Except a bill is passed for companies to keep unclaimed dividends in perpetuity, the Federal Government may walk away with about N52 billion unclaimed dividends.
Director/Secretary, Securities and Exchange Commission (SEC), Mr Kennedy Aigbekaen, said though the exact amount trapped in the unclaimed dividends funds is unknown, a bill would be passed for companies to keep the unclaimed dividends in perpetuity, or in the alternative, the money will revert to the government.
According to Aigbekaen, “as regards the figure, there is some harmonisation going on. I cannot say what the exact figure is; some say it is N40 billion, while others say it is N52 billion.The point is there is a discrepancy in the figures registrars have.”
He added: “In other parts of the world, when dividends are unclaimed, they revert to the state because dividends are like property, no property can be vacant. In every society once a property is vacant, it goes to the state because the state takes care of everybody.
“That is the way unclaimed dividends must be treated. People must be able to claim their funds as long as they can prove it, that will require changing the Companies and Allied Matters Act (CAMA), or making new laws to attend to this,” he stated.
He said the “Monitoring and Investigation Department of the SEC, is meeting with Registrars and other stakeholders to harmonise positions and come up with the exact figure that is trapped as unclaimed dividends, adding that many stakeholders are responding so the figures may change, it may be higher or lower, depending on the harmonisation that is going on.”
He said SEC has sent the “unclaimed dividends bill to the National Assembly, but was shot down, probably through the efforts of other stakeholders who didn’t like it.”
He noted: “Once dividend is declared, it is no longer the fund of the company, it becomes a debt the company owes the shareholders. As at today, if after 12 years a dividend is unclaimed, the company can use it outside its operations.”
Aigbekaen said unclaimed dividends persist because of change in address, cases of multiple applications as some people can no longer remember the addresses they used to receive their warrants and they did not update the information on their applications, and the refusal of many banks to pay dividend warrants into savings accounts.
One way of dealing with the problem, he said, “is for dividends to be issued electronically and once that is done, all the registrar has to do is to credit the accounts of investors within hours of the declaration of dividends rather than having investors wait for years before they get their dividends.
“Another way of dealing with the problem will be through government’s intervention by making laws and passing the unclaimed dividend bill because with CAMA, as it is today, you cannot get your dividend after a specified period, but if that bill is passed, it will be in perpetuity so that anytime you get to know about your unclaimed dividends and you can prove it then you can have it from the unclaimed dividend trust funds office.”
The SEC Board secretary also disclosed that the capital market will soon have investors’ complaints procedure for resolving disputes between investors and stock brokers.
According to Aigbekaen “as at today what we are trying to do is to formalize it so that everybody will know what the process is. The process that is being proposed is before the rules committee of the commission and will soon be finalized, why we have not finalized it is because there is something being done by the market itself so also the committee on investor confidence is doing something and we need to harmonize positions.”
The format he disclosed is “if you raise a complaint we will tell the complainant to go and discuss with the person he is laying the complaint against, that operator must be able to resolve the complaint within ten days, if he is unable to resolve the matter then it gets to the stock exchange and the stock exchange will have not more than 90 days to deal with the complaint, that is the way the framework is fashioned, if the exchange is unable to resolve the matter then you come to the commission where we will evaluate the matter.
The SEC he said trying to institute alternative dispute resolution mechanism in which case the market will have a pool of arbitrators so that when such a matter comes before the commission the complaint will be sent to the tribunal or arbitration depending on the nature of the complaint, what it means is that the commission will no longer be addressing customer complaints.
As soon as all those involved harmonize positions with the market there is the issue of length of time which has to be addressed before the mechanism takes off for complaints management systems.
He lamented that “it is not healthy for market, NSE and the Commission to be dealing with a particular at the same time so complaints will now be in stages.”
The SEC he added will “also encourage electronic complaints that will be sent to the portals and once that is done, the SEC will see it, NES will see it and the operator who is complained against will see it, in which case if the operator is not doing anything the NSE and the SEC will know because the time the complaint was filed will be seen on the portal. So if in ten days nothing happens we expect the NSE to ask questions.”
