E-Financial
SEC @ Senate Hearing Opposes FG’s Move to Manage Unclaimed Dividends
Securities and Exchange Commission (SEC) is opposed to a proposed amendment in the Finance Bill 2020 that prescribes that unclaimed dividends be handed over to the federal government as trustee, according to Abdulkadir Abbas, head of Department, SEC.
Abbas, stated this at the public hearing of the bill organised by the Senate Committee on Finance on Thursday.
His submission was in reaction to the presentation of Zainab Ahmed, finance minister, on the key reforms intended in the bill.
Ahmed, explained that under the Companies and Allied Matters Act (CAMA), the federal government proposes the creation of an unclaimed dividends and unutilised bank Balances Trust Fund.
She said the platform would house dividends that were declared but unclaimed and will be owed as a perpetual debt to shareholders.
“It is proposed that such unclaimed dividends should be handed over to the government as trustee, in a perpetual fund created under supervision or the CBN and DMO, etc with private sector involvement in the governance of the fund.
“The liability to shareholders of public companies will no longer be extinguished after 12 years as currently provided for in the CAMA,” she said.
Mr Abbas, however, opposed the government’s plan to supervise the platform particularly because the Investment Securities Act mandates the commission to protect the interest of the investors.
“We are not against the proposal to set up the unclaimed dividends and balances trust fund. What I said is that we have concerns with respect to the governance structure of that proposed fund and appealing for reconsideration.
“SEC being the capital market regulator and mandated by the Investment Securities Act to protect the interest of the investors, to be the one to administer or to manage or to supervise the operation of that fund. That is what I stated.”
In response to his concerns, the finance minister said the government’s proposal was in line with the provisions of the Nigerian Constitution, adding that the Debt Management Office will supervise it.
“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 issues securities to the registrars in case owners of such unclaimed dividends or deposit in dormant accounts come forward to claim their entitlement.
“The reason the Debt Management Office would be in charge of the unclaimed dividends and deposit in dormant accounts is because it has the mandate to manage debts on behalf of the government.
“That is why we recommend that the DMO as against to 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…”
Mrs Ahmed further explained that there is a provision that had modified the section in the law 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, she said, the government wants to manage the funds.
When asked what happens if the DMO takes over the management of the funds and the owners of the unclaimed dividends or deposits in the dormant accounts show up, she said DMO would give details of the procedure of how the funds would be managed.
The minister was made to further explain how and why the government will supervise the fund to which she said the government only wants to use monies that are lying idle in bank accounts 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 believe 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 fours 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.
Ovie Omo-Agege, deputy Senate president, who was also present at the hearing, called on the government to also claim funds from dormant accounts.
The Finance Bill seeks to amend 12 laws including the Capital Gains Tax Act; Companies Income Tax Act; Personal Income Tax Act; Tertiary Education Trust Fund (Establishment) Act; Customs and Excise Tariff, etc (Consolidated) Act and the Value Added Tax.
Others are Federal Inland Revenue Service (Establishment) Act; Nigeria Export Processing Zone Act; Oil and Gas Export Free Zone Act; Fiscal Responsibility Act; Companies and Allied Matters Act 2020; and Public Procurement Act; in order to make further provisions in connection.
Some objectives of the bills include reforming extant fiscal policies to prioritise job creation, economic growth, socio-economic development, domestic revenue mobilization, as well as to foster closer coordination between monetary and trade policies.
The exchange rate stabilised in the FX market as the Central Bank of Nigeria (CBN), defended the local currency with $360 million, stemming a negative tide from increased demand for the US dollar.
Olayemi Cardoso, Governor, Central Bank of Nigeria
According to Market Forces Africa, for most part of the week, the naira experienced heightened volatility due to an FX liquidity shortage in the official window, brought forward from the previous week.
This caused the exchange rate to wobble against the US dollar, but late picked up as inflows into the market improved.
On Friday, the naira rebounded against the dominant foreign currency, the US dollar, in last-minute transactions supported by a relatively higher liquidity supply by the monetary authority.
The exchange rate appreciated by about 2% to settle at N1,517.93 in the official market on Friday after persistent negative volatile.
Spot FX data from the regulator showed that the naira gained N29.89 on the day following FX sales to banks.
The market liquidity was also supported by additional inflows from foreign sources and reduced demand for foreign payments.
FX interventions and inflows from offshore clients and local corporations boosted volume of US dollar in the official window, AIICO Capital Limited dropped the hint in an investors note.
In the market, demand pressure persisted, leading to fluctuations in the US dollar to naira exchange rate for most of the week.
The CBN sold $188.10 million to banks, the last auction offered at the range of N1,532.00 to N1,540.00, bringing the total FX sales for the week to $360.00 million, according to investment banking firm TrustBanc Financial Group Limited.
Despite these interventions, demand outpaced supply, causing the naira to depreciate. By the end of the week, the market recorded improved liquidity, with trades ranging between N1,480 and N1,548.
Data from the CBN revealed that Nigeria’s external reserves increased by USD12.06 million to USD38.36 billion after 9 consecutive weeks of decline. In the forwards market, the naira rates decreased by 0.6% for a one-month contract to N1, 577.80.
The Securities and Exchange Commission (SEC) has cancelled the registration of Mainland Trust Limited, and suspended Centurion Registrars, following their failure to comply with regulatory directives.
The commission made the disclosure through circulars which were released at the weekend. The circular on Mainland Trust Limited read: “The Securities and Exchange Commission hereby notifies the general public that the registration of Mainland Trust Limited as a capital market operator has been cancelled with immediate effect.
“This cancellation order is made pursuant to the powers of the Commission under Section 38(4) of the Investments and Securities Act, 2007 and Rule 34(1)(e) of the SEC Consolidated Rules and Regulations 2013.
“The Commission’s decision is informed by the company’s failure to comply with regulatory directives and non-resolution of several complaints against it.
“All clients of Mainland Trust Limited are by this notice advised to contact the Central Securities Clearing Systems Plc (CSCS) for appropriate guidance on the transfer of their stocks to another stockbroker of their choice.”
SEC directed that the Nigerian Exchange Group (NGX), the Institute of Capital Market Registrars (ICMR), the Chartered Institute of Stockbrokers (CIS), the Central Securities Clearing System (CSCS) Plc and all capital market trade associations to discontinue capital market-related dealings with the company.
In the same vein, the SEC announced the suspension of Centurion Registrars Limited, its directors and sponsored individuals from capital market activities with immediate effect.
The SEC said the suspension order was made pursuant to the powers of the Commission under Section 38(4) & (5) of the Investments and Securities Act, 2007 and Rule 34(1)(e) of the SEC Consolidated Rules and Regulations 2013.
It explained that its decision was informed by the company’s failure to comply with regulatory directives and non-resolution of several complaints against it.
“All clients of Centurion Registrars Limited are advised to contact Africa Prudential Plc for appropriate guidance on the transfer of their portfolios to another Registrar of their choice.
“In addition, the Nigerian Exchange Group (NGX), the Institute of Capital Market Registrars (ICMR), the Chartered Institute of Stockbrokers (CIS), the Central Securities Clearing System (CSCS) Plc and all Capital Market Trade Association are directed to discontinue capital market related dealings with the company and its principal officers,” the circular stated.
The commission also disclosed that in furtherance of the commission’s unwavering commitment to the maintenance of zero tolerance for infractions in the Nigerian capital market and in line with its revised enforcement strategies, stakeholders and the general public are hereby informed that henceforth, the names of capital market operators (CMOs) found to have violated market laws/regulations would be published in the commission’s “name and shame” journal.
“The publication would be in addition to the sanctions/penalties for the respective infractions prescribed in the ISA 2007 and the SEC Rules and Regulations.
“This enforcement strategy underscores the Commission’s dedication to safeguarding the integrity and stability of the Nigerian capital market, protecting investors, and ensuring strict adherence to established rules and regulations.
“Stakeholders and CMOs are advised to be guided accordingly” the commission added.
FirstBank has formally denied allegations of fraud in an ongoing court case filed by customer Dr. Agbai Eke, describing the claims as “entirely unfounded and false.”
According to a statement from the bank, their internal investigation points to “unprofessional and unethical dealings” between Dr. Eke and a former bank employee.
FirstBank claims these individuals used a personal relationship to conduct unauthorised transactions without the bank’s knowledge or involvement.
The bank said it has reported the matter to law enforcement authorities for further investigation.
Officials noted that suspects have already provided statements to investigators.
FirstBank also declined to provide additional details, citing the ongoing court proceedings.
“We will refrain from further comments to allow the Court to dispassionately determine the issues before it,” the bank stated.
The case gained public attention following reports by Thisday Newspaper and Arise Television, as well as through a circulating video regarding the legal dispute.
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