Stockswatch would hereby like to lend its voice to the controversy surrounding Securities and Exchange Commission’s (SEC) recent plan to transfer unclaimed dividend to the proposed Nigeria Capital Market Development Fund (NCMDF).
Given SEC’s intent on the matter, our view is that the call for the establishment of Nigerian Capital Market Development Fund, (NCMDF) should be discarded.
Shareholders of quoted companies on the Nigerian Stock Exchange, (NSE) have already come out strongly to criticize the SEC over the proposed plan to float NCMDF as part of its measures to addressing the rising unclaimed dividend which is said to be over N80 billion.
Moreover, many shareholders under the umbrella of Independent Shareholder’s Association of Nigeria (ISAN), with the exception of a few have expressed strong reservation over the Commission’s ability to manage their funds as evidence had shown in the past that most funds managed by government officials were mostly misappropriated.
Shareholders who bared their mind following the calls for quoted companies and registrars to send comment and input over its proposed rule on application of 12 years and above unclaimed dividend, have vehemently opposed the idea of setting up NCMDF.
According to them, they argue that in the past, the Commission had sponsored similar Bill on unclaimed dividend and abandon property, which was finally rejected by the National Assembly when majority of stakeholders kicked against it during the time of the public hearing.
The shareholders equally hold that the SEC has no business managing their fund as its plan is to reap where it did not sow; they further opined that the Companies and Allied Matters Act, CAMA 1990 was long overdue to be amended given the changing and evolving economic and market conditions.
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It would be recalled that the Commission had late last year disclosed that over N30 billion has so far been paid to investors in the Nigerian capital market from As a means to further reduce the unclaimed dividends profile and curb its growth in the country, the Commission did notified the investing public that it will continue to underwrite the cost of e-Dividend enrollment till 30th June, 2017.
However, SEC’s efforts in that direction, has so far resulted in getting about 48 per cent of investors to enroll for the e-dividend payments. Arising from this exercise, over N30 billion which was hitherto unclaimed have so far been credited to respective bank accounts of investors.
It is pertinent to note that unclaimed dividend is the property of retail shareholders and becomes the property of the company that paid it after 12 years period that the shareholders could not claim it, as stipulated by law.
Consequently, the contract of shares offering and purchase is between the company and shareholders. Subsection 123 of Companies and Allied Matters Act, CAMA has spelt out what to do in case there is a breach of contract. So, transferring of unclaimed dividend to a trust fund is not acceptable to the shareholders and should be resisted.
Capital Market Development Fund by its own merit is a good concept if it is properly managed and funded as stipulated by the SEC. It will bring confidence to the market and any dividend that remains unclaimed after 12years goes back to the company that declared it. SEC should continue their good work in encouraging more shareholders to key into e-dividend project.
To us at Stocks watch, it will be reasonable if the SEC can abandon the pursuit for the establishment of a trust fund while the enforcement of e-dividend continues.