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SEC wants unclaimed dividends returned after 12 months

By on February 3, 2015

The Securities and Exchange Commission has proposed rules and amendments to its rules and regulation, including rules on the return of unclaimed dividend.

The commission has also proposed the inclusion of Independent National Electoral Commission voter registration card as a valid means of identification of individual clients in the capital market.

The proposed rules on return of unclaimed dividends to paying companies provides, among other things, that “All unclaimed dividends in the custody of the registrars shall be returned to the paying company12 months after the date of approval of dividends at a general meeting (for final dividends) or a board meeting (for interim dividends) and evidence of remittance forwarded to the commission within 24 hours.”

It also provides that 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.

SEC is also out to ensure through the proposed rules and amendments 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.

“The company may retain a minimum of five per cent of the unclaimed dividends in cash or near-cash for the purpose of remittance to the Registrars upon request for payment,” read one of the rules.

Another proposed amendment is that, “All accrued interests from the failure of registrars to remit the unclaimed dividends within the time limit prescribe d in these rules and regulations shall be remitted along with the unclaimed dividend to the paying company”.

SEC also expects that the accrued interest shall be calculated at a rate not below CBN treasury bills.

The proposed rules and amendment are also contains serious sanctions for parties in violation of rules should they be approved.

For instance, the proposed rules provide that, “Failure to remit unclaimed dividends to the paying company by the Registrar as stated above shall attract a penalty of N5m and an additional sum of N100, 000 for every day such contravention persists.”

If the SEC has its way, the responsibility of paying dividends to a shareholder after the dividends have been returned to the company shall lie with the registrar.

The new rules are also aimed at ensuring that paying companies remit the portion of unclaimed dividends claimed by a shareholder(s) to the registrar within 48 hours of receiving a request/claim for payment.

“Failure by the paying companies to comply with the above provision shall attract a penalty of N1 million in the first instance and N100, 000 for every day such contravention persists,” it proposes.

It also proposes that, “Failure by the Registrars to comply with the above provision will attract a penalty of N2m in the first instance and N500, 000 for every day such contravention persists.”

 

[Punch]