The Federal Government may take over unclaimed dividends and deposits domiciled in dormant accounts of banks in the country.

Minister of Finance, Dr Zainab Ahmed, gave the disclosure on Thursday at a one-day public hearing organised by the Joint Senate Committees on Finance, National Planning, Banking, Customs, Trade and Investment on the provisions in Finance Bill 2020.

The motive, according to the finance minister is to mop up funds for developmental projects.

Responding to the Deputy Senate President, Ovie Omo-Agege’s question at the hearing on whether the government would also take over the deposits in the various dormant accounts in banks, the minister said “the same provision that affects unclaimed dividends will also affect unclaimed deposit in the dormant accounts.

“On the issue of unclaimed dividends, what the government is proposing is in line with the provisions of the constitution.

“Any fund that is lying fallow after a certain period of time cannot be taken over but such funds could be borrowed. The Unit Trust being proposed is a borrowing arrangement of the government.

“At the moment, the Debt Management Office issues securities to the Registrars in case owners of such unclaimed dividends come forward to claim their entitlements.

“The reason the Debt Management Office would be in charge of the unclaimed dividends and deposit in dormant accounts is because it has the mandate to manage debts on behalf of the government.

“That is why we recommend that the DMO as against to SEC, should manage the funds. It is possible that a different arrangement is in place in other jurisdiction.

“I want to state that in the amended Companies and Allied Matters Act, there is a provision that had modified the section that mandates the registrars to return unclaimed dividends after 12 years to the companies that paid the dividends in the first instance.

“Rather than the companies to collect back the money and redistribute, the government wanted to manage the funds.”

Senator representing Lagos West and Chairman of the Senate Committee on Finance, Senator Solomon Adeola, demanded explanations if the DMO takes over the management of the funds and the owners of the unclaimed dividends or deposits in the dormant accounts later surface.

The finance minister maintained that the fund management trust fund that would be set up, would give details of the procedure of how the funds would be managed.

Adeola, however, said the committee would be interested in making sure that the proposed amendments spell out the details clearly.

Adeola said that to assure Nigerians that in accordance with the Act, that once the owners of the unclaimed funds come forward with an application, the registrar would make a request to DMO based on the evidence provided by the unclaimed funds’ owners.

Ahmed said: “The essence of this is that the funds since it is a borrowed money would be available for the government to use. We have funds sitting in the registrars and funds sitting in the banks which are not helpful to the system.

“The government is just trying to make use of the funds in the interest of Nigerians because there is no point having idle funds in the banks whereas the government needs money to carry out many developmental projects.

“This is well-intended, some shareholders may not be happy. Certainly, no regulator is happy. This is our proposal and we believe that the National Assembly would take the right decisions for the benefit of the greater good of Nigerians.

“The United Kingdom also has a provision that dividends not claimed after fours years, revert to the companies that issued them.

“We are now proposing to reduce the length of time that the unclaimed dividends could revert to the companies. We are proposing six years. It would be a pool of funds and whoever comes up with a request for refund would have enough to collect.”

Earlier, representative of the Security and Exchange Commission, Abdulkadir Abbas, said critical stakeholders in the capital market has expressed strong reservations over the proposal to set up the unclaimed dividends trust funds.

Abbas said SEC has since ventilated several innovations over the years to minimise cases of unclaimed dividends.

He said: “We are advocating a modification of the provisions with regards to management and governance of the trust fund to avoid possible harm to the capital market which is still struggling to survive.”

Asked by the committee to declare the total amount of the unclaimed dividends in the country, Abbas said it is over N150bn.

He said: “We are not against the proposal to set up the unclaimed dividends and balances the trust fund. What I said is that we have concerns with respect to the governance structure of that proposed fund and appealing for reconsideration.

“SEC, being the capital market regulator and mandated by the Investment Securities Act to protect the interest of the investors, to be the one to administer or to manage or to supervise the operation of that fund.”

National Coordinator Emeritus of the Independent Shareholders Association of Nigeria, Sunny Nwosu, equally backed SEC in its opposition to the government claim to unclaimed dividends.

He said: “Unclaimed dividends is shareholders money and not government money. It should never be entrusted in the hands of the government or with any unclaimed dividends agency.

“Our position is that we are totally against issues that affect the dividends of a private investor. What the government needs to do is to make it easier for people to get letters of arbitration.

“This will reduce cases of unclaimed dividends. People go to claim their dividends every day. Unclaimed dividends should be reverted to the company that issued it.”

Senator Omo-Agege who was also present at the hearing had earlier tasked the Federal Government to also claim funds from dormant accounts.

He said, “I looked at the reforms you proposed especially with respect to unclaimed dividends. I was curious why you did not also include dormant accounts.

“That is even more revenue to the government than you get from unclaimed dividends. I know it is very controversial. There was a bill in the 8th Senate to address this issue. We would appreciate if you show more interest in addressing this very issue.”

Written By Obioma Ezenwobodo Esq

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