Court restrains FG from borrowing unclaimed dividends

A federal high court sitting in Abeokuta, Ogun state, has issued an interim order restraining the federal government from borrowing unclaimed dividends of shareholders in the Nigerian capital market.

The court order follows a case filed by shareholders under the aegis of Palm Wealth Shareholders Association (PWSA) in February 2021.

According to the Finance Act 2020 signed into law by Muhammadu Buhari in December last year, unclaimed dividends of a public limited liability company in the Nigerian stock exchange and any unutilised amounts in a dormant bank for at least six years will be transferred as special credit to the federal government through the Unclaimed Funds Trust Fund.

However, PWSA (applicants) sued the attorney-general of the federation; minister of finance, budget and national planning; and accountant general of the federation as respondents and representatives of the federal government in suit No. FHC/AB/FHR/14/2021.

According to them, the provision is contrary to Nigeria’s constitution (1999, as amended), the African Charter on Human and People’s Rights Act, and laws of the federation.

In an affidavit in support of their application, PWSA observed that they are “intimidated, in fact, psychologically traumatised and threatened by the provisions of the Finance Act, 2020”, arguing that it would inflict grievous harm on the shareholders if the provision is allowed to come into operation and the dividends, which the shareholders are working seriously to claim, taken over.

In his ruling, Obehi Abdulmalik, the judge, on July 23, granted interim orders restraining the respondents from bringing into force the “proposed new rules on unclaimed dividends (E-dividend mandate) or any new rules on unclaimed dividend not in force before 31st December, 2020”.

The court also restrained the federal government from harassing, intimidating, inviting and/or ordering public limited liability companies or their registrars for questioning for the purpose of taking or giving accounts of the unclaimed dividends, pending the determination of the motion on notice.

According to ThisDay, the case was adjourned to October 25, for hearing of the applications as well as the substantive matter.

In November 2020, the house committee on capital markets and institutions raised an alarm over the growing unclaimed dividends in the capital market, which was estimated to cross N200 billion at the end of 2020.

The committee explained that the value of unclaimed dividends was N2.09 billion in 1999, N100 billion in 2017, N120 billion in 2018, and N158.44 billion as at the end of 2019.