As part of efforts aimed at strengthening the capital market, the House of Representatives on resumption from the Christmas and New Year recess is expected to commence debate on a bill which seeks to establish Unclaimed Dividends Trust Fund in the country.
The bill sponsored by Chairman, House Committee on Media and Public Affairs, Hon. Benjamin Kalu, provides that all dividends by any shareholder after 24 months of declaration by a public company and venture capital meant for investment is usually high risk or new business that also has high potentials shall be categorised as unclaimed dividends.
Clause 17 of the bill, provides that the Fund shall guarantee loans to Small and Medium Scale Enterprises with total assets not less than N5 million and not more than N100 million and employing persons between 26 and 100 persons, in order to facilitate their listing on the Stock Exchange, Capital Trade Points or over-the-counter market and for the purpose of raising funds from the capital market.
In exercising its functions, the Board shall have regard to the geographical spread of the enterprises in the 6 geopolitical zones of the Federal Republic of Nigeria.
To be eligible for the loans guarantee or equity participation by the Fund, a Capital Trade Point shall be operated for profit and wholly-owned by Nigerians; and no enterprises in one area of the six geopolitical zones shall benefit twice from the loans guarantee scheme.
The loan shall be disbursed through any bank licenced by the Central Bank of Nigeria (CBN) with a maximum period of 2 years for the repayment.
In case of default, the benefitting SMEs shall be liable on conviction to a fine not exceeding N1,000,000 or to imprisonment for a term not exceeding three years or to both such fine and imprisonment.
The bill also provides for the constitution of the Board with membership drawn from Registered Shareholders Association; Nigerian Employers Consultative Association; Registrars of Public Companies; National Association of Small and Medium Scale Enterprises; Corporate Affairs Commission; Chartered Institute of Stockbrokers; Federal Ministry of Finance; Securities and Exchange Commission; and Managing Director who shall be the Chief Executive of the Fund, while the Chairman and members of the Board other than the Managing Director shall serve on part-time basis.
As stipulated in Clause 5 of the bill, the Board is empowered to: act as Trustees to the Fund; maintain a database of unclaimed dividends, owners’ addresses and other relevant information; register and assist small and medium scale enterprises who are applying for loan guarantee; promote and develop capital trade points in the six geo-political zones of the Federation; carry out public enlightenment programmes on unclaimed dividends; and paying of unclaimed dividends recovered from public companies to the owners, provided the claimants who emerge five years after declaration of the dividends shall not be entitled to interest on the dividends.
The Board is also expected to approve participating and other banks into which unclaimed dividends and monies of the Fund shall be paid and approving banks that will participate in the loans guarantee scheme of the Fund; inspect and examine books and records of all institutions and persons who are subject to the provisions of this Bill; manage the monies of the Fund including making investments; receive information on all unclaimed dividends from public companies and their agents; pay and discharge all expenses incurred in connection with the aims and objectives of the Board; commence, prosecuting, enforcing actions and legal proceedings which may affect the Board; formulate policies, rules and guidelines for the management of the Fund; carry out any other functions and exercising any other power that may be necessary and incidental to this Bill; and carry out any other functions that may be assigned to it by the President.
Clause 10 of the bill also empowers the Board to establish and maintain a fund from which shall be defrayed all expenditure incurred by the Fund while subsection 2 provides that: “There shall be paid and credited to the Fund established pursuant to subsection (1) of this section all outstanding unclaimed dividends held by public companies or former public companies and their agents declared within twelve years preceding the commencement of this Bill.
“Without prejudice to the future capital increases, the Fund shall commence operation with an initial funding derived from the following sources: all outstanding unclaimed dividends, which have been dissolved or liquidated or in the hands of any present or former liquidator at the date of dissolution of such companies within 3 years; grants, gifts and donations from any person or institution on terms and conditions not contrary to the objective of the Fund; penalties and fines imposed by the Fund; unclaimed dividends to be paid regularly into the Fund directly by public companies and their agents as and when due; all subsequent dividends declared by public companies within six months from the commencement of this Bill; all subventions, fees and charges for services rendered by the Fund.”
The Board is also empowered to award contracts up to N50,000,000 but shall be required to obtain the approval of the Minister for any contract in excess of that amount.
Clause 22 of the bill which provides for offences and penalties clause, provides that: “Any public company or any of its agent that: fails, refuses or neglects to make remittances of unclaimed dividends to the Fund within the period specified in this Bill shall be liable to a fine of 10 per cent of the amount involved or N100,000 for each day in which such failure, refusal or neglect persists; and fails to render returns or pay a penalty shall have its moveable property seized or sold by the Fund.”
In the same vein, Clause 23(1 & 2) stated that: “Every public company shall file with the Board annual returns if unclaimed dividends not later than 3 months after the end of each financial year; any company which contravenes the provisions shall be liable on conviction to a fine of N500,000.”