The Securities and Exchange Commission (SEC) has issued a directive instructing all public companies and their registrars to stop denying shareholders access to dividends unclaimed for more than 12 years, particularly those declared before the Finance Act 2020 came into effect.
This new order, which was contained in a circular released on Tuesday, aims to correct what the Commission described as a misinterpretation of the statute of limitations by companies and registrars. It reaffirmed that dividends declared before December 31, 2020, remain claimable by shareholders if they had not already become statute-barred before the Finance Act 2020 was enacted.
“The attention of the Securities and Exchange Commission has been drawn to the fact that paying companies and their registrars have continued to treat unclaimed dividends of public companies that are older than 12 years as being ‘statute-barred’ without recourse to the provisions of the Finance Act 2020,” the circular stated.
The SEC clarified that Section 60 of the Finance Act 2020 provides that dividends unclaimed for six years or more must be transferred to the Unclaimed Funds Trust Fund (UFTF), where they will be held in trust for shareholders pending rightful claims.
However, the circular pointed out that since the UFTF is yet to become fully operational, companies and their registrars must continue to honour all shareholder requests for dividend payments, including those previously considered as expired under the former 12-year rule.
The Commission further cited Sections 3(4)(e) and 93 of the Investments and Securities Act 2025, which empower it to regulate these matters pending the establishment of the UFTF by the Federal Government.
“Pending the setting up and operationalisation of the UFTF by the Federal Government… the Commission hereby directs public companies and their registrars to continue to honour all requests by shareholders for the payment of unclaimed dividends as described above, with effect from December 31, 2020,” it stated.
The SEC directed all companies and registrars to immediately comply with the new guidelines and ensure they submit regular reports on the status of unclaimed dividend payments in line with its Rules and Regulations.
This move is expected to benefit thousands of Nigerian investors, many of whom have been unable to claim their rightful dividends due to outdated interpretations of the law. It also reflects efforts by the regulator to clean up unclaimed financial assets, which have become a growing concern in the capital market.
Prior to the enactment of the Finance Act 2020, companies often treated dividends older than 12 years as forfeited. This practice left billions of naira in dividends unclaimed, even when shareholders presented legitimate claims. The new law, which introduced the Unclaimed Dividends and Balances Trust Fund, was designed to centralise and safeguard these funds for eventual disbursement to rightful owners.
However, in the absence of a fully functional UFTF, many companies continued to follow the old rules, leading to widespread shareholder dissatisfaction. With the SEC’s latest directive, shareholders can now reclaim dividends they were previously denied, provided those dividends had not already become statute-barred before December 31, 2020.
