quantum of dividends declared in the entire capital market.

“That is a large amount, but when you compare that with the total amount of dividends declared in the Nigerian capital market, these unclaimed dividends amount to about five per cent of the total amount of dividends declared.

“Although, five per cent is still not the ideal number, it should be zero per cent.

“Every person, who has come to the capital market and invested money, should be able to get his dividends as and when due,’’ Yuguda said

He also said that SEC is working with the Central Securities Clearing System (CSCS) and other stakeholders in the industry to address the issue of unclaimed dividends.

“The SEC has been working with CSCS, Registrars and the stockbrokers to make sure that every market appraisal makes it easy for the clients to fill their mandate form.

“We are also making sure that investors continue to get their dividends.’’

He also said that the Federal Government intervened last year by enacting a Finance Act on Unclaimed Dividends Fund.

“The government is looking at unclaimed monies both in the capital market and the banking system and established a fund that will actually access through dividends that have been unclaimed for a certain number of years that meet certain basic definitions.

“It is not that the government has taken over the money, but when the claimants eventually surface, there is a system for recovering.

“Every person who has come to the capital market and invested money should be able to get his dividends as and when due,” he added.

He noted that SEC would continue working to ensure it gets to zero per cent level, saying that “there is a need for strong investor education to achieve success.

June 29, 2022
Nigeria’s unclaimed dividends increase to N170bn

The Securities and Exchange Commission (SEC) on Friday said the total unclaimed dividends in the Nigerian capital market stood at N170 billion as of December 2020.

The Director-General, SEC, Mr Lamido Yuguda, said this at the second post-Capital Market Committee (CMC) virtual news conference.

Yuguda said the figure had increased compared with N158.44 billion total unclaimed dividends as of December 2019.

He attributed the rising figure to identity management and multiple subscriptions of investors.

“We have problems with identity management in the Nigerian capital market and this is really one of the things the commission is trying to resolve.

“We have set up a high powered committee to look at the issue, people bought shares under false names and multiple subscriptions.

“There is a problem with the process but there is a problem with us too as people because if you are buying securities using your own wealth; why will you use another persons name, why will you use a name that will not be traceable to you?

“This became an issue after the introduction of BVN because BVN is tied to only one name,” Yuguda said.

He noted that the commission constituted a Committee on Identity Management for the Nigerian Capital Market in June in order to address the unclaimed dividend issue.

“The committee is chaired by Mr Aigboje Aig-Imoukhuede and is expected to harmonise various databases of investors, and facilitate data accuracy in the market.

“We are optimistic that the outcome of this committee’s assignment would address the challenges of identity management and help resolve some of the issues we face in the areas of unclaimed dividend, direct cash settlement and multiple subscription,” he added.

On the Electronic Dividend Mandate Management System (e-DMMS) portal, Yuguda said the total number of mandated and approved accounts from its inception in 2016 to July 2021 stood at 1,144,970.

He explained that the COVID-19 pandemic affected the registration exercise.

Yuguda said members of the CMC had adopted some measures to increase the number of mandated investors on the e-DMMS and reduce the quantum of unclaimed dividends in the market.

He listed the measures as; automation for mandating to e-DMMS, increased monitoring of adherence to procedures and increased awareness campaigns on the initiative.

Yuguda added that a training session would be organised by the Central Securities Clearing System (CSCS); to be supported by the e-DMMS technical committee, Institute of Capital Market Registrars (ICMR) and Association of Securities Dealing Houses of Nigeria.

He said a study to determine the suitability of the CSCS to process dividends of investors in unlisted companies would also be conducted.

August 13, 2021
SERAP tackles Buhari over FG’s plan to borrow from dormant account balances, unclaimed dividends

Socio-Economic Rights and Accountability Project (SERAP) has sent an open letter to President Muhammadu Buhari urging him to use his leadership position “to promptly drop the plan by the Federal Government to borrow about N895bn of unclaimed dividends and funds in dormant accounts using the patently unconstitutional and illegal Finance Act, 2020, and to ensure full respect for Nigerians’ right to property.”

The Finance Act, signed into law by Buhari last December, would allow the government to borrow unclaimed dividends and dormant account balances owned by Nigerians in any bank in the country.

But SERAP in a letter dated 9 January 2021 and signed by its deputy director Kolawole Oluwadare said: “The right to property is a sacred and fundamental right. Borrowing unclaimed dividends and funds in dormant accounts amount to an illegal expropriation, and would hurt poor and vulnerable Nigerians who continue to suffer under reduced public services, and ultimately lead to unsustainable levels of public debt.”

SERAP said: “The right to property extends to all forms of property, including unclaimed dividends and funds in dormant accounts. Borrowing these dividends and funds without due process of law, and the explicit consent of the owners is arbitrary, and as such, legally and morally unjustifiable.”

According to SERAP: “The borrowing is neither proportionate nor necessary, especially given the unwillingness or inability of the government to stop systemic corruption in ministries, departments, and agencies [MDAs], cut waste, and stop all leakages in public expenditures. The borrowing is also clearly not in pursuit of public or social interest.”

The letter, read in part: “The security of property, next to personal security against the exertions of government, is of the essence of liberty. It is next in degree to the protection of personal liberty and freedom from undue interference or molestation. Our constitutional jurisprudence rests largely upon its sanctity.”

“Rather than pushing to borrow unclaimed dividends and funds in dormant accounts, your government ought to move swiftly to cut the cost of governance, ensure review of jumbo salaries and allowances of all high-ranking political office holders, and address the systemic corruption in MDAs, as well as improve transparency and accountability in public spending.”

“The borrowing also seems to be discriminatory, as it excludes government’s owned official bank accounts and may exclude the bank accounts of high-ranking government officials and politicians, thereby violating the constitutional and international prohibition of discrimination against vulnerable groups, to allow everyone to fully enjoy their right to property and associated rights on equal terms.”

“SERAP is concerned that the government has also repeatedly failed and/or refused to ensure transparency and accountability in the spending of recovered stolen assets, and the loans so far obtained, which according to the Debt Management Office, currently stands at $31.98 billion.”

“SERAP notes growing allegations of corruption and mismanagement in the spending of these loans and recovered stolen assets.”

“We would be grateful if your government would drop the decision to borrow unclaimed dividends and funds in dormant accounts, and to indicate the measures being taken to send back the Finance Act to the National Assembly to repeal the legislation and remove its unconstitutional and unlawful provisions, including Sections 60 and 77, within 14 days of the receipt and/or publication of this letter.”

“If we have not heard from you by then as to the steps being taken in this direction, the Registered Trustees of SERAP shall take all appropriate legal actions to compel your government to implement these recommendations in the public interest, and to promote transparency and accountability in public spending.”

“The government cannot lawfully enforce the provisions on Crisis Intervention Fund and Unclaimed Funds Trust Fund under the guise of a trust arrangement, as Section 44(2)[h] of the Nigerian Constitution 1999 [as amended] is inapplicable, and cannot justify the establishment of these funds.”

“SERAP notes that while targeting the accounts of ordinary Nigerians, the Finance Act exempts official bank accounts owned by the federal government, state government or local governments or any of their ministries, departments or agencies.”

“Our requests are brought in the public interest, and in keeping with the requirements of the Nigerian Constitution, the country’s international human rights obligations including under the African Charter on Human and Peoples’ Rights to which Nigeria is a state party, and which has been domesticated as part of the country’s domestic legislation.”

“According to our information, your government has reportedly completed plans to borrow an estimated N895bn of unclaimed dividends and funds in dormant accounts using the Finance Act 2020 you recently signed into law.”

“Under the law, the government will be able to access and take without consent unclaimed dividends and funds in dormant accounts in any bank, on the basis of the vague and undefined ‘Crisis Intervention Fund,’ and patently unlawful ‘Unclaimed Funds Trust Fund’.”

“The government is justifying the borrowing on the ground that it would improve access of the Federal Government to much-needed funds, and remove the burdens of foreign exchange and punitive loan conditions imposed by multilateral lenders.”

“According to the Finance Act, the operation of the trust fund is to be supervised by the Debt Management Office (DMO) and governed by a governing council chaired by the finance minister and a co-chairperson from the private sector appointed by you.

“The Nigerian Constitution in Section 44(1) provides that, ‘no moveable property or any interest in an immovable property shall be taken possession of compulsorily and no right over or interest in any such property shall be acquired compulsorily in any part of Nigeria except in the manner and for the purposes prescribed by a law.’”

“Similarly, Article 14 of the African Charter on Human and Peoples’ Rights, and Article 17 of the Universal Declaration of Human Rights guarantee the right to property and prohibit the arbitrary deprivation of the right. Thus, everyone is entitled to own property alone as well as in association with others.”

“Respect for the right to property is important to improve the enjoyment of other basic human rights and to lift Nigerians out of poverty. The Nigerian Constitution and international human rights law limit the ability of any government to interfere with private property without any legal justifications.”

The letter is copied to Mr. Abubakar Malami, SAN, Attorney General of the Federation and Minister of Justice, and Mrs. Zainab Ahmed, Minister of Finance, Budget, and National Planning.

January 10, 2021
FG to borrow from dormant bank accounts, unclaimed dividends to finance 2021 budget

The federal government (FG) has revealed plans to borrow monies in dormant bank accounts and unclaimed dividends to finance the 2021 budget.

This information is contained in the Finance Act 2020 recently signed into law by President Muhammadu Buhari.

According to the finance act, the monies recovered in the process would be transferred into an Unclaimed Funds Trust Fund.

The Finance Act also stated that the trust fund will be a sub-fund of the Crisis Intervention Fund.

The finance act reads: “Any unclaimed dividend of a public limited liability company quoted on the Nigerian Stock Exchange and any unutilised amounts in a dormant bank account maintained in or by a deposit money bank which has remained unclaimed or unutilised for a period of not less than six years from the date of declaring the dividend or domiciling the funds in a bank account shall be transferred immediately to the trust fund”.

The act exempts official bank accounts owned by the federal government, state government or local governments or any of their ministries, departments or agencies.

According to the act, the monies transferred to the trust fund will be a “special debt owed by the federal government to shareholders and dormant bank account holders”.

The finance act also stated that the original owners of the money can claim it at any time and that the operation of the trust fund will be supervised by the Debt Management Office (DMO) and governed by a governing council chaired by the finance minister and a co-chairperson from the private sector appointed by the president.

This move will make needed funds available to the federal government without foreign exchange worries or conditions attached to loans from multilateral lenders.

Other members of the governing council shall include the governor of the Central Bank of Nigeria (CBN), director-general of the Securities and Exchange Commission (SEC), managing director of the National Deposit Insurance Corporation (NDIC), a representative of the registrars of companies, two representatives of the shareholders’ association, a representative of the Bankers’ Committee and the director-general of the Debt Management Office as the secretary of the trust fund.

January 6, 2021