Security dealers challenge Reps over unclaimed dividends

By Peter Egwuatu

The proposed plan by the Federal Government to takeover investors’ unclaimed dividends has drawn the ire of capital market operators who are pointing at the adverse effects on investor confidence and future growth of the market.

The unclaimed dividend portfolio is projected to hit N200 billion by the end of this year

Some critics of the controversial bill see it as one of the options of the government to fund its budget in the face of increasing budget deficit and rising public debt.

The Federal Government has in Section 39 of the 2020 Finance Act proposed that unclaimed dividends of less than 12 years be managed on behalf shareholders through Unclaimed Dividend Trust Fund while after 12 years, the money becomes   forfeited to the   Government as   perpetual debt to shareholders.

READ ALSOHoodlums hold Customs officials hostage, snatch gun from soldiers in Ogun

Addressing the Investigative Arm of House Committee on Capital Market and Institutions recently, the Chairman, Association of Securities Dealing Houses of Nigeria (ASHON), Chief Onyenwechukwu Ezeagu, explained that capital market regulators and operators have leveraged technology to put in place many initiatives to address the issue of unclaimed dividends.

According to him,   the initiatives include: Dematerialization of shares which entails upload of quoted companies’ shares in the Central Securities Clearing System (CSCS) for ease of reconciliation, adoption of E-Dividend and E-Mandate, consolidation of multiple accounts, identity management engagements, introduction of electronic Initial Public offering (e-IPO), adoption of Minimum Operating Standards (MOS) for operators to enhance efficiency, intensified Investor Education, continuous Stakeholders’   Engagements, Process Reform and Streamlining and KYC Update on Clients’ accounts among others.

“Generally, the incentives for savers and capital providers in the capital market are the expectation of dividends and capital appreciation. It is therefore our considered view that the proposed legislation, if passed, will be a great disincentive to savings, long-term capital mobilization and serious disruption of the Nigerian economy since it will take away the only expectation of investors in the market”, says Ezeagu.

The post Security dealers challenge Reps over unclaimed dividends appeared first on Vanguard News.

https://ift.tt/3qksGFx by Urowayino Jeremiah via Vanguard News Albert Einstein Fools of Fortune