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SEC and the N90b unclaimed dividends by Nigerian investors

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The regulators should act now to safe guard unclaimed dividends and other floating unclaimed funds in the financial system… the recent CBN’s policy  on ‘Unclaimed Funds’ did not go far enough.

Photos: Past and present Director-General of SEC, Mounir Gwarzo [upper left and Aruma Oteh [above]

The mere mention of =N=90Billion outstanding as unclaimed dividend speak volume of the miss-allocation of scare funds, wastefulness and how Nigerian Finical System eternalise inefficiency. These seemingly idle funds are held by the registrars, owned by them same group that own and hold the dormant deposit accounts. 

It is not surprising that this astronomical volume of funds is held for the interest of insignificant number of economic agents in the system. I believe the Nigerian public vested the right on the government to manage and regulate our economic activities, which the government vested on CBN and SEC.  

This should be a further wake-up call to these regulators for corrective practice all actors in the financial system. 

The current “E- dividend means electronic dividend’ system that allow share investors to collect their dividend electronically in their preferred bank though will reduce such incidence unclaimed funds, but will not stop it. Suppose all share investors subscribe to this system, then all their dividend goes to their respective banks. 

Furthermore, in a situation the investors do not operate such deposit accounts it goes dormant, and the fund remain left to the banks. 

However, but worst still, these automated transactions much as they originated from the customers once through completion of indicated forms and continually been wrongfully assumed to be customer originated. 

Hence, customer may well have stopped operating accounts and such accounts should have been technically dormant. Considering that dividends are customers related transactions, these customers’ accounts will be mistaken to be active. Such mistaken active accounts are only beneficial and advantageous to the banks not the owners of the deposits as they may not come for them anymore.

The is obvious when we consider an organisation(s) having such funds can invest  them in risk-free Nigerian Treasury Bill and pay back the owners of the fund the face value of their money without any interest. Such organisation(s) that retains interest income from this risk free investment is already a billionaire on the first year of the investment.  

However, a thought that this fund is held by this organization(s) year by year ad infinituum (indefinitely) is most disturbing. It most surprising to me as well as well-meaning Nigerians  that this things are still happening in Nigerian Financial System over the watch of the Central Bank of Nigeria, Security and Exchange Commission of Nigeria and other regulators without resolution.

It is pertinent to note in 2005 there were ranging argument in Nigerian financial system on who would appropriate the unclaimed dividend with Nigerian Shareholders Association and the Company Registrars each claiming that the fund should be theirs. 

Surely this period is far too long to find a final settlement, solution and look for best practices world over. Certainly there is vested interest in our financial and may well explained why a former Federal Minister of Finance Chief Anthony Ani warned and alarmed on these issues. I feel refrained to recall his thought about a German philosopher on banking, but Fela called it magic for us Nigerians to understand.

However, I may now add and observe that Lagos Island and inner Abuja have established a family of wide fat cats of financial experts and professionals. Certainly =N=90Billion with annual additional unclaimed dividends and other unclaimed funds and interest from investing them may not be enough for these cats. 

Hence the reason the regulators should act now to safe guard unclaimed dividends and other floating unclaimed funds in the financial system. I will  argue that the recent CBN’s policy  on ‘Unclaimed Funds’ of which unclaimed divided is one class did not go far enough. 

Nigerian Financial System is long overdue to have a profit oriented ‘Unclaimed Funds Bank’, ensuring that it is well managed and not like other government quangos, in completion with other national banks to ensure effective allocation of scare funds. 

I will argue that unclaimed dividends do not belong to SEC, the registrars, or even Association of Shareholders etc, alternatively to the government by the rule of bona vacantia a basic principle of common law. 

OGJ Odumodu, Business Analyst / Optimisation Analyst


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