Lagos – Some capital market operators are wooing the Securities and Exchange Commission (SEC) to allow the investment of the nation’s N50 billion unclaimed dividends in the Nigerian bourse.
Checks by the News Agency of Nigeria (NAN) showed that the operators had proposed that investing a fraction of unclaimed dividend in the market would assist in boosting liquidity.
They argued that the idle funds would be the best buffer to leverage the confidence of the investing public, especially during liquidity squeeze challenges.
Mr Emeka Madubuike, President, Association of Stockbroking Houses of Nigeria (ASHON), comfirm to NAN that the idea was a proposal.
Madubuike said that market operators were still discussing with registrars and quoted companies on the modalities before issuing a position paper to the apex capital market regulator.
Dr David Ogogo, Registrar/Chief Executive Officer, Institute of Capital Market Registrars (ICMR), said that operators were of the opinion that a fraction of the unclaimed dividend could be invested in the market to boost liquidity.
Ogogo said that the institute had insisted that it could only discuss with the operators on the possibility and modalities, if the existing status quo on unclaimed dividend remained.
He said that unclaimed dividend funds would no longer be in the hands of the registrars if the new rules on unclaimed dividend by the commission was implemented.
“We can only discuss the proposal if the status quo on unclaimed dividend remains, but if the rules are amended, unclaimed dividend funds will no longer be with the registrars,” Ogogo said.
NAN reports that SEC in February proposed new rules that stipulated that all unclaimed dividends in the custody of the registrars shall be returned to the company that paid it 12 months after the date of approval of such dividends.
The proposed SEC rule known as rules 108(b)(1-11) titled “Return of dividends unclaimed” also provides that an evidence of remittance of the unclaimed dividend should be forwarded to the commission within 24 hours.
The rule reads: “Where dividends are returned to the company unclaimed, the company may invest the unclaimed dividend for its own benefit in a guaranteed income investment outside the company and no interest shall accrue on the dividends against the company”.
It added that unclaimed dividend shall not be used by the company for its own business except in accordance with provisions of Companies and Allied Matters Act (CAMA).
ICMR said that the unclaimed dividends in the nation’s bourse reached N50.94 billion as at Dec. 31, 2013.
The President/Chairman of Council ICMR, Mr Bayo Olugbemi, said that the figure represented 5.05 per cent of the total dividends declared for the past 10 years.
Olugbemi said that the institute would continue to enlighten investors on the importance of electronic dividend platform to reduce the figure.
Unclaimed dividend is used to represent the monetary value of (profit) pay-outs by quoted companies, which have not been claimed or received by shareholders/investors. (NAN)