How Finance Act 2020 denies citizens’ rights


A fresh report by Lagos-based CSL Research company has shown that the provisions in the Finance Act 2020 concerning unclaimed dividends and dormant accounts, are another way of denying citizens their rights over personal bank accounts and investment yields.

Concerns have continued to grow following the Federal Government of Nigeria’s decision to securitize unclaimed dividends and dormant account balances of up to six years in the country.

In the recently assented 2020 Finance Bill, the management of unclaimed dividends and dormant account balances has been captured as part of many other provisions intended by the Federal Government of Nigeria to mitigate Nigeria’s fiscal frailties and economic crunch caused by the emergence of Covid-19.

“The funds realized will be placed in a trust fund, managed by the Debt Management Office (DMO). The DMO’s responsibility also includes payment of claims for such dividend and the accompanying compensation for accrued interest.,” the report clarified.

It observed that the Finance Act does not say borrow. It allows the government to take the money without the obligation to pay back.

“The act also subordinates provisions of CAMA that allows a period of 12 years of unclaimed dividends before it is passed back to the company. Evidently, the Act represents legally sanctioned State appropriation of private assets.

“The appropriated money will go to a Trust Fund and then onto the Federation Account from which no individual can collect the money even after a formal request to the Accountant-General and the Minister of Justice. The Act appears to be a travesty denying constitutionally-guaranteed spirit (if not letter) of the citizens’ rights over their personal bank accounts and investment yields,” the firm stated.

In 2015, the Securities and Exchange Commission (SEC) had issued a circular directing company registrars to remit to the paying companies, unclaimed dividends held up to 15 months.

In 2016, SEC also issued a rule which stated that: “Companies and Registrars in custody of dividends which remain unclaimed by shareholders 12 years after the date of declaration or subsequently attain the 12 years threshold shall upon the coming into effect of this Rule transfer such monies into the Nigerian Capital Market Development Fund (NCMDF)”.

Similarly, the Companies and Allied Matters Act (CAMA) 1990 (revised 2020) had provided that companies should publish the list of unclaimed dividends with names of all intended beneficiaries. After which, unclaimed dividends could be ploughed back for investment purposes.

As at the end of 2019, the total value of unclaimed dividends stood at N158.44 billion. In 2015, the SEC introduced the electronic dividend payment platform to enable an automated deposit of dividends to Investors’ bank accounts to help mitigate the incidence of unclaimed dividends.

Analysts at CSL research noted: “While we agree with the public outcry that dividends and bank balances are private wealth of investors, either individuals or corporate entities and negates the provisions of the constitution when converted to federal wealth, we expect this policy move to benefit the fund owners as such funds (unclaimed dividends) is expected to earn interests payable to the beneficiaries instead of the previous arrangement where unclaimed dividends serve the holding firms.

“However, we are concerned about the ability of the government to manage such funds effectively considering that a lot of resources will need to be deployed. That said, we expect that the announcement will trigger reactivation of dormant account of many banks and force many to try to retrieve their unclaimed dividends.”

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