Court restrains FG from taking over N200 billion unclaimed dividends

A Federal High Court sitting in Abeokuta has granted an interim order restraining the Federal Government from having access to the unclaimed dividends of shareholders in the capital market estimated to be more than N200 billion.

The order followed a case instituted by shareholders under the aegis of Palm Wealth Shareholders Association (PWSA) asking the court to void the plan to take over unclaimed dividends.

In the Finance Act 2020 signed into law last February by President Muhammadu Buhari, the Federal Government said that any unclaimed dividends of a public limited liability company quoted on the Nigerian Exchange Limited (NGX) and any unutilised amounts in a dormant bank account maintained in or by a deposit money bank, which has remained unclaimed or unutilised for a period of not less than six years from the date of declaring the dividend or domiciling the funds in a bank account, shall be transferred immediately to Unclaimed Funds Trust Fund.

The shareholders (Applicants) sued the Attorney General of the Federation with the Minister of Finance, Budget and National Planning; and Accountant General of the Federation as Respondents and Representatives of the Federal Government of Nigeria in the Suit NO. FHC/AB/FHR/14/2021.

The applicants asked the court to restrain the respondents from calling for or transferring the unclaimed dividends of the applicants from their respective companies to the Unclaimed Funds Trust Fund, in accordance with Part xv of the Finance Act, 2020.

According to ThisDay, Hon. Justice J. O. Abdulmalik last Friday, 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 purpose of taking or giving accounts of the unclaimed dividends, pending the determination of the Motion on Notice.

A copy of the judgment showed that the case was adjourned to October 25 for hearing of the applications as well as the substantive matter.

The chairman of PWSA, Mr. Simon Emokeraro, said the shareholders were seeking “an Order of the Honourable Court for the enforcement of the applicants’ fundamental rights to acquire and own immoveable and moveable personal property; an order restraining the federal government, that is, the Respondents, from calling for or transferring the unclaimed dividends of the Applicants in public quoted companies to the Unclaimed Funds Trust Fund; an order restraining the Respondents from harassing, intimidating, inviting the companies or their Registrars for the purpose of transferring the unclaimed dividends belonging to the applicants to the Unclaimed Funds Trust Fund contrary to the Constitution of the Federal Republic of Nigeria 1999 (as amended), the African Charter on Human and People’s Rights Act, Laws of the Federation.

The Federal Government had, in a section of the 2020 Finance Act, proposed the establishment of a trust fund where unclaimed dividends would be remitted.

However, stakeholders in the capital market including shareholders had rejected the proposal. As part of efforts to stop the federal government from taking over the funds, PWSA instituted a case against the government at the Federal High Court in Abeokuta.

Shareholders, economists and securities experts had reacted angrily to Federal Government’s plan to take over N200 billion unclaimed dividends into its coffers insisting that unclaimed dividends should be reinvested in companies as retained earnings to grow their businesses and generate employment.

They argued that if a trust fund must be created, it should be under the supervision of a leading private sector group, rather than being put in the coffers of the Federal Government.

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Shareholders move against FG’s establishment of unclaimed dividend trust fund

ThisDay/Nairamatrics