Equities investors yet to claim their dividends may face a more rigorous and cumbersome process in recovering them as the Securities and Exchange Commission (SEC) has disclosed that the N170 billion unclaimed dividends have been remitted to the new Unclaimed Dividend Trust Fund (UDTF). The fund is being managed by the Commission and the Debt Management Office (DMO).
At a virtual post-Capital Market Committee (CMC) meeting held in Lagos, at the weekend, the Director-General of the SEC, Lamido Yuguda, said unclaimed dividends have been moved into the fund and are now managed by both institutions.
He, however, stated that the monies would be released to the owner or beneficiaries with appropriate documents proving ownership.
Yuguda also noted that information that has to do with unclaimed dividends can now be generated from both the SEC and DMO.
“Unclaimed dividend has gone into the unclaimed dividend trust fund and is now managed by the SEC and DMO. SEC is no longer the only institution that has data on the unclaimed dividend. It will remain there until the owner comes forward to claim them. We still have cases of multiple subscriptions but we are working very hard on solutions to tackle them, especially in the area of unclaimed dividends,” he said.
Recall that shareholders had condemned the establishment of a UDTF in 2017 when it was earlier proposed in the capital market, insisting that any fund under the supervision of the government could be misappropriated and converted for other uses.
They also argued that the value of the unclaimed dividend estimated at N117 billion had reduced significantly with the application of the Companies and Allied Matter Act (CAMA) law on unclaimed dividends.
Yuguda also stated that the Commission is currently working with other agencies on a sectoral basis to tackle any potential cyber security threat in the capital market.
He said the issue of cybersecurity is increasingly given priority globally as many business activities are now being conducted digitally more than ever before.
The SEC boss pointed out that while this has significantly raised efficiency levels, it has triggered a new set of risks, which the Commission must guard against.
According to him, this necessitated the need to work towards a sectoral strategy for tackling the risks.
He said: “The issue of cybersecurity is becoming increasingly important globally. Many of our activities as individuals and organisations are now conducted digitally more than ever before.
“While this has significantly raised our efficiency level, it has triggered a new set of risks, which we must recognise and guard against. We are working towards a sectoral strategy for tackling these risks.”
Yuguda assured that the Commission will continue to enhance the existing regulatory framework guiding the operations of the market by keeping pace with the evolving changes in practices, especially with the advent of Financial Technology (Fintech), which has significantly altered the ways and means of transacting business in the capital market.
He also disclosed that the commission has successfully concluded the extensive review of the ISA 2007 to pass the Investment and Securities Bill (ISB).2021 into law during the year 2022.
“In conjunction with the National Assembly ( NASS) committees on the capital market, the commission organised a retreat to review the entire Bill. We sincerely appreciate the support received from both the Senate and House of Representatives Committees on the capital market during the review exercise,” he said.
Reacting to the deployment of unclaimed dividends in a trust fund, the Co-founder of the Noble Shareholders Association, Timothy Adesiyan said the decision is a disincentive to investment, insisting that previous trust funds were marred by corruption.
He expressed fear that the growth of the capital market would be threatened if a major incentive for investment like dividend payout is no longer attractive to retail investors.
A member of the Shareholders United Font, Rotimi Idowu said it is inappropriate for a trust fund to be created by the government, saying it would not be effectively managed.
He pointed out that the action had created another opportunity for wasteful spending, adding that the unclaimed dividends should go back to the companies.
Idowu explained that ploughing it back into the company that declared it aligns with the intention of the original investors to put their money with the companies who will use it to enhance profitability.
According to him, when the money goes to these companies, it will grow its reserves for the benefit of its shareholders.
He pointed out that the preponderance of unclaimed dividends was due to multiple subscriptions by investors. Multiple subscriptions happen when investors subscribe to the same public offer with multiple names.
Therefore he urged the regulators to simplify letters of administration for the families of deceased persons to facilitate access to dividend claims.
The value of unclaimed dividends in 1999 was put at N2.09 billion; N100 billion in 2017; N120 billion in 2018, but at the close of 2019, it had risen to N158.44 billion. The figure hit N170 billion as of December 2020.
Source: Guardian.ng