It has been confirmed that some listed companies, brokerage firms and securities market operators are holding over ¢100 billion of monies from declared but unclaimed dividends belonging to unidentified shareholders since the inception of the Ghana Stock Exchange (GSE).
An unclaimed asset is an asset declared by the directors of a company that has not yet been claimed by their owners. It may be in the form of dividend, bond interest, insurance proceeds, redemption proceeds, liquidation dividend, pension entitlements and redundant bank accounts.
By law, dividends become debt of a company once they are declared and must be paid. Unclaimed dividends do not belong to companies that declare them or stock brokers but to investors or shareholders. It is therefore wrong for companies and some securities market operators such as stock brokers to invest the dividends and reap huge interests on the dividend money without considering the shareholder.
According to the Securities and Exchange Commission (SEC), the Limitation Decree 1972 (NRCD 54) states that "shareholders are in principle and legally acknowledged as part owners of a company, by which they are entitled by right to dividend payments when declared and also the fact that companies annual reports acknowledge liability of such dividend payments, either claimed or unclaimed," cannot be applied to unclaimed dividends. "This is so even if the shares are transferred to a third party," it stressed. Many market operators have taken advantage of the law to hold dividends of their clients and use them without their knowledge.
Under section 9 of the Securities Industry Law (PNDCL) 333 as amended, the SEC is vested with powers to maintain surveillance over activities in the securities industry to ensure orderly, fair and equitable dealings in securities and to formulate principles for guidance of the industry and protect investors. The law also empowers the SEC to protect the integrity of the market against all forms of abuse and to create the necessary atmosphere for the orderly growth of the market.
Given these concerns, the SEC is taking serious actions to reverse the trend in the capital market.
The SEC intends to initiate legislation or guidelines on unclaimed dividends, where it may constitute a trust fund, Unclaimed Dividend Trust Fund, in consultation with market operators to manage the unclaimed dividend fund.
The 2007 budget statement has also made the commitment to protect the beneficiary owners of the assets, promote accountability, transparency and safety of unclaimed assets. This, according to the budget, will be done through a review leading to the establishment of appropriate legislative and administrative processes to address the problem.
According to the 2007 budget, this will lead to the establishment of a national framework for the management of unclaimed assets as well as educate the public on the procedures for tracing unclaimed assets.
The ministry of finance will manage the scheme closely along with Social Security and National Insurance Trust, the SEC, the Bank of Ghana, the National Insurance Commission and the Registrar General.
This idea proposed by the government would go a long way toward resolving the problem of unclaimed assets since many establishments have been benefiting because they earn huge returns on them.
However, the government should be made aware that legislation on unclaimed assets should be expedited. We are two months into 2007, and nothing has been done on it.