The Nigeria Employers’ Consultative Association (NECA) has kicked against Federal Government plans to take over unclaimed dividend, warning that it would further strangulate businesses in the country.
This is in reaction to the provisions of sections 38 and 39 of the proposed Finance Bill.
Dr. Timothy Olawale, director-general of NECA, stated that “the draft Bill creates a COVID-19 Crisis Intervention Fund, which is expected to be utilized to meet COVID-19-related expenditure or other such exigencies.”
He, however, noted that it did not provide information on how the fund would be governed or the persons qualified to govern/manage the fund.
According to him, “In as much as the Bill cannot be expected to provide an exhaustive list of the purposes to which the funds will be applied, the Bill should define what is meant by ‘COVID-19-related expenditure’ to help to reduce abuse”.
The NECA DG lamented that section 39 of the draft bill, which seeks to establish an Unclaimed Dividends Trust Fund as a sub-fund of the COVID-19 Crisis Intervention Fund was unnecessary. He called on government to expunge provisions on the Unclaimed Dividends Trust Fund from the Finance Bill 2021 and allow companies to manage the unclaimed dividends for and on behalf of its shareholders; and in the best interest of both the company and its shareholders.
Olawale queried why government which has already collected Companies Income Tax of 30% and Education Trust Fund of 2% from the profit of each company before dividend was declared, in addition to another 10% withholding tax from such dividend, is still interested in taking over the unclaimed dividends. “This is notwithstanding that it did not invest in the shares of public listed companies that generating these unclaimed dividends.”
He also expressed that the proposed section 39 of the Finance Bill overrides Sections 429 and 432 of the Companies and Allied Matters Act 2020 which authorized the company declaring the dividend to invest it outside its business after 3 months of publication of unclaimed dividends and to add same to the profit to be distributed to shareholders after 12 years of declaration.
He said, “Dividends are private properties of investors, either individuals or corporate entities. The idea of converting such private properties to Federation wealth negates the relevant provisions of the Rights to own property as guaranteed by the 1999 Constitution. Investors, Nigerians and Companies have a right to private properties and assets of which dividends funds are a specie,” he said.
He highlighted several issues and challenges that would arise as a result of the current provisions in section 39 of the Bill, to include, whether the Accountant General of the Federation (AGF) would become the Registrar of listed companies to process unclaimed dividends and how would he verify information about the shareholders in order to confirm the rightful owners entitled to the unclaimed dividends amongst others.