Finance Bill 2020: Opposition mounts as FG moves to take possession of dormant fund

Opposition mounts against the Federal Government’s bid to take possession of dormant dividends and accounts.

The debate was at the public hearing on Finance Bill 2020 by the Joint Senate Committee on Finance, Customs, National Planning and Trade Investment at the National Assembly on Thursday in Abuja.

The Minister of Finance, Budget and National Planning, Zainab Ahmed, said under the Finance Bill, the government proposed that any funds lying fallow after a certain period of time could not be taken over but such funds could be borrowed.

Speaking on the deposit in the various dormant accounts, she said, “I want to say that the same provisions was made in the proposed amendments. The same provision that affects unclaimed dividends will also affect unclaimed deposit in the dormant accounts.

“On the issue of unclaimed dividends, what the government is proposing is in line with the provisions of the Constitution. Any funds that is lying fallow after a certain period of time cannot be taken over but such funds could be borrowed.

“The Unit Trust is a borrowing arrangement of the government. At the moment, the Debt Management Office (DMO) issues securities to the registrars in case owners of such unclaimed dividends or deposit in dormant accounts come forward to claim their entitlement.”

Read also: Senate raises concerns over dormant fund in capital market

The minister explained that the unclaimed dividends and deposit in dormant accounts would be managed by the DMO because it has the mandate to manage debts on behalf of the government.

She said, “That is why we recommend that the DMO as against to Securities and Exchange Commission (SEC) should manage the funds.

“It is possible that a different arrangement is in place in other jurisdiction but I want to state that in the amended CAMA, there is a provision that had modified the section that mandates the registrars to return unclaimed dividends after 12 years to the Companies that paid the dividends in the first instance. Rather than the companies to collect back the money and redistribute, government wanted to manage the funds.”

The Chairman of the Senate Committee on Finance, Senator Solomon Adeola, asked the minister asked what would happen if the DMO took over the management of the funds and the owners of the unclaimed dividends or deposits in the dormant accounts showed up.

Ahmed said the fund management that would be set up would give details of the procedure of how the funds would be managed.

Adeola stated that the committee would be interested in making sure that the proposed amendments spelt out explicitly so as to allay the fears of Nigerians.

He stated that in accordance with the Act, once the owners of the unclaimed funds come forward with an application, the registrar would make a request to DMO based on the evidence provided by the unclaimed funds owners.

The Minister agreed with Adeola, saying that it had been anticipated in the Act because only the registrar could ratify that the person that is making the claims is the rightful owner.

‘The essence of this is that the funds, since it is a borrowed, money would be available for government to use.

She said, “We have funds sitting in the registrars and funds sitting in the banks which are not helpful to the system. The government is just trying to make use of the funds in the interest of Nigerians because there is no point having idle funds in the banks whereas government needs money to carry out many developmental projects.

“This is well intended, some shareholders may not be happy. Certainly, no regulator is happy. This is our proposal and we belief that the National Assembly would take the right decisions for the benefit of the greater good of Nigerians. The United Kingdom also have a provision that dividends not claimed after four years, revert to the Companies that issued them..

“We are now proposing to reduce the length of time that the unclaimed dividends could revert to the Companies, we are proposing six years. It would be a pool of funds and whoever comes up with a request for refund would have enough to collect.”

The representative of the Security and Exchange Commission, Abdulkadir Abbas, said critical stakeholders in the capital market had inundated the commission with complaints over the proposal to set up the unclaimed dividends trust funds.

Abbas said SEC had come up with innovations over the years to minimise cases of unclaimed dividends.

He said about 1.5million shareholders had been mandated under the e-dividend mandate initiative and that it had resulted in the consolidation of 50, 000 applications involving five billion unit of shares.

He said, “We are advocating a modification of the provisions with regards to management and governance of the trust fund to avoid possible harm to the capital market which is still struggling to survive.”

Asked by the committee to declare the total amount of the unclaimed dividends in the country, Abbas said it is over N150bn.

But the National Coordinator emeritus of the Independent Shareholders Association of Nigeria representing all the shareholders in Nigeria, Sunny Nwosu, argued that unclaimed dividends is shareholders money and not government money.

“It should never be entrusted in the hands of government or with any unclaimed dividends agency. Our position is that we are totally against issues that affects the dividends of a private investor .

“What government needs to do is to make it easier for people to get letters of arbitration. This will reduce cases of unclaimed dividends. People go to claim their dividends everyday. Unclaimed dividends should be reverted to the company that issued it.”