Capital Market operators and dealers in securities have kicked against the proposed plan by the Federal Government to manage unclaimed dividends.
BizWatchNigeria recalls that there is a proposal in the 2020 Finance Bill for the creation of an unclaimed dividend and un-utilised bank balance trust fund wherein dividends declared and unclaimed would be warehoused and owed as a perpetual debt to shareholders.
Addressing the Investigative Arm of House Committee on Capital Market and Institutions, the Chairman, Association of Securities Dealing Houses of Nigeria, Onyenwechukwu Ezeagu, explained that capital market regulators and operators had leveraged technology to put in place many initiatives to address the issue of unclaimed dividends.
According to him, the initiatives include dematerialisation of shares which entails upload of quoted companies’ shares in the Central Securities Clearing System for ease of reconciliation; adoption of e-dividend and e-mandate; consolidation of multiple accounts; identity management engagements, and introduction of electronic Initial Public Offering.
“Generally, the incentives for savers and capital providers in the capital market is the expectation of dividends and capital appreciation.
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“It is, therefore, our considered view that the proposed legislation, if passed, will be a great disincentive to savings, long-term capital mobilisation and serious disruption of the Nigerian economy since it will take away the only expectation of investors in the market,” he said.
Corroborating him, the President, Chartered Institute of Stockbrokers, Olatunde Amolegbe, said the Securities and Exchange Commission would always ensure the transfer of unclaimed dividends to the capital reserves of the company for restricted utilisation such as capital expansion and issuance of bonus shares to the company’s shareholders.
On his part, the Chief Executive Officer, Wyoming Capital, Mr Tajudeen Olayinka, expressed dismay at the bill, saying “If passed by the National Assembly, it would amount to deleveraging the banking system, whose stock-in-trade is cash, while at the same time, putting too much pressure on public companies’ additional source of finance.
“Capital formation and investor confidence are at stake as well.”
