By Dipo Olowookere
President of the Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN), Mr Bode Ayeku, has warned that many companies listed on the Nigerian Stock Exchange (NSE) may begin to consider delisting their shares because of the new policy of the federal government.
The Nigerian government is planning to take control of the unclaimed dividends in the capital market believed to be worth N200 billion. This is to be done through the Financial Bill to be forwarded to the National Assembly soon.
Section 39 of the document seeks to establish an Unclaimed Dividends Trust Fund for the transfer of idle shareholders’ reward of firms listed on the stock exchange for three for the use of the federal government.
Also, if the dividends remain unclaimed for 12 years, the funds would become government revenue and would be transferred from the trust fund to the federation account as federation revenue.
Business Post gathered that it would become an offence for any company that fails to transfer its unclaimed dividend to the fund.
The punishment is the payment of five times the value of the unclaimed dividends with accumulated interests at the monetary policy rate (MPR) rate of the Central Bank of Nigeria (CBN), which is currently at 11.50 per cent.
But Mr Ayeku sees this policy as counterproductive because according to him, the federal government never made any attempt to solve the root cause of the unclaimed dividends.
Speaking at the 44th annual conference of the institute last Thursday in Lagos, he said the control of the unclaimed dividends could make companies delist from the NSE as the bill seems to target them.
According to him, this move could compel them to “re-register as private companies as recently done by some companies in order to avoid the take-over of their unclaimed dividends which are private funds.”
The ICSAN leader questioned why the federal government was interested in the idle funds when it “has already collected companies income tax of 30 per cent and education trust fund of 2 per cent from the profit of each company before the dividend was declared, in addition to another 10 per cent withholding tax from such dividend, notwithstanding that it did not invest in the shares of public listed companies generating these unclaimed dividends.”
He advised the government to “replace Section 39 of the Finance Bill 2021 with a provision that unclaimed dividends shall be accessible to shareholders indefinitely and shall not be forfeited by any company after 12 years, but to be kept by the companies as stated in CAMA 2020.”
He argued that, “This is because companies have a contractual responsibility to pay dividends to shareholders and this Bill has the implication of inducing a breach of such contract.”
Mr Ayeku further said the various state governments should “review their complex, unfair and exploitative probate process; arbitrary valuation of assets of deceased leading to compromise by probate officials; high estate duty of 10 per cent which dependents of deceased are compelled to pay notwithstanding that probate/letter of administration is just a change of name and not the sale of assets of the deceased.”
“They should fix a time frame of a maximum of two months for issuance of probate after receipt of complete documentation by the probate registry of each state to enable executors/administrators of deceased shareholders quick claim their unclaimed dividends in order to reduce their hardship,” he added.
Adedapo Adesanya