…say it contravenes Nigerian Constitution
Shareholders and other stakeholders in the country have kicked against Federal Government’s insistence to take over about N895.5billion unclaimed dividend and depositors’ fund as “special borrowing” to fund crisis-related expenditures.
But the shareholders and stakeholders who are irked by the FG’s planned borrowing of the funds have condemned the move, saying that the government has no business borrowing investors’ funds.
Investigation by FirstNews showed that the amount represents unclaimed dividends (standing at N158 billion) and dormant bank balances (N737.5 billion) in the affected financial services sub-sectors.
Reacting to the development, the concerned stakeholders, operating under the aegis of Registered Shareholders’ Associations, are opposed to the enforcement of the recently enacted Finance Act, which empowers the government to “borrow” unclaimed dividends and dormant account balances not less than six years old.
However, Section 77, 1-3 of the Finance Act stipulates, “From the commencement of this Act, any unclaimed dividend of a public limited liability company quoted on the Nigerian Stock Exchange and any unutilised amounts in a dormant bank account maintained in or by a deposit money bank, which has remained unclaimed or unutilised for a period of not less than six years from the date of declaring the dividend or domiciling the funds in a bank account, shall be transferred immediately to the Unclaimed Funds Trust Fund.
“Provided that this section shall not apply to official bank accounts owned or belonging to the Federal Government, State Government or Local Government, or any of their Ministries, Departments or Agencies.”
The enforcement of the Act came as a surprise to the shareholders, who argued that various investor groups had opposed the idea at the public hearing stage of the Finance Bill at the National Assembly.
According to them, the move amounts to undue confiscation of individual and groups’ assets by the government as the word “borrow” is a misnomer and not in tandem with the conventional meaning of obligations inherent in transactions between a debtor and a creditor.
National Chairman, Progressive Shareholders Association of Nigeria, Boniface Okezie, expressed dismay over the enforcement of the section of the Finance Bill that empowers the government to “borrow” equity investors’ and bank depositors’ assets unilaterally.
Okezie said, “This is not right; how can the government take over investors’ assets in the name of borrowing without the consent of the owners of the assets?
“People use their hard-earned money to buy shares in quoted companies, they pay prescribed statutory taxes such as withholding tax, value added tax, company tax, income tax – as the case may be.
“The companies should be allowed to warehouse the unclaimed dividends and, possibly, invest them to yield returns for shareholders.”
He added that the stakeholders would challenge the Act in court as it operates in contravention of the Nigerian Constitution.
National Coordinator, Pragmatic Shareholders Association, Mrs Bisi Bakare, said that her group would challenge the law in court because the members were opposed to it from the outset.
According to her, the companies have deducted the necessary taxes from the dividends and paid the required corporate taxes to the government, it would be unfair to collect taxes from investors’ dividend and turn round to “confiscate” the same dividend in the guise of “borrowing” under a Trust Fund.
She said, “My group is totally against it and we are going ahead to challenge the Law because, fundamentally, it is against the provisions of the Constitution that allows citizens to own assets in any part of the country.
“We opposed it at the National Assembly Public Hearing in Abuja and we made it clear that it was a bad Law that must not be allowed to operate.
“It cannot work in a sane society – to unilaterally “borrow” money that does not belong to you and tell the owner to begin to file a process for recovering his money.”
The shareholders, however, blamed the regulatory authorities for not doing enough to determine and locate the owners of the unclaimed dividends.