Companies get 48-hour deadline to remit N200b unclaimed dividends

By TAOFIK SALAKO

Companies got a 48-hour deadline on Tuesday to remit unclaimed dividends of up to six years to their owners.

The deadline came from apex capital market regulator Securities and Exchange Commission (SEC).

Unclaimed dividends are estimated to be in excess of N200 billion.

The SEC is finalising an amendment to the national unclaimed dividend management framework.

A draft of the new framework obtained by The Nation stipulates that companies’ registrars must ensure that all accounts mandated for electronic dividend (e-dividend) are credited with “outstanding unclaimed dividends within 48 hours of receipt of the e-dividend mandate by shareholders”.

The registrars are also required to forward a status report of all mandated accounts to SEC on quarterly basis.

The status report shall include a list of requests by shareholders, number of requests processed, number of successful requests and number of unsuccessful requests with reasons.

According to the draft rules, where a company’s registrar fails to comply with the 48-hour remittance deadline and submission of status report, such a registrar shall be liable to a penalty of a sum not less than 25 per cent of the unremitted amount and N50, 000 for every day the violation continues.

Also, as part of the new measures to block loopholes leading to increase in unclaimed dividends, all public companies to whom unclaimed dividends have been transferred, after 15 months but less than six years, shall report in their annual audited account the bank balance, investment and the earned income on the unclaimed dividend funds, by way of note to the audited accounts.

The registrar to a company may also be required to make other reports on unclaimed dividends as may be requested by the Commission from time to time.

The draft stipulates: “Failure by any public company to make such report shall lead to appropriate sanction, including the forfeiture of the income to the Commission for the year which the company failed to report.

“Any company that fails to make the reports as required by Rule (b) shall be liable to pay the sum of N10 million as penalty.”

SEC stated that the forthcoming amendment is necessary to serve as a deterrent to registrars and ensure prompt compliance.

“These rules will also reduce the quantum of unclaimed dividends in the custody of the registrars as well as discourage registrars from keeping unclaimed dividends,” the commission stated.

It added that the amendments were also necessary to ensure that there is full compliance by the beneficiary public companies and to determine the contribution of unclaimed dividend funds in the performance of the public companies.

In November 2015, SEC launched the e-Dividend Mandate Management System (e-DMMS) in collaboration with the Central Bank of Nigeria (CBN), Nigerian Interbank Settlement System (NIBSS) and other stakeholders.

The e-DMMS is an E-dividend payment portal that ensures the payment of dividends directly into a shareholder’s account.

The commission subsequently cancelled the issuance of physical dividend warrants, opting for full e-dividend payment for companies quoted on the Nigerian stock market. (The Nation)