FG barred from borrowing unclaimed dividends, dormant funds

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A FEDERAL High Court in Abeokuta has issued an interim order barring the Federal Government from accessing unclaimed dividends of capital market shareholders worth more than N200 billion.

The order was a fallout of a case filed by shareholders under the auspices of the Palm Wealth Shareholders Association (PWSA) requesting the court to overturn the plan to take over unclaimed dividends.

President Buhari had signed into law the establishment of a Trust Fund which the Nigerian government can borrow from.

According to the act, the monies transferred to the trust fund will be a “special debt owed by the federal government to shareholders and dormant bank account holders”.

“Any unclaimed dividend of a public limited liability company quoted on the Nigerian Stock Exchange 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 the trust fund,” the act read.

Angered by the move, 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(Federal government) 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.

In his ruling 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 the purpose of taking or giving accounts of the unclaimed dividends, pending the determination of the Motion on Notice.

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