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FG’s Control of Unclaimed Dividends Could Cause Mass Exit from NSE—Ayeku

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Unclaimed Dividends

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.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Economy

CBN Puts Down N500m to Encourage Entrepreneurship Among Students

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Encourage Entrepreneurship

By Ashemiriogwa Emmanuel

As part of its policy measures to address rising youth unemployment and underemployment, the Central Bank of Nigeria (CBN) has disclosed that it will support students in tertiary institutions to encourage entrepreneurship.

According to the apex bank, a grant of N500 million would be awarded to five top Nigerian polytechnics and universities with the best entrepreneurial pitches or ideas.

“Five top Nigerian polytechnics and universities with the best entrepreneurial pitches/ideas shall be awarded as follows: first place – N150 million; second place – N120 million; third place – N100 million; fourth place – N80 million; and fifth place – N50 million,” a report from the central bank on Wednesday, October 20, titled Guidelines for the implementation of tertiary institutions entrepreneurship scheme stated.

The bank said it would receive offers from crucial sectors of the economy like agribusiness, information technology, creative industry, and science and technology.

On implementation, CBN disclosed that a Body of Experts (BoE) from the private and public sector would be put together for the regional and national entrepreneurship competitions to evaluate entrepreneurial and technological innovations submitted by participants.

The BoE, who will review and recommend the projects, will comprise four representatives from the Bankers’ Committee, one representative from consulting industry, and one nominee from the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).

The body to review the pitches also comprises one nominee each from the Nigerian Universities Commission (NUC), National Board for Technical Education (NBTE), and from the CBN (Secretary).

“Participation under the developmental component shall be restricted to undergraduates of Nigerian polytechnics and universities.

“Interested Nigerian polytechnics and universities shall apply to participate in the national biennial entrepreneurship competition on a dedicated online portal (https://cbnties.com.ng), outlining brief details of the project, potential impact, and evidence of originality of the project.

“The submitted applications shall be evaluated by the BoE through engagements that showcase undergraduates competing by pitching entrepreneurial and technological innovations at regional levels, with finalists proceeding to the national event for final consideration and ranking by the BoE,” CBN disclosed.

According to the bank, the program, which will be aired a month on national television stations and on social media, will help promote the value of entrepreneurship.

It said that the awarded grant will be credited “in tranches of 55:45 ratio” directly to a dedicated account opened for the purpose of the funding.

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Economy

NGX Group Gains 10% to Lift Stock Market by 0.26%

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NGX Group Shares

By Dipo Olowookere

The nation’s stock market rebounded by 0.26 per cent on Wednesday after going down by 0.71 per cent on Monday, which was the last trading session as the exchange was closed on Tuesday for a public holiday in Nigeria.

Investors were in high spirits yesterday when they returned to the market and this reflected in the level of activity as the trading volume rose by 47.47 per cent to 499.5 million stocks from 338.7 million stocks, the trading value increased by 25.16 per cent to N5.1 billion from N4.1 billion, while the number of deals grew by 2.25 per cent 5,998 deals from 5,866 deals.

Business Post reports that when the exchange closed for the day, FBN Holdings was the most traded equity with the sale of 147.6 million units valued at N1.8 billion, followed by eTranzact, which transacted 105.2 million units worth N215.6 million.

Furthermore, Access Bank sold 27.9 million units worth N266.0 million, Transcorp traded 22.3 million units valued at N22.8 million, while GTCO recorded a turnover of 20.6 million shares worth N612.9 million.

It was observed that the market closed in the positive territory as a result of the growth posted by the Nigerian Exchange (NGX) Group Plc as its share price went up by 10.00 per cent to settle at N21.45.

GlaxoSmithKline rose by 6.87 per cent to N7.00, NPF Microfinance Bank gained 5.85 per cent to trade at N1.81, Coronation Insurance grew by 4.17 per cent to 50 kobo, while FBN Holdings appreciated by 3.83 per cent to N12.20.

On the flip side, Prestige Assurance was the worst loser as its value depreciated by 8.51 per cent to 43 kobo, Consolidated Hallmark Insurance fell by 8.33 per cent to 55 kobo, Academy Press also dropped 8.33 per cent to 33 kobo, Cadbury Nigeria lost 5.88 per cent to sell for N8.00, while Union Bank went down by 5.66 per cent to N5.00.

In all, a total of 21 stocks closed on the gainers’ chart while 18 stocks finished on the losers’ chart, indicating a positive market breadth and investor sentiment.

However, three of the five major sectors of the market closed bearish with the energy, consumer goods and banking counters losing 0.39 per cent, 0.24 per cent and 0.20 per cent respectively, while the insurance and industrial goods sectors rose by 0.58 per cent and 0.04 per cent apiece.

At the close of transactions, the All-Share Index (ASI) improved by 105.04 points to 41,249.71 points from 41,144.67 points, while the market capitalisation expanded by N54 billion to N21.526 trillion from N21.472 trillion.

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Economy

Naira Appreciates to N414.07/$1 as Bitcoin Hits $66k

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bitcoin nigerians

By Adedapo Adesanya

The Naira appreciated against the US Dollar at the Investors and Exporters (I&E) window of the foreign exchange (forex) market by 0.16 per cent or 66 kobo on Wednesday, October 20 as trading returned after the Eid-el-Maulud holiday break.

At the close of business at the midweek session, the local currency was sold for N414.07/$1 in contrast to N414.73/$1 it was traded on Monday, according to data obtained from FMDQ Securities Exchange.

During the second trading session of the week, a turnover of $334.97 million was recorded as against the $172 million achieved at the preceding session.

This indicated a $162.97 million or 48.7 per cent rise in the value of transactions yesterday and because of the anticipation of pressure on the Nigerian currency, FX supply was made available to traders and this supported the growth posted by the domestic currency during the trading day.

But at the interbank segment of the market, the Nigerian currency maintained stability against the American Dollar as it remained unchanged at N410.89/$1 on Wednesday.

Meanwhile, at the cryptocurrency market, Bitcoin (BTC) rallied to an all-time high (ATH) of $66,000 yesterday as optimism surged for greater mainstream acceptance in the wake of the successful launch of the first exchange-traded fund for US investors.

In a Naira equivalent, the most popular digital coin in the world was sold for N37,004,384.99 after it rose by 2.8 per cent.

On October 19, 2021, the Proshares Bitcoin Strategy ETF (BITO) was launched. The bitcoin exchange-traded fund is the first ETF ever to be approved in the United States and it’s based on bitcoin futures markets.

This development, Business Post gathered, triggered a renewed interest in the cryptos and caused Litecoin (LTC) to rise by 9.3 per cent to N117,992.99. Dash (DASH) went up by 5.9 per cent to sell for N111,892.63, Tron (TRX) grew by 4.7 per cent to trade at N58.70, while Ripple (XRP) appreciated by 4.4 per cent to trade at N635.00.

Further, Dogecoin (DOGE) was 4.2 per cent higher to sell at N150.96, Cardano (ADA) saw its value rise by 4.1 per cent to N1,305.81, Binance Coin (BNB) made a 3.4 per cent gain to trade at N205,395.75, while Ethereum (ETH) rose by 1.7 per cent to trade at N2,203,900.99.

However, the US Dollar Tether (USDT) went down by 0.4 per cent to sell for N565.49.

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