Dangote Warns FG: Borrowing Unclaimed Dividend Will Discourage Investment
Dangote Sugar Refinery wants the Federal Government to focus on solving the root causes of unclaimed dividend instead of laying hands on the funds, a move it said could worsen investor apathy in the capital market.
The company held this position in its recently published Consolidated and Separate Financial Statements for 2020, seen by THE WHISTLER.
“The move would impact negatively on the capital market as it would discourage investment and has huge consequences for the nation’s struggling capital market,” Dangote Sugar said.
The Finance Act 2020 which took effect from January 1 this year, gives the Federal Government the power to borrow from the funds.
The unclaimed dividend would help Nigeria to shore- up its fiscal earnings to support the budget in the wake of the Covid-19 pandemic.
Based on the new legislation, the government said it would borrow all dividend that have been unclaimed for six years.
Also, any unutilised amount in a dormant bank account maintained in or by a deposit money bank would be borrowed.
The unclaimed dividend which is N895bn will be managed by the Debt Management Office through the Unclaimed Dividend Trust Fund , the government said.
Section 432 of the Companies & Allied Matters Act 2020 provides that dividend that remain unclaimed after 12 years should be included in the profit of the company for distribution to other Shareholders, to enhance the company’s growth by ploughing back the funds into its operations.
Apart from weakening investor apathy, the manufacturer said the government should have given more attention to addressing the cause of the problems and desist from the act which it said would infringe shareholder’s right to property.
Dangote said, “It is an infringement of the constitutional right to property of the shareholder. The Government should focus more on addressing the root causes of unclaimed dividends rather than descending to the arena of unclaimed dividend and interfering with the corporate strategy of public companies.
“The Bill would amount to a breach of the contractual responsibility to pay dividends to shareholders.”