SEC to sanction stakeholders over N180bn unclaimed dividends

The Securities and Exchange Commission has urged all stakeholders in the capital market to continue to work towards reducing the volume of unclaimed dividends and reiterated that stiff penalties will be meted out to any stakeholder whose action appears to frustrate the efforts of the Commission on this objective.

This was disclosed by the Director-General, Alhaji Lamido Yuguda, at a press briefing for the second Capital Market Committee (CMC) Meeting held virtually.

Yuguda reiterated the Commission’s commitment to continue to strive and fulfil its mandate of protecting investors and creating an enabling environment for market operations.

As of December 31, 2021, unclaimed dividends have increased to N180 billion from N168 billion it recorded in 2020, according to Yuguda.

The Commission noted that in spite of its efforts in the implementation of the Electronic Dividend Mandate Management System (eDMMS), investors have continued to lament the delayed payments of e-dividend and the cumbersome manual process among other shortcomings.

“A large number of investors are also still unaware of the eDMMS and have not mandated their accounts.

“The Commission will however continue to create awareness in this regard. Capital market operators must also do more to demonstrate, through their activities, an efficient capital market that prioritizes the interests of investors.

“As part of our efforts to stem the tide of fraudulent activities of unregistered investment crowdfunding platforms, the Commission warned the operators of such platforms that they stand the risk of being prosecuted. The Commission has an existing regulatory framework that permits private companies with the required structure and mechanism to raise capital from the public through crowdfunding. All crowdfunding platforms must register with the Commission,”Yuguda said.

Yuguda noted that on Monday, June 27, the Capital Market Master Plan Implementation Council (CAMMIC) submitted the revised Nigerian Capital Market Master Plan (2021 -2025) to the Honourable Minister of Finance, Budget and National Planning, adding that the Commission will be launching the revised Master Plan at the next CMC meeting in November 2022.

“The Commission has obtained donor funding towards acquiring and deploying a securities market surveillance system. The deployment of the surveillance solution will improve the Commission’s regulatory and supervisory capabilities over securities trading activities and help modernise the local capital markets, ensure market integrity and transparency across all trading platforms, and boost investor confidence. All of these will bode well for the capital market and support its growth.”

Following the conclusion of the Commodity Standards Stakeholders’ Sensitization Workshops held in Lagos and Kano in November 2021, the SEC continues to engage the Standards Organisation of Nigeria (SON) deepen the Commodities Ecosystem. SON is currently finalizing its review of commodities standards in line with comments received from stakeholders at the two workshops.

On the back of the commencement of tax on corporate bonds by the Federal Government, Yuguda urged the government to reconsider and give investors tax exemption period for corporate bonds and short-term government securities.

“We believe that these tax exemptions should return to the capital market. Stakeholders also agree with this. The Commission continues its engagement with the Honourable Minister of Finance, Budget and National Planning on the request for tax exemption for corporate bonds,” he said.

Concerns have grown after the Federal Government of Nigeria decided to securitize unclaimed dividends and inactive account balances in the country for up to six (6) years.

The management of unclaimed dividends and dormant account balances has been included in the recently assented 2020 Finance Bill, along with many other provisions intended by the Federal Government of Nigeria to mitigate Nigeria’s fiscal frailties and economic crunch caused by the emergence of COVID-19.The funds realised will be placed in a trust fund, managed by the Debt Management Office (DMO). The DMO’s responsibility also includes payment of claims for such dividends and the accompanying compensation for accrued interest.