SEC directs corporations to pay dividends older than 12 years, clarifies Finance Act 2020 provisions
The Securities and Trade Fee (SEC) has issued a directive instructing all public corporations and Registrars to cease treating dividends older than 12 years as “statute-barred.”
A declare is “statute-barred” when a authorized motion to implement it can’t be taken as a result of the deadline set by the statute of limitations has handed.
SEC emphasised that dividends declared earlier than the enactment of the Finance Act 2020 have to be dealt with in accordance with present authorized provisions, making certain shareholders retain their rights to say them.
In an announcement on Tuesday, the regulatory physique reaffirmed the significance of compliance with Part 60 of the Finance Act 2020, which outlines the remedy of unclaimed dividends.
In keeping with the Act, dividends that stay unclaimed for greater than six years have to be transferred to the Unclaimed Funds Belief Fund (UFTF), the place they’re held till rightful shareholders come ahead to say them.
Clarification on Dividend Eligibility
SEC Director-Normal Emomotimi Agama emphasised the importance of this directive, noting that quite a few corporations and Registrars have incorrectly categorized dividends older than 12 years as statute-barred.
This misinterpretation has led to some shareholders being denied their rightful funds.
Agama defined that shareholders should declare dividends issued as much as 12 years previous to December 31, 2020, opposite to the inaccurate assumptions held by some entities.
“In response to ongoing inquiries, the Fee needs to make clear the proper interpretation and dealing with of unclaimed dividends,” Agama acknowledged.
He pressured that the Finance Act mandates that unclaimed dividends exceeding six years have to be moved to the UFTF, making certain they continue to be accessible for legit claims at any time sooner or later.
Enforcement and Compliance Measures
Whereas the UFTF isn’t but totally operational, the SEC has mandated that every one affected corporations and Registrars should honor legitimate dividend claims relationship again to December 31, 2020.
The Fee expects instant compliance with this directive, making certain shareholders usually are not disadvantaged of their entitlements as a consequence of incorrect interpretations of the legislation.
Moreover, the SEC has instructed corporations and Registrars to submit common studies detailing their adherence to this directive, in accordance with the Fee’s regulatory necessities.
By implementing these measures, the SEC goals to uphold investor rights, foster better transparency, and preserve belief inside Nigeria’s capital market.
What it’s best to know
- This directive serves as a safeguard for shareholders, reinforcing their rights to say dividends that may in any other case have been categorized as unclaimable.
- Buyers are inspired to assessment their {financial} information and have interaction with corporations or Registrars in the event that they consider they’re entitled to dividends beforehand deemed statute-barred.
- The SEC’s actions underline its dedication to making sure that shareholders obtain their rightful earnings whereas addressing regulatory gaps which have led to misinterpretations of the Finance Act 2020.
