By Victor Oluwasegun, Abuja
House of Representatives Committee on Capital Markets and Financial Institutions on Wednesday expressed concern about the N200 billion projected as unclaimed dividends for the end of 2020.
The committee, headed by Babangida Ibrahim (APC, Katsina), expressed worry that unclaimed dividends will hit N200 billion or above at the close of the year.
Ibrahim spoke during an investigative public hearing on The Need to Investigate the Rising Value of Unclaimed Dividends, Unremitted Withholding Tax on Dividends and their Attendant Effects on Nation’s Economy, at the National Assembly in Abuja.
Ibrahim said the development was not a good picture of the state of the capital market.
The lawmaker recalled that in 1999, the value of unclaimed dividends was put at N2.09 billion; it was N100 billion in 2017; N120 billion in 2018 and rose to N158.44 billion at the close of 2019.
He said the problem of huge accumulated unclaimed dividends is a major challenge to the development of the nation’s capital market.
Ibrahim noted that despite the efforts of capital market regulators, the issue of huge unclaimed dividends remained a recurring decimal.
The problem of the huge volume of unclaimed dividends, he said, has adverse implications on the nation’s economic development.
According to him, this includes adverse investor confidence, decrease in the availability of long-term capital for economic development and the likely volatility in the regulation of the capital market.
He added: “We are aware of measures that have been taken by the capital market regulators in the past to address the problem. But we can all see that the problem remains and, in fact, the situation is worsening by the day.
“Some of the measures include e-dividend, dematerialisation of share certificates, publication of names of owners of unclaimed dividends, among others. All these measures are very commendable, especially the fact that they are primarily aimed at ensuring that the shareholders who are owners of the dividends get the benefits of their investment.
“It is important to underscore this point. Dividends are distributions of earnings to shareholders. Dividends, whether cash dividends or share dividends, also known as bonus shares, belong to the shareholders and not to the company who distributed them; neither to the government. Therefore, every effort must be made to ensure that the shareholders get their dividends from their hard-earned investment.
“Nevertheless, we must also be interested in knowing what happens to the dividends money when they remain unclaimed. You may recall that the Securities and Exchange Commission (SEC) had attempted to address this issue in 2006 when it sponsored a Bill to establish the Unclaimed Dividends Trust Fund (UDTF).”