Is Government Taking Over Unclaimed Dividend and Shares?

Is Government Taking Over Unclaimed Dividend and Shares? Daily Law Tips (Tip 764) by Onyekachi Umah, Esq., LL.M, ACIArb(UK)

 Introduction: 

There has been rumor on social media that the Federal Government of Nigeria is about to take over all unclaimed dividends and shares. There is even a purported deadline attached to the rumor. The rumor is so common and convincing that I received numerous calls and mails from people seeking to protect their unclaimed dividends and shares in companies in Nigeria.

The summary of the rumor is that the Federal Government of Nigeria has set a deadline for all persons having unclaimed dividends and shares to claim and recover such or forfeit them to the government. The rumor became worrisome, when Federal Government of Nigeria was said to be seeking for loans internally. Obviously, the distrust on government by its citizens has passed the gauge.

Government and the Property Rights: 

The Constitution of Nigeria is the greatest of all laws, policies, regulations, religions, systems and governments in Nigeria and outside Nigeria. And, it binds all Nigerians and all persons in Nigeria. The Constitution of Nigeria created the governments in Nigeria, from Federal Government to State Governments and then to Local Governments. The Constitution also stated the specific powers, rights and duties of each government in Nigeria. So, by this arrangement, no government can act beyond its own powers without violating the Constitution of Nigeria. And, once there is a violation of the Constitution, the action or inaction of Government that lead to such violation is automatically deemed invalid, useless, unlawful and unconstitutional. 

The Constitution of Nigeria also contains the fundamental human rights of all persons in Nigeria. These are natural rights of persons in Nigeria acquired automatically for free upon birth. This includes the rights to life, right to own property and right to freedom of movement. Earlier work on the “List of Fundamental Human Rights in Nigeria” can be accessed via < https://sabilaw.org/list-of-fundamental-human-rights-in-nigeria/>. The right to own property ensures that any person in Nigeria is free to make, acquire, retain, maintain, use or dispose any property. This includes, movable property (shoes, cars, tables, shares, certificates and licenses) and immovable property (land, landed structures, boreholes and graves). 

The right to own property in Nigeria also ensures that no government, person, institution or group in Nigeria or outside Nigeria can take over the property of any person by force or fraud. It is for this single reason that the courts in Nigeria will protect any person that rushes to court to protect his/her property from any compulsory acquisition. Even on land and landed property which generally belongs to state governments, no government can compulsory acquire any land without paying compensation to its lawful occupiers. Also, it is only by an order of court that a government may seize or attempt to tamper with the property of a person. And, a court of law in Nigeria must give an opportunity to be heard to the owner of a property sought to be seized before an order can be made. This is often seen in cases where government wants to seize proceeds of crime and property connected to criminals. 

Dividends and shares are property (movable property) of their respective owners (shareholders and their representatives). As such, no government in Nigeria or outside Nigeria can takeover shares and dividends or any property of any Nigerian or any person in Nigeria. That shares or dividends are unclaimed does not make such property ownerless or the property of government. The best any government can do is to protect an unclaimed property, publicize its existence and allow its owners to make claims and recover them (even if such owners are to pay fees to government for safe keeping). To this end, there is no arrangement or order in Nigeria, that is designed to enable or allow government to takeover unclaimed shares and dividends.    

Following a new federal law (the Finance Act) signed by the President of Nigeria on 31 December 2020, there is roadmap for Federal Government of Nigeria to protect and preserve unclaimed dividends of shareholders. The federal law came into action on 1st January 2021. By that law, the Federal Government of Nigeria has created an Unclaimed Funds Trust Fund. Public Liability Companies quoted on the Nigerian Stock Exchange are mandated to transfer unclaimed dividends of their shareholders to the Unclaimed Funds Trust Fund. Public Liability Companies quoted on the Nigerian Stock Exchange are to make the transfer after 6 years that an unclaimed dividend remained unclaimed, calculating from the day the dividend was declared by the company. All unclaimed dividends in the Unclaimed Funds Trust Fund are to be managed and protected by the Federal Government and whenever any owner (shareholder) of such unclaimed dividend claims it, the Federal Government of Nigeria will release it to the owner. So, with this scheme, the government protects and preserves unclaimed dividends until their owners claim them. 

It is important to note that the Unclaimed Funds Trust Fund applies to Public Liability Companies quoted on the Nigerian Stock Exchange. So, this means that Private Liability Companies and Public Liability Companies not quoted on the Nigerian Stock Exchange are not compelled to transfer their unclaimed dividends to the Unclaimed Funds Trust Fund. Rather, the Private Liability Companies and Public Liability Companies not quoted on the Nigerian Stock Exchange are to hold on to unclaimed dividends of their shareholders. And shareholders are to claim such unclaimed dividends within 12 years from the date the dividends were declared by the company. After 12 years, an unclaimed dividend automatically becomes the profit of the company and is to be shared to all other shareholders. 

Conclusion: 

The Constitution of Nigeria protects the property of all persons in Nigeria, from all forms of acquisition by force or fraud. Forceful acquisition of private property is a violation of fundamental human right. As such, no government in Nigeria can take over any private property in Nigeria by force or fraud. 

Unclaimed dividend and shares are private property of shareholders in companies in Nigeria. The Federal Government of Nigeria as well as all other government in Nigeria, cannot take over any shares or unclaimed dividends in Nigeria. All governments in Nigeria lack the power to do such. So, before any government can take over unclaimed dividend and shares, the government must first of all make a law enabling such take over. And, since such law will be violating the constitution of Nigeria, no government can make such law. Where any insane government makes a law that permits government to take over unclaimed dividends and shares, such law violates the Constitution of Nigeria and as such is automatically unconstitutional, nullified, useless and dead on arrival.  

 Also, government can never attempt to takeover any property without an order of court and an order of court will not be given by any court of law without hearing from the owner of the property. So, let all persons relax, government is not taking over any unclaimed dividend and shares. Rather, Federal Government of Nigeria has set up an Unclaimed Funds Trust Fund to protect and persevere unclaimed dividend of shareholders of Public Liability Companies quoted on the Nigerian Stock Exchange. And all unclaimed dividends in the Unclaimed Funds Trust Fund are kept in trust by Federal Government of Nigeria and will be release to their respective owners, whenever there is a clam to them. So, no government is taking over any unclaimed dividend or shares in Nigeria. 

My authorities, are:

1. Sections 1, 2, 3, 4, 5, 6 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44 and 45 of the Constitution of the Federal Republic of Nigeria, 1999.
2. Sections 1, 60, 81 and 81 of the Finance Act, 2020. Click to download a free copy of the Finance Act, 2020 <https://sabilaw.org/free-copy-of-the-finance-act-2020/>.
3. Sections 432, 868 ad 870 of the Companies and Allied Matters Act, 2020. Click to download a free copy of the Companies and Allied Matters Act, 2020 <https://sabilaw.org/new-cama-2020-companies-allied-matters-act/>
4. The judgment of the Supreme Court of Nigeria (on meaning and nature of fundamental human rights) in the case of RANSOME-KUTI & ORS v. AG FEDERATION & ORS (1985) LPELR-2940(SC)
5. The judgment of the Supreme Court of Nigeria (on meaning and nature of fundamental human rights) in the case of AGBAI & ORS v. OKOGBUE (1991) LPELR-225(SC)
6. Judgment of the Supreme Court of Nigeria (on the definition of “Government”) in the case of THE GOVERNOR OF KWARA STATE & ORS v. JEROME OLADELE DADA (2011) LPELR-8132(SC)
7. Onyekachi Umah, “Legal Remedies Can Be Sought Not Only For Breach But Fear Of Breach Of Fundamental Human Rights.” (LearnNigerianLaws.com, 9 August 2018) <https://sabilaw.org/daily-law-tips-by-onyekachi-umah-esq-tip-160-legal-remedies-can-be-sought-not-only-for-breach-but-fear-of-breach-of-fundamental-human-rights/ > accessed 14 January 2021
8. Onyekachi Umah, “Courts That Can Hear Cases of Fundamental Human Rights In Nigeria” (LearnNigerianLaws.com, 2 May 2018) <https://sabilaw.org/daily-law-tips-by-onyekachi-umah-esq-tip-92-courts-that-can-hear-cases-of-fundamental-human-rights-in-nigeria/> accessed 14 January 2021
9. Onyekachi Umah, “#EndPoliceBrutality: The Right To Protest Is A Human Right.” (learnNigerianLaws.com, 15 October 2020) <https://sabilaw.org/endpolicebrutality-the-right-to-protest-is-a-human-right/> accessed 14 January 2021
10. Onyekachi Umah, “Time To Oppose Cases Of Breach Of Human Rights In Nigeria” (LearnNigerianLaws.com, 24 August 2018) <application of the hire purchase act in Nigeria> accessed 14 January 2021.
11. Onyekachi Umah, “Requirements For Enforcement of Fundamental Human Rights” (LearnNigerianLaws.com, 3 November 2020) <https://sabilaw.org/requirements-for-enforcement-of-fundamental-human-rights/ > accessed 14 January 2021.
12. Onyekachi Umah, “Human Rights That Can Never Be Restricted Even In War, Pandemic or State of Emergency (Daily Law Tips [Tip 539]) <https://sabilaw.org/human-rights-that-can-never-be-restricted-even-in-war-pandemic-or-state-of-emergency-daily-law-tips-tip-539-by-onyekachi-umah-esq-llm-aciarbuk/> accessed 14 January 2021.
13. Onyekachi Umah, “Does The President/Governors Have Powers To Lockdown Any Part Of Nigeria Or Restrict Human Rights?” (Daily Law Tips [Tip 537]) <https://sabilaw.org/does-the-president-governors-have-powers-to-lockdown-any-part-of-nigeria-or-restrict-human-rights-daily-law-tips-tip-537-by-onyekachi-umah-esq-llm-aciarbuk/ > accessed 14 January 2021.
14. Onyekachi Umah, “When and How Can Government Prohibit Protest In Nigeria” (LearnNigerianLaws.com, 19 October 2020) <https://sabilaw.org/when-and-how-can-government-prohibit-protest-in-nigeria/ > accessed 14 January 2021.
15. Onyekachi Umah, “Human Rights That Can Never Be Restricted Even In War, Pandemic or State of Emergency (Daily Law Tips [Tip 539]) <https://sabilaw.org/human-rights-that-can-never-be-restricted-even-in-war-pandemic-or-state-of-emergency-daily-law-tips-tip-539-by-onyekachi-umah-esq-llm-aciarbuk/> accessed 14 January 2021.
16. Pic credit: all news

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