The Securities and Exchange Commission (SEC) has directed all publicly listed companies and Registrars to halt the practice of classifying dividends older than 12 years as “statute-barred.” This move aims to preserve shareholders’ rights and ensure rightful access to unclaimed dividends under the provisions of the Finance Act 2020.
A statute-barred claim typically refers to a situation where legal action cannot be taken due to the expiration of the legal time limit. However, the SEC clarified that such limitations do not apply to dividends declared before the implementation of the Finance Act 2020, as long as the relevant legal frameworks are followed.
SEC Reinforces the Provisions of the Finance Act 2020
According to the Commission, Section 60 of the Finance Act 2020 outlines how unclaimed dividends should be managed. Specifically, it mandates that any dividend left unclaimed for over six years must be transferred to the Unclaimed Funds Trust Fund (UFTF), where it will be preserved until the rightful owners come forward.
In a statement issued on Tuesday, SEC Director-General Emomotimi Agama emphasized that several companies and Registrars have misinterpreted the law, incorrectly marking dividends older than 12 years as unclaimable. This has unjustly prevented many shareholders from receiving their entitled earnings.
Agama pointed out that shareholders can still claim dividends issued up to 12 years before December 31, 2020. He stated, “The Commission has received numerous inquiries, and it is important to provide clarity. The Finance Act allows for unclaimed dividends to be transferred to the UFTF after six years, but it does not nullify shareholders’ rights to those funds.”
He added that the UFTF was specifically created to safeguard such dividends and ensure that investors can recover them at any time in the future.
Directive for Immediate Compliance by Companies
Although the Unclaimed Funds Trust Fund is not yet fully operational, the SEC has instructed all companies and Registrars to honor valid claims on dividends dating back to at least December 31, 2020. The Commission stressed that there must be no further delay in paying out these funds to eligible shareholders.
Moreover, the SEC expects full compliance from affected entities and has mandated the submission of periodic compliance reports. These reports must detail how each company and Registrar is adhering to the new directive.
The regulator noted that strict enforcement of these provisions would help enhance investor protection, increase transparency in the capital market, and boost overall confidence in Nigeria’s financial system.
Protecting Investors and Upholding Their Rights
This latest SEC directive serves as a critical reminder for shareholders to revisit their investment records and claim any outstanding dividends. Investors who previously believed their dividends had become inaccessible due to the statute of limitations are now encouraged to contact the respective companies or Registrars for verification and disbursement.
In reiterating its position, the Commission affirmed its dedication to closing regulatory loopholes that have allowed the misclassification of unclaimed dividends. It also reassured the investing public that ongoing reforms would strengthen shareholder protections across the board.
By taking a firm stance on this issue, the SEC aims to restore trust and accountability within the Nigerian capital market while ensuring that no shareholder is unfairly denied their rightful returns.
