In a section of the 2020 Finance Act, the Federal Government (FG) facilitated the formation of a Trust Fund where unclaimed dividends would be ploughed.
But investors, yesterday, urged President Muhammadu Buhari to withhold approval of the bill until the disputed section had been expunged.
The new provision is in conflict with the previous one in the Companies and Allied Matters Act (CAMA) which guarantees a 12-year limitation period on unclaimed dividends, after which the fund would be ploughed back into the company that declared it.
At the 2020 Finance Bill webinar organized by KPMG in collaboration with the Ministry of Finance, Budget and National Planning last week, Finance Minister Zainab Ahmed said the funds would be owed as a perpetual debt to shareholders.
But investors and experts insisted that unclaimed dividends should be reinvested in companies as profits remained to grow their businesses and create jobs.
They argued that if a trust fund must be created, it should be under the supervision of a leading private sector group, rather than being put in the coffers of the Federal Government.
Their opposition was based on the claim that most assets managed by government officials in the past were misappropriated.
They also contended that the takeover of unclaimed dividends by government was not necessary since market regulators, through various initiatives, were taking steps to ensure that unclaimed dividends were reduced to the barest minimum.
Investors suggested that instead of creating a trust fund for unclaimed dividends, government should simplify letters of administration for deceased family, for instance, and make the process of claims less cumbersome for investors.
Publicity Secretary of the Independent Shareholders Association, Moses Igbrude, said creating a trust fund is a disincentive to investment, insisting that previous trust funds were marred by corruption.
“FG has forgotten that it has taken over 30 per cent tax from companies that generate the dividends on profit before tax and 10 per cent from the individual investors through withholding tax.
“What moral right do you have to take the fund that does not belong to you? In Section 39(f) of the finance bill it stated that all unclaimed dividends that have remained unclaimed for a period of not less than 12 years shall lapse into government revenue and shall be transferred from the unclaimed dividends trust fund to the federal account as federal revenue.”
He said it was not only unacceptable but a disincentive to investment and appealed to the National Assembly to reject and expunge the section of the bill because, from all indications, the trust fund was designed to rob shareholders of their hard-earned money.”
Government, he said, should reconsider its stance to avoid eroding investor confidence in the market, especially now that shareholders have not recovered from losses occasioned by global financial crisis.
AN economist, Prof. Pat Utomi, said it was unfair for the trust fund to be managed by government agencies. He suggested that it should be handed over to a minority group for the welfare of the people.
“We can have a public trust fund in which we have a nominated minority group or leading private sector organisation that can deploy the fund to sponsor activities like arts and create employment for the people like the American Chamber of Commerce did.
“These groups are not governmental agencies; they advance public welfare with the use of private sector funds instead of having another government agency and setting up one government trust fund.”