New SEC Rules Compel Full Disclosure Of Unclaimed Dividends, Income.
The Securities and Exchange Commission (SEC) will soon start to request public firms and their registrars to fully disclose unclaimed dividends of six years and also, the income derives from such in their registers or face its wrath.
These are highlights of new rules that will soon come into force as the commission battles with the huge unclaimed dividends which value is in billions of Naira.
The new rules which are to deter registrars and ensure prompt compliance are also to reduce the quantum of unclaimed dividends in the custody of registrars as well as discourage them from keeping unclaimed dividend.
The Commission in a circular Wednesday, entitled “Exposure of a Proposed New Rule Of the Securities and Exchange Commission” orders public companies to report in their Annual audited account the bank balance (s), investment (s) and the earned income on the unclaimed dividend funds.
Prior to now, SEC had mandated companies and Registrars to file in unclaimed dividends within 12 years. “Companies and registrars in the custody of dividends, which remain unclaimed by shareholders 12 years after the date of declaration or subsequently attain the 12 years threshold, shall upon the coming into effect of this rule transfer such monies into the Nigerian Capital Market Development Fund (NCMDF).
SEC, in a circular on Wednesday, said the new rules shall apply to all unclaimed dividends below six years and that all registrars shall ensure that all mandated accounts are credited with outstanding unclaimed dividends within 48 hours of receipt of the e-dividend mandate by shareholders.
The new rule also compels registrars to forward a status report containing a list of requests by shareholders; the number of requests processed; the number of successful requests; number of unsuccessful requests with reasons, on all mandated accounts to the Commission on a quarterly basis.
The commission will apply sanctions which include 25 per cent of the unremitted amount and N50,000 for every day the violation continues if the mandated accounts are not credited within 48 hours or a status report is not sent.
On the reporting of income earned from unclaimed dividend,, SEC in the new rule, compels all public companies to whom unclaimed dividends have been transferred, after 15 months but less than six years, to disclose in their annual audited account, the bank balance (s), investment (s) and the earned income on the unclaimed dividend funds, by way of note to the audited accounts.
The commission in the new rule also states that registrars may also be required to make other reports on unclaimed dividends as may be requested from time to time.
Any public company that fails to make such a report incur sanctions that include the forfeiture of the income for the year while companies that fail to credit mandated accounts with unclaimed dividends within 48 hours are liable to a N10 Million penalty.
This, according to the commission is to ensure full compliance by the beneficiary public companies and to determine the contribution of unclaimed dividend funds in the performance of the public companies.
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