The Securities and Exchange Commission has stated that it is not against the proposal by the Federal Government to set up unclaimed dividends and balances trust fund.
This was disclosed by the Head, Securities and Investments Services (SIS) Department, SEC Mr. Abdulkadir Abbas while making clarifications on the Commission’s presentation at the one (1) day Public Hearing on the Finance Bill, 2020 in Abuja.
He said the Commission is requesting to be allowed to continue to constructively manage the issue of unclaimed dividends for the development of the nation’s capital market.
Dividends are cash rewards that a company gives to its shareholder.
According to him “We are not against the proposal to set up unclaimed dividends and balances trust fund. Our concerns are with respect to the governance structure of that proposed fund and that is why we are asking for reconsideration. We are advocating modifications 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.”
“SEC being the capital market regulator and mandated by the Investments and Securities Act to protect the interest of the investors, to be the one to administer or to manage or to supervise the operations of that fund, that is what we are requesting”.
Mr. Abbas, who represented the Director-General of the SEC at the Public Hearing assured the Senate that, the SEC would continue to monitor the compliance of the rules and regulations on the treatment of unclaimed dividends adding that its ultimate objective is to pool unclaimed dividends into a well-structured and well governed Fund with independent management under the existing National Investor Protection Fund (NIPF) as found in other jurisdictions like Kenya and India.
He added that, alternatively, the unclaimed Dividends Trust Fund could be set up as an independent Fund to be managed by the private sector (Professionals Fund Managers) under the supervision of the Commission.
Meanwhile, Finance Bill 2021 proposed for the creation of an unclaimed dividend and unutilised bank balance trust fund wherein dividends declared and unclaimed would be warehoused and owed as a perpetual debt to shareholders.
Consequently, such unclaimed dividends is proposed to be handed ov er to the gov ernment, as trustee, in a perpetual fund created under supervision of the CBN & DMO, etc with private sector involvement in the governance of the Fund.
Accordingly, the liability to shareholders of the public companies will no longer be extinguished after 12 years as currently provided for in the CAMA.