Shareholders have said the plan by the federal government to take over the N200billion unclaimed dividends through the establishment of Unclaimed Dividend Trust Fund is unconstitutional and void to resist the move.
The shareholders under the aegis of Independent Shareholders Association of Nigeria (ISAN), stated this in statement signed by its Founder, Sunny Nwosu and its National Coordinator, Anthony Omojola.
According to them, the underground moves to take over the funds via a "trust fund" is null, saying the government lacks powers to manage funds belonging to private sector investors.
"Dividends are private wealth of investors, either individuals or corporate entities. The idea of converting such private wealth to federal wealth negates the relevant provisions of the rights to own property as guaranteed by the 1999 constitution. Our opinion, is that S39 to the extent of its inconsistency with S44 of the 1999 constitution(as amended)is null and void. The law expressly states that there shall be no forceful takeover of any private move-able property of any Nigerian without due and appropriate compensation and or valid court order," the shareholders said.
ISAN explained that dividends are only available to investors after "the company has paid a host of taxies, including companies income Tax Act(CITA),Educational Trust Fund(ETF) and other taxes are paid to the federal government -including 10 per cent withholding tax on the shareholders for every dividend declared."
"The statute of limitation provides for expiration of debts after six years. CAMA 2020 by S432 increased the limitation to 12 years. Is government by any chance taking the position that the statute of limitation is unconstitutional?"Government lacks the capacity to manage the funds and has demonstrated a lack of capacity to administer funds. Imagine a shareholder with an unclaimed dividend of about N1, 000 to write /go to Abuja just to make a claim of the unpaid dividend. The stress and bureaucratic bottleneck is too cumbersome and will not solve the unclaimed dividend problem," the shareholders said.
For solution, ISAN asked that government should make it easier for the estate of deceased shareholders to obtain probate/administration via the courts and that banks should help in ensuring ease of executing probate/letters of administration.
Before now, the Chairman, Association of Securities Dealing Houses of Nigeria (ASHON), Chief Onyenwechukwu Ezeagu, and President of Chartered Institute Stockbrokers (CIS), ), Mr.Olatunde Amolegbe, had kicked against the move. For instance, Ezeagu, said the plan was unnecessary because capital market regulators and operators had leveraged technology to put in place many initiatives that are already addressing the issue of unclaimed dividends.
"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," Ezeagu said.
On his part, Amolegbe, described the bill as objectionable at this stage of the market.
According to him, the Securities and Exchange Commission (SEC) would always ensure that unclaimed dividend is transferred to capital reserves of the company for restricted utilisation such as capital expansion and issuance of bonus shares to the company's shareholders.