How Finance Act empowered FG to borrow from unclaimed dividends, others

The recent signing into law of the Finance Act 2020 by President Muhammadu Buhari,

With the signing of the Finance Act, it automatically means that the federal government can now borrow from the unclaimed dividends and dormant bank account balances.

Findings showed that provisions of the Act provide that the federal government can borrow from the unclaimed dividends and dormant account balances under the Unclaimed Funds Trust Fund.

The funds will be provided via a special debt owed by the federal government to the respective shareholders and the 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 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 says.

However, the official bank accounts owned by the federal government, state government, local governments or any of their ministries, departments or agencies are specially exempted by the Act.

Also, the borrowed funds by the FG shall be made available for claim with the appropriate yield by the shareholders and the bank account holders at any time, while failure by any company or deposit money banks (DMBs) to transfer such funds to the Unclaimed Funds Trust fund shall be considered as an offence and liable upon conviction to a fine of not less than five times.
Simlarly, the trust fund shall be supervised by the Debt Management Office (DMO) but governed by the governing council chaired by the Minister for Finance, with the co-chairperson from the private sector that is appointed by the president.

Subsequently, the individual from the private sector shall be recommended by the Minister for Finance and duly confirmed to serve in such capacity.

Other members of the Governing council include the CBN Governor, DG of Securities Exchange Commission, MD of NDIC, a representative of the Registrars of Companies, 2 representatives of the Shareholders Association, a representative of the Bankers Committee and DG of Debt management Office as the Secretary of the Trust Fund.

By the provisions, The report that the era of unclaimed dividends and dormant bank account balances have come to an end, which may have some effect the deposit portfolios of some DMBs as they currently have to avalanche of dormant accounts in their respective banks.

However, the positive is that if these funds are made available, it would boost the financial capacity of the federal government to handle more of Capital projects and enhance infrastructural development.