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.

What the court order is saying

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.

What the PWSA is saying about the unclaimed dividends

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.

“Others are: an order of the Honourable Court restraining the Respondents from borrowing the unclaimed dividends belonging to the applicants; a declaration by the Honourable Court that the applicants have rights guaranteed and protected under sections 43 & 44 of the Constitution of the Federal Republic of Nigeria, Articles 14 and 24 of the African Charter on Human and People’s Rights and Article 17 of the United Nation’s Charter on Human Rights 1945 and sections 42 (1) and (2) of the Companies and Allied Matters Act; a declaration of the Honourable Court that Part XV of the Finance Act 2020 calling for or transferring the unclaimed dividends of the applicants in public quoted companies to Unclaimed Funds Trust Fund by the respondents without any constitutional grounds is unconstitutional, null and void and of no moment as it violates the applicants fundamental rights; and a declaration of the Honourable Court that the applicants are entitled to claim their dividends without coercion, stampede, and intimidation from the respondents.”

What you should know

• 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.