The Federal Government should expunge Section thirty-nine of the Finance Bill twenty-twenty-one proposing to take over unclaimed dividends of public listed companies.

It should focus on addressing the root causes of unclaimed dividends by requesting the various state governments to review their complex, unfair and exploitative Probate process; arbitrary valuation of assets of deceased leading to compromise by Probate officials; high estate duty of ten percent which dependents of deceased are compelled to pay notwithstanding that probate / letter of administration is just a change of name and not sale of assets of the deceased.

According to the Institute of Chartered Secretaries and Administrators of Nigeria, the government should fix a time frame of maximum of two months for issuance of probate after receipt of complete documentation by the Probate Registry of each state to enable executors / administrators of deceased shareholders quick claim their unclaimed dividends in order to reduce their hardship.

Its President and Chairman of Governing Council, Bode Ayeku said this while delivering a welcome address at the institutes forty-fourth annual conference; themed:Entrenching the Right Governance Framework for Economic Development and Sustainability.

He requested the Securities and Exchange Commission to further simplify the procedure for accessing unclaimed dividends by the shareholders such that one form can be used by affected shareholders to access all unclaimed dividends in PLCs instead of filing a form for each Registrar and the Registrars and banks are to conclude all requests received with complete documentation within a period of three days.

In his word, the commission should allow existing shareholders to update their information by nominating default beneficiaries with bank account numbers that dividends should be paid in case of death or disability of the shareholders.

The corporate governance expert asked the government to replace Section thirty-nine of the Bill with a provision that unclaimed dividends shall be accessible to shareholders indefinitely and not be forfeited by any company after twelve years, but to be kept by the companies as stated in CAMA.

He said this was because companies have contractual responsibility to pay dividends to shareholders and the Bill has the implication of inducing a breach of such contract.

The Bill provides that unclaimed dividends of public listed companies that remain unclaimed for three years after declaration shall be transferred immediately to the trust fund either by the company or its registrar.

In addition, all unclaimed dividend of more than twelve years shall lapse into government revenue and shall be transferred from the trust fund to the federation account as federation revenue.

Any company that fails to transfer its unclaimed dividend to the fund commits an offence and was liable to five times the value of the unclaimed dividends with accumulated interests at the Monetary Policy Rate of Central Bank of Nigeria.

Ayeku said the section was a big disincentive to listing on the Nigerian Stock Exchange by companies and constrained those already listed to delist since the Bill targeted listed companies.

He noted that Principle twenty-three of the Nigerian Code of Corporate Governance 2018 provides for the “Protection of Shareholder Rights”.

Ayeku said the right to dividend by the shareholders was one of the rights that companies and stakeholders must protect.

The ICSAN president urged government to focus on addressing the root causes of unclaimed dividends by requesting the various state governments to review their complex, unfair and exploitative probate processes.

He listed the processes to include the arbitrary valuation of assets of deceased leading to compromise by probate officials, high estate duty of 10 per cent which dependents of deceased were compelled to pay notwithstanding that probate.

Speaking on the theme of the conference, Ayeku said it reflected the realities that the nation’s economy was undeniably challenged on many fronts with many concerned stakeholders already being apprehensive of another recession.

According to him, at the moment, we are experiencing shrinking of socioeconomic enterprises, rising inflation, fall in the value of Naira, low capacity utilisation in the real sector, retrenchment, among others.

He says all these are aggravating the already very high rate of unemployment and the negative economic indices affecting national growth.

“Therefore, this year’s conference has aptly brought to the front burner the imperative of creatively exploring all avenues for finding solution to the nation’s socioeconomic regression through the right governance framework,” he said.

WELCOME ADDRESS OF THE PRESIDENT OF THE INSTITUTE OF CHARTERED SECRETARIES AND ADMINISTRATORS OF NIGERIA (ICSAN), MR. BODE AYEKU, FCIS, DELIVERED AT THE 44TH ANNUAL CONFERENCE OF THE INSTITUTE ON THURSDAY, NOVEMBER 19, 2020 AT SHELL HALL, MUSON CENTRE, ONIKAN, LAGOS.
The Chairman of the Occasion
Our Keynote Speaker
Other notable Speakers and Discussants
The Vice President, Mr. Taiwo ’Gbenga Owokalade, FCIS
The Immediate Past President, Mr. Samuel Kolawole, FCIS
Past Presidents of our great Institute here present
The Treasurer, Mr. Francis Olawale, FCIS
Presidents of other Professional Bodies here present
Members of the Governing Council of ICSAN
Fellow Chartered Secretaries and Administrators
Other professionals in Governance field here present
My Lords Spiritual and Temporal
Distinguished Guests
Members of the Fourth Estate of the realm
Distinguished Ladies and Gentlemen
I am delighted to welcome you all to the 44th Annual Conference of our great Institute which is an important event in our calendar. It offers a veritable platform for the Institute’s members and other stakeholders from diverse sectors of the economy to converge and discuss trending issues of national importance and benefit to professionals.

Thus, we have over the years employed our Annul Conference as an opportunity to address some critical national issues of importance that require solutions which we are duty-bound to proffer in consonance with our status as the leading voice on governance matters.
Before I go on, let me defer to our culture of saying some few introductory words about our Institute for the benefit of our guests and other stakeholders, who are not too familiar with ICSAN.

By way of brief introduction, ICSAN is a leading, statutorily established professional body, dedicated to enhancing the status and practice of Corporate Governance and Public Administration. It is the only professional body authorized in Nigeria to conduct the examinations leading to the qualification as Chartered Secretaries and Administrators.
Although ICSAN started in Nigeria in 1944 as an associate of the international body based in Britain, it elected its first president in 1966, about 54 years ago. ICSAN became Chartered by Decree 19 of 1991 (Now Act CAP I13 LFN 2004.

ICSAN is a member of the Corporate Secretaries International Association (CSIA), a global organization originally registered in Geneva, but now in Hong Kong, and dedicated to developing the study / practice of Secretaryship and Administration to improve professional standards, the quality of governance practice and organizational performance. The Association is the global voice of Corporate Secretaries and Governance Professionals.

The Institute is also an Affiliate Member of the African Corporate Governance Network (ACGN) which was formed to develop institutional members’ capacity for enhancing effective Corporate Governance Practices, building better organizations and corporate citizens in Africa.

Over the years, we have consistently promoted the ideals of Corporate Governance through periodic issuance of policy papers and Guidance materials on Corporate and Public Administration.
For the past 54 years that we have been in existence, we have regularly produced seasoned professionals who had contributed their quota to the nation’s economic advancement. Many of our members are at present occupying various responsible and enviable positions across the whole gamut of Nigeria’s socio-economic life.

At ICSAN, we are fully aware of the responsibilities that devolve on us as the champion of Corporate Governance and always strive to seize every opportunity to point out the ways good governance principles can be employed to solve our contemporary problems. It is this preoccupation with practical approach to engaging governance challenges with time-tested and reliable principles of best practices that normally informs the choice of themes in our annual programs.
The theme of the 2020 Annual Conference is “Entrenching the Right Governance Framework For Economic Development and Sustainability”.
The theme is apt as it reflects the realties that the nation’s economy is undeniably challenged on many fronts with many concerned stakeholders already being apprehensive that we might enter into another recession.
Not only has our socioeconomic enterprises suffered its fair share of the debilitating effects of the global COVID-19 pandemic, the locally brewed #EndSARS protest (which began as a peaceful protest but later snowballed into violence when hijacked by hoodlums) has aggravated the problem with the destruction of valuable assets and infrastructure worth trillions of naira.

At the moment, we are experiencing shrinking of socioeconomic enterprises, rising inflation, fall in the value of Naira, low capacity utilisation in the real sector, retrenchment, etc. All these are aggravating the already very high rate of unemployment and the negative economic indices affecting national growth.

Therefore, this year’s Conference has aptly brought to the front burner the imperative of creatively exploring all avenues for finding solution to the nation’s socioeconomic regression through the right governance framework. At least, we all know that the purpose of Corporate Governance is to facilitate entrepreneurial and prudent management that can deliver the long-term success of the company, which by extension, can also serve as a springboard for national renaissance.
The theme is interesting because it suggest unequivocally that there is a connection between governance and economic development and sustainability, and that the only missing link is to find the right governance framework. It is this “missing link” that all our resource persons and of course, our informed participants, will seek to find by brainstorming for the next few hours.
There also three relevant subthemes. The first subtheme “The New Normal: Emerging Trends in Corporate Governance and its implication on business continuity” focusing on the new buzz word, the “New Normal”. This is to unearth how governance principles can drive business against the background of the novelty and uncertainties of the New Normal. We are all living witnesses to the New Normal. The fact that this Conference is being held in hybrid format – by physical and virtual methods, is an attestation to the reality of the New Normal.
In many companies, people work from home rather than being physically in the offices. Even in some companies, human beings are being replaced with robots. The enhanced deployment of Artificial Intelligence also shows that the workplace is gradually changing from what it once was. Very few things remain the same! It is the cumulative effects of all the changes and the ways they have affected the world that people refer to as the “New Normal”. However, what it entails is not foreclosed, it is just unfolding as the world responds in numerous ways to the challenges brought by the COVID-19 pandemic. Thus, we all need to get acquainted with the new ways of doing things – which must be in consonance with the Corporate Governance principles.
The second subtheme “Digitalization and Cyber Security: Impact on businesses” examines the extent of the whole impact of digitalization and Cyber Security on businesses. This will beam the searchlight on the pros and cons of technology to the 21st century business world and highlight how businesses can reap the benefits and shield themselves from the dangers that technology poses.
The third subtheme “The Revised Companies and Allied Matters Act 2020: Opportunities for Company Secretaries” would provide deep knowledge and insight into the new law which Chartered Secretaries and other professionals in governance must give due attention. It is bound to highlight many areas, especially the controversial ones, and dissect grey areas in the Act that would interest all stakeholders. I know that all these areas will equip the participants with eye-opening, capacity-building and problem-solving insights and knowledge into numerous trending issues.
We have already established the tradition of bringing highly experienced, accomplished and seasoned professionals as resource persons to our programs. The array of resource persons for this year’s Conference is an attestation to the fact this worthy custom has been sustained, and I can tell you, it will always be.
All our Speakers are authorities in their fields, and they will engage their topics with dexterity and proficiency one can only expect from reputable professionals. The Discussants, drawn from diverse backgrounds, are similarly men and women of immense experience and track record of professional excellence.

I am therefore confident that with the assemblage of these highly skilled resource persons, we will have intellectually stimulating, critically engaging and enjoyable moments together in the next few hours. I enjoin you all to make this forum interactive by asking questions, making observations and commentaries at the allotted time. Those participating virtually should not forget to put their questions and observations into the chat box. We promise to take as many of them as time would permit us.

Let me also assure you that the observations and recommendations in our discourse today will be developed into a communique by our team of seasoned rapporteurs and circulated to relevant authorities, policymakers and other stakeholders to assist in guiding their policy formulation and implementation. The generality of Nigerians would have access to it through some national dailies.
Corporate Governance Platform on MITV Television Station
To enlighten the public on the provisions of the Nigerian Corporate Governance Code 2018 (NCCG) and the benefits of the entrenchment of best corporate governance practices to businesses, ICSAN has started the Corporate Governance Platform on MITV on DSTV 255 and UHF 43 every Thursday between 4.30 pm and 5.00 pm. This is in addition to our ongoing Radio program on Eko FM 89.7 FM every Wednesday between 10.15 am and 10.30 am.

Concerns on the Finance Bill 2021
I cannot end this address without commenting on the controversial Section 39 of the Finance Bill 2021 with a proposal by the government to take over the management of Unclaimed Dividends of public listed companies. This is as a result of the several calls received from critical stakeholders in the capital market and the approval of the Bill by the Federal Executive Council on November 18, 2020. The take-over is proposed to be done through the establishment of a trust, as a sub-trust of the COVID-19 Crisis Intervention Fund, to be known as Unclaimed Dividend Trust Fund.
We are expressing our views on it because ICSAN is the Hub of Governance Professionals and must always play its leading role on issues relating to Corporate Governance in Nigeria.
It should be noted that Principle 23 of the Nigerian Code of Corporate Governance 2018 (NCCG) provides for the “Protection of Shareholder Rights”, and the right to dividend by the shareholders is one of the rights that companies and stakeholders must protect. The Bill provides that:
Any unclaimed dividends of public listed companies that remain unclaimed for three (3) years after declaration shall be transferred immediately to the Unclaimed Dividends Trust Fund (Fund) either by the company or its Registrar
The Trust Fund shall be governed by the Governing Council chaired by the Minister of Finance and co-chairperson appointed by the President on the recommendation of the Minister of Finance
The Secretariat of the Fund shall be in the Office of the Accountant- General of the Federation AGF) / Debt Management Office (DMO), and the Accountant-General of the Federation and the DG of the DMO shall operate the Fund with the CBN
Public listed companies shall render returns on unclaimed dividend to the Accountant-General of the Federation
All unclaimed dividend of more than 12 years shall lapse into government revenue and shall be transferred from the Trust Fund to the Federation Account as Federation Revenue
Subject to the approval of the Finance Minister on the recommendation of the Accountant General, unclaimed dividends that have not lapsed into the revenue of the government shall be paid to its rightful owners
The Auditor General shall audit the Fund
Any company that fails to transfer its unclaimed dividend to the Fund commits an offence and liable to five (5) times the value of the unclaimed dividends with accumulated interests at the MPR rate of CBN
Section 39 of the Finance Bill overrides Sections 429 and 432 of the Companies and Allied Matters Act 2020 authorizing the company declaring the dividend to invest it outside its business after 3 months of publication of unclaimed dividends (i.e. after 15 months) and to add same to the profit to be distributed to shareholders after 12 years of declaration.
For us as governance professionals, below are the questions that those proposing the take-over of unclaimed dividends should answer based on the concerns raised by the shareholders and companies:
Why are there no provisions in the Finance Bill on how to reduce unclaimed dividends to solve the problem permanently, instead of the interest only in the take-over of unclaimed dividends by the government? 
Why is it that the government which has already collected Companies Income Tax of 30% and Education Trust Fund of 2% from the profit of each company before dividend was declared, in addition to another 10% withholding tax from such dividend, is still interested in taking over the unclaimed dividends, notwithstanding that it did not invest in the shares of public listed companies generating these unclaimed dividends?
At the public consultation organized by KPMG on behalf of the Finance Minister on November 13, 2020, the authorities pushing for the take-over of unclaimed dividends stated that the provision in CAMA 2020 authorizing companies to write back unclaimed dividend after 12 years is an infringement of the constitutional right to property of shareholders. Then, is the provision in Section 39 of the Finance Bill stating that “All unclaimed dividend of more than 12 years shall lapse into government revenue and shall be transferred from the Trust Fund to the Federation Account as Federation Revenue”, not an infringement of the constitutional right to property of the shareholders?
If the desire of the government is to make unclaimed dividends available to shareholders indefinitely, why can’t Section 39 just state that “unclaimed dividends shall be accessible to shareholders indefinitely and shall not be forfeited by company after 12 years as stated in CAMA 2020”?
Is it not better as currently provided in CAMA 2020 for companies that declared the dividends to first invest the unclaimed dividends outside their operations after 15 months, and plough them back into the business after 12 years in the interest of the companies and shareholders, instead of the proposed take-over of private funds by the government?
Will the Accountant General of the Federation now be the Registrar of listed companies to process unclaimed dividends and how would he verify information about the shareholders in order to confirm the rightful owners entitled to the unclaimed dividends? Is the AGF not another bottleneck that would compound the problem of unclaimed dividends with the requirements that payment to rightful owners are based on the approval of Finance Minister on the recommendation of the AGF?
What is the procedure for the recovery of unclaimed dividends by the rightful owners from the office of the AGF? Where would the unclaimed dividends application be submitted, and money collected by the shareholders – the office of AGF in Abuja or in major cities in Nigeria?
Why is the AGF and DMO now given the responsibility of managing unclaimed dividends which are private funds?
Is the role of SEC to be taken over by the Accountant General as companies are now to send returns on unclaimed dividend to AGF? Are these returns in respect of unclaimed dividends not up to three (3) which are still with the companies and or Registrar or those already transferred to AGF after twelve (12) years of declaration?
If unclaimed dividends after three (3) years are transferred to the Trust Fund, where will the company and Registrars get the money to pay shareholders that apply for their unclaimed dividends between 3 years and 12 years of declaration – from the AGF or the companies?
Who bears the expenses of the Trust Fund – government or the unclaimed dividends fund to be taken over by the government?
Would Section 39 not be a big disincentive to listing on the Nigerian Stock Exchange by companies and constrained those already listed to delist since the Bill targets listed companies? Even if Section 39 extends to all public companies, would they not be compelled to re-register as private companies as recently done by some companies in order to avoid the take-over of their unclaimed dividends which are private funds?
Would Section 39 of the Finance Bill not cripple the capital market that is just trying to recover from the impact of COVID-19?
We hereby make the following recommendations:
Government should expunge Section 39 of the Finance Bill 2021 proposing to take over unclaimed dividends of public listed companies
(i) Government should focus on addressing the root causes of unclaimed dividends by requesting the various state governments to review their complex, unfair and exploitative Probate process; arbitrary valuation of assets of deceased leading to compromise by Probate officials; high estate duty of 10% which dependents of deceased are compelled to pay notwithstanding that probate / letter of administration is just a change of name and not sale of assets of the deceased. They should fix a time frame of maximum of 2 months for issuance of probate after receipt of complete documentation by the Probate Registry of each state to enable executors / administrators of deceased shareholders quick claim their unclaimed dividends in order to reduce their hardship.
(ii) Request the Securities and Exchange Commission to further simplify the procedure for accessing unclaimed dividends by the shareholders such that one form can be used by affected shareholders to access all unclaimed dividends in PLCs instead of filing a form for each Registrar, and the Registrars and banks are to conclude all requests received with complete documentation within a period of three (3) days
(iii) Allow existing shareholders to update their information by nominating default beneficiaries with bank account numbers that dividends should be paid in case of death or disability of the shareholders
(iv) Include a section in the new Share / Bond application form (through the primary and secondary markets), Stockbroker / CSCS account opening forms for default beneficiaries to be stated by investor in order to proactively reduce the volume of unclaimed dividend in future
Government should replace Section 39 of the Finance Bill 2021 with a provision that unclaimed dividends shall be accessible to shareholders indefinitely and shall not be forfeited by any company after 12 years, but to be kept by the companies as stated in CAMA 2020. This is because companies have contractual responsibility to pay dividends to shareholders and this Bill has the implication of inducing a breach of such contract
To ensure the safety of unclaimed dividends so that they can be accessed by shareholders indefinitely, companies should be mandated to invest unclaimed dividends only in government securities / gilt edge securities
The unclaimed dividends SHOULD NOT be transferred from the custody of companies that declared them to any institution, whether private or public, corporate or institutional, local or international

NEXT STEPS BY ICSAN ON THIS ISSUE

Due to the controversy generated by Section 39 of the Finance Bill 2021 on unclaimed dividends and its implications on corporate governance, ICSAN will devote the next episode of the Corporate Governance Platform on MITV on DSTV 255 and UHF 43 on Thursday, November 26, 2020 at 4.30 pm to discuss this matter. I request you to join us.

As usual, we will forward our position paper to the relevant authorities for appropriate action that would respect the rights of shareholders as stated in the NCCG 2018. This is to avoid any action that would negatively affect the capital market and discourage investors.

Once again, I welcome you to the ICSAN 2020 Annual Conference and wish you fruitful deliberations.

Thank you all.

Mr. Bode Ayeku, FCIS
PRESIDENT/CHAIRMAN OF COUNCIL, ICSAN