Shareholders have said that the creation of unclaimed Dividend Trust Fund and transfer of the unclaimed dividends into the Federation Account will encourage corruption and nepotism to the detriment of the shareholders/beneficiaries of returns on investments.
The shareholders under the aegis of Independent Shareholders Association of Nigeria (ISAN) stated this while reacting to the proposed fund at the public hearing of the Senate Committee on Finance, Trade and Investment and Public Procurement on the Finance Bill 2020.
In a statement signed by Mr Anthony Omojola, national coordinator, and Mr Sunday Nwosu, founder, ISAN said the fund was uncalled for.
They described dividends as private wealth of investors, either individuals or corporate entities, saying that and the idea of converting such private wealth to Federal Government’s revenue negated the relevant provisions of the rights to own property and asset as guaranteed by the 1999 Constitution, as amended.
The association said to the extent of its inconsistency with the 1999 constitution, the proposed trust fund was null and void as the law expressly stated that there shoud be no forceful takeover of any private moveable or immovable property of any Nigerian without due and appropriate compensation and or valid court order.
“It is nothing short of expropriation which the constitution forbids. Dividends, including unclaimed dividends, are funds generated by private companies and made available to its shareholders in line with the provisions of Companies and Allied Matters Act and the Company Memart,” ISAN stated.
“That these funds are available only after the company has paid a host of taxes, including Companies Income Tax Act, Educational Trust Fund and tax of about 32 per cent of gross profit is paid to the federal government and 10 per cent withholding tax on the shareholders for every dividend declared,” ISAN stated.
The shareholders argued that it was clearly overreaching and unacceptable for the government to seek to expropriate the unclaimed dividends under the subterfuge of any revenue.
They noted that companies and individuals had a right to private properties and assets of which unclaimed dividends funds fell into.
According to the group, the philosophy behind the decision to appropriate unclaimed dividends is wrong, as returns on investments cannot be time-barred by any progressive government.
They noted that the thinking that the cancellation of rights after 12 years was unconstitutional and the notion that expropriation was to cure an alleged unconstitutional wrong is also wrong, describing this as inverse legal thinking that would lead to another unconstitutional mess.
ISAN said, “These unconstitutional wrongs, if the right thinking members of the public accept the argument behind this philosophy, will not make it right. The Memorandum and Articles of Association of a company is a contract between the shareholders and the company.
“Thus, the rights of the shareholders are contractual, and entered into with their knowledge and cannot be legislated upon to the detriment of the other party.”