Securities dealers oppose FG’s proposed unclaimed dividend fund

The proposed plan by the Federal Government to manage unclaimed dividends, projected to hit N200bn by the end of this year, has drawn the ire of capital market operators on the adverse effects on investor confidence and future growth of the market.

In the 2020 Finance Bill, there is a proposal 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 recently, 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.

READ ALSO  Real estate sector contracted by 17.18% –NBS

He said, “Generally, the incentives for savers and capital providers in the capital market is the expectation of dividends and capital appreciation.

“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.”

Corroborating him, the President, Chartered Institute of Stockbrokers, Mr 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.

Amolegbe described the bill as objectionable at this stage of the market.

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.

READ ALSO  Foreign capital flows into Nigeria tumble by $4.56bn

“Capital formation and investor confidence are at stake as well.”

Please follow and like us:

Next Post

APC demands Nasarawa chairman’s killing probe, Buhari, others mourn

Mon Nov 23 , 2020
Post Views: 35 The President, Major General Muhammadu Buhari (retd.), has said the nation’s security agencies must do more to end violence in the country. The Senior Special Assistant to the President on Media and Publicity, Garba Shehu, in a statement made available to journalists on Sunday, quoted the President […]
RSS
Follow by Email