Senate pushes SEC to reclaim N5trn in unclaimed dividends, boost investor trust
By Esther Agbo
The Senate Committee on Capital Market, alongside the Security and Exchange Commission (SEC) and other stakeholders, convened a public hearing during the week to tackle the persistent issue of unclaimed dividends in Nigeria.
The discussions culminated in a consensus on the need for comprehensive strategies to reclaim these funds, potentially benefiting investors and bolstering the capital market’s integrity.
The forum, attended by a wide range of market participants, highlighted the necessity of modernising SEC’s approach.
The committee underscored the importance of adopting advanced technology to accurately identify the rightful owners of unclaimed dividends, suggesting that the SEC should develop a thorough database.
There was also a call for heightened public awareness regarding SEC’s activities and mandates.
During the hearing, Senate President GodswillAkpabioemphasised the session’s purpose: to dissect the root causes of unclaimed dividends and propose solutions that would restore investor confidence.
He stressed the importance of protecting investors and fully leveraging the capital market’s potential.
Chairman of the Senate Committee, OsitaIzunaso, stressed the critical role of trust in the capital market. He argued that rebuilding this trust, especially after the market downturn in 2018, is essential for encouraging investment.
Izunaso pointed out that dividends declared over the past five years totaled approximately N5 trillion, indicating that the market’s potential is substantial if investor confidence is restored.
He also called for a reevaluation of the Finance Minister’s role in overseeing related institutions, suggesting that the position might be too demanding.
He said, “Once that trust is eroded, people will not want to invest again. And you know since the crash of the capital market in 2018, a lot of people still don’t have confidence in the capital market.
“So it is our responsibility, it is our collective responsibility to make sure that this confidence is built back.
“Whether you are a stakeholder, whether you are in the parliament, whether you are a shareholder, whoever you are, make sure that this confidence comes back.
“The declared dividend alone for five years is N5tn. So which means it’s an average of N1trn, so you can say that it is N1trn annually.
“So if the dividend alone can be N1trn, then the stock market is not doing badly. But you can see that if it is promoted further, we’re going to make more money from that exercise.”
Izunaso specifically tasked the SEC with increasing its efforts to identify unclaimed dividend owners through enhanced Know Your Customer (KYC) protocols and user-friendly processes for updating account information. He also recommended the creation or enhancement of a centralised online platform where investors can easily access relevant information.
“I’ve said it here, It’s very key. Once you strengthen the KYC requirements, some of these issues will have been taken care of. You should simplify the process of account updates. This is for the bank. Let the process be simplified.
“The shareholder’s representative that spoke was talking about their website where all these things will be there, once you go to that website, you will see everything.
“I don’t know whether there is such a website in existence. If there is, please, make sure that the public knows about it. If there’s none, let there be one. So that all these stories will not come up again.”
Cotinuing, he said, “The DG talked about the leveraging on technology, that is key. That is the major key.
“We, as National Assembly have a role to play and we know our roles. Our roles are very clear. There is a need to amend the Finance Act.
“You can’t lump up all these things together. There is a need to separate it. The CBN will not have a role to play in the matter of accounts, while the SEC and other institutions will have a role in the acclaimed dividends.”
Furthermore, the hearing addressed the need to refine the Finance Act, particularly the provisions that empower the Debt Management Office (DMO) to manage a portion of the unclaimed funds. Participants agreed that the DMO should not retain a 10 percent share, as current legislation allows.
The meeting concluded with a directive for the SEC Director-General, Dr. Emomotimi Agama, to present a detailed plan within six months, outlining how to reclaim unclaimed dividends and strengthen the capital market’s infrastructure.
This initiative represents a concerted effort by the legislative and financial authorities to restore confidence in Nigeria’s capital market, ensuring that investors are adequately protected and informed.
The proposed amendments and technological advancements are seen as vital steps towards achieving a more transparent and efficient system.
