The Securities and Exchange Commission has issued a directive to all public companies and registrars to stop treating unclaimed dividends older than 12 years particularly those predating the Finance Act 2020 as “statute-barred.”
The directive reinforces Section 60 of the Finance Act 2020, which stipulates that dividends unclaimed for six years or more must be transferred to the Unclaimed Funds Trust Fund (UFTF), where they remain available to shareholders who later come forward to claim them.
According to the SEC, shareholders still retain the right to claim dividends not older than 12 years as of December 31, 2020, when the Finance Act came into effect.
“The attention of the Securities and Exchange Commission has been drawn to the fact that paying companies and their registrars have continued to treat unclaimed dividends of public companies that are older than 12 years as being ‘statute-barred’ without recourse to the provisions of the Finance Act 2020,” the Commission said in a circular.
In clarifying its stance, the SEC explained: “The import of the provisions of Section 60 of the Finance Act 2020 (December 31, 2020), is that, where dividends declared by a public company quoted on the Nigerian Exchange Limited remained unclaimed for a period of six years or more, such dividends are expected to be transferred to the Unclaimed Funds Trust Fund (UFTF) to be held in trust and managed pending when the shareholder presents a claim for such unclaimed dividends.”
However, since the UFTF is yet to become fully operational, the SEC directed companies to continue honoring legitimate requests for dividend payments.
“Pending the setting up and operationalisation of the UFTF by the Federal Government, according to its powers under Sections 3 (4) (e) and 93 of the Investments and Securities Act 2025, the Commission hereby directs public companies and their Registrars to continue to honour all requests by shareholders for the payment of unclaimed dividends as described above, with effect from December 31, 2020.”
The Commission also instructed public companies and registrars to immediately comply with this directive and submit regular reports as required by SEC’s existing rules and regulations.