The Independent Shareholders Association of Nigeria (ISAN) criticised the newly passed legislation mandating the transfer of all unclaimed dividends from registrars to the Central Bank of Nigeria (CBN).
Describing the move as a violation of constitutional rights, a threat to investor trust and market integrity in a formal letter signed by the National Coordinator, Moses Igbrude, the association registered its rejection of the law, warning that it represents an unjust inversion into private property.
Recall that in 2020, shareholders, economists and securities experts reacted angrily to the Federal Government’s plan to plough unclaimed dividends valued at N215 billion into the 2024 Trust Fund to be managed by the Debt Management Office and the Securities and Exchange Commission.
The provision, according to shareholders, conflicts with the previous one in the Companies and Allied Matters Act (CAMA) that guarantees a 12-year statute of limitation on unclaimed dividends, after which the fund would be ploughed back into the company that declared it.
At a 2020 Finance Bill webinar organised by KPMG in collaboration with the ministries of Finance, Budget and National Planning, investors and experts insisted that unclaimed dividends should be reinvested in companies as retained earnings to grow their businesses and generate employment.
Their opposition was based on the claim that most assets managed by government officials in the past were misappropriated.
They also contended that the takeover of unclaimed dividends by the government was not necessary since market regulators, through various initiatives, were taking steps to ensure that unclaimed dividends were reduced to the barest minimum.
With the new proposal to transfer all unclaimed dividends from company registrars to the Central Bank of Nigeria (CBN), ISAN insisted that the government has no business with the fund, stating that the legislation undermines the essence of Nigeria’s capital market.
ISAN argued that unclaimed dividends are not government assets or dormant public revenue; rather, they are the legitimate earnings of individual shareholders and their legal beneficiaries, regardless of how long the funds remain unclaimed.
Dividends, by nature, are proceeds from investments made in good faith and governed by trust and any attempt to centralise their custody under a government agency, no matter how well-intentioned amounts to an indirect confiscation of private wealth.
Beyond the legal and ethical concerns, ISAN expressed deep dismay over the complete lack of consultation with key stakeholders before the passage of the legislation.
The association noted that shareholders, the owners of these unclaimed dividends, were not allowed to voice their opinions or contribute to discussions around the proposal.
Just as the registrars, capital market operators or regulatory bodies were not meaningfully engaged before the decision was made.(Guardian)
