The controversy surrounding the transfer of unclaimed dividends to the Unclaimed Funds Trust Fund in Nigeria has ignited fierce opposition from the Independent Shareholders Association of Nigeria (ISAN), who view the law as a blatant infringement upon shareholder rights and a betrayal of investor trust. This contentious legislation, enshrined in the Finance Act 2020, mandates the transfer of unclaimed dividends held by listed companies for six years or more, along with dormant account balances in deposit money banks, into the government-controlled Unclaimed Funds Trust Fund. ISAN vehemently argues that unclaimed dividends, regardless of the duration of their dormancy, remain the rightful property of individual investors and their heirs, and that the government’s seizure of these funds constitutes an act of indirect expropriation, severely undermining investor confidence in the Nigerian capital market. This forceful condemnation reflects a deep-seated concern that the government’s actions create a dangerous precedent, threatening the sanctity of private property and potentially jeopardizing the stability of the entire investment landscape.
At the heart of ISAN’s objection lies the fundamental principle of property rights. They contend that the government’s rationale for seizing these funds, based on their dormancy, does not justify the dispossession of rightful owners. This action, they argue, sets a perilous precedent, blurring the lines between private and public ownership and eroding the trust that underpinned the capital market. The association emphasizes the critical importance of investor confidence, particularly the assurance that returns on investment are protected and not subject to arbitrary confiscation by the state. This confidence is paramount for both local and foreign investors, who rely on the predictability and stability of the legal framework governing investments. The perceived threat to this stability posed by the new law, according to ISAN, could have chilling effects on future investment, hindering economic growth and development.
ISAN further criticizes the lack of transparency and due process in the enactment and implementation of the law. The association highlights the absence of meaningful consultation with key stakeholders, including shareholders, registrars, and other capital market participants. This lack of engagement, they argue, not only disregards the rights and interests of those directly affected but also raises concerns about the potential for mismanagement and corruption. The absence of a clear and publicly available framework for managing the transferred funds, including the process for verifying and processing claims, adds to the apprehension surrounding the law’s implementation. The opaqueness of the process, according to ISAN, invites suspicion and undermines trust in the government’s ability to handle these funds responsibly and equitably.
Compounding these concerns is the lack of clarity regarding the management of the Unclaimed Funds Trust Fund and the mechanism for returning funds to their rightful owners. The absence of a well-defined framework raises serious concerns about the potential for bureaucratic inefficiency, delays, and even corruption. ISAN argues that the government’s focus should be on improving the existing claims process at the registrar level, leveraging technology, investor education, and standardized procedures, rather than centralizing the funds under government control. They advocate for a more decentralized and transparent approach that empowers shareholders and facilitates a more efficient and accountable claims process. This, they believe, would be a far more effective and equitable solution than the current centralized approach, which they view as inherently flawed.
The recent directive by the House of Representatives Joint Committee on Public Accounts and Public Assets to the Central Bank of Nigeria (CBN) to remit N3.64 trillion to the Federal Government within 14 days has further inflamed the controversy. This directive, coupled with the demand for the CBN to disclose the total value of unclaimed dividends and dormant account balances by June 30, 2025, underscores the government’s intent to proceed with the implementation of the law despite the widespread opposition. ISAN views this as a blatant disregard for the concerns raised by shareholders and a clear indication of the government’s prioritization of revenue generation over the protection of investor rights. This action, they argue, further erodes trust and reinforces the perception that the government is acting unilaterally and without due consideration for the potential negative consequences.
In its concluding remarks, ISAN reiterates its call for the immediate suspension of the law’s implementation and a comprehensive judicial review of its constitutionality. The association maintains that the law fundamentally infringes on the rights of shareholders and sets a dangerous precedent for the arbitrary seizure of private assets. They urge all shareholders to actively resist this perceived injustice and defend their right to their dividends. The core of their argument rests on the principle that dividends are a legally earned return on investment, not a readily available source of revenue for the government. ISAN’s staunch opposition to the law underscores their unwavering commitment to protecting the rights and interests of shareholders and upholding the integrity of the Nigerian capital market. They believe that a just and equitable resolution must prioritize the rights of individual investors and ensure the long-term health and stability of the market.
