The Senate has explained the reason behind its move to amend Investment and Security Act (ISA) 2007 and enactment of Unclaimed Funds Bill 2018, saying there was so much benefit locked up in the sector, capable of boosting the economy.
Speaking on Tuesday at the Public hearing on the two Bills organised by the Senate Committee on Capital Market, President of the Senate, Dr Abubakar Bukola Saraki, said it had been found that as much as N104 billion was locked up as unclaimed dividends in the capital market.
Explaining why the amendment was necessary, he said with the right legislation this money would be unlocked for either the government to access it for national development or to widen the legal scope for the beneficiaries to be able to claim it.
Describing a proper functioning Capital Market as key to a viable economy, he said the laws governing the sector in Nigeria required periodic reviews.
He said: “To ensure greater efficiency and international competitiveness, there is always the need to empower the Securities and Exchange Commission (SEC) to deal with issues mitigating against the activities of the capital market.”
He further explained that some of the provisions of ISA 2007 were obsolete and that there was the need to get them updated in order to gain the confidence of investors.
Another reason behind the amendment, according to him, was to review the restrictions on the number of years a shareholder could claim his dividend as stipulated by Companies and Allied Matters Act (CAMA) 1999.
“S. 385 of CAMA provides a window of only 12 years after which a shareholder can no longer access the dividend warrant declared by the company. While the law is silent on what happens to these unclaimed dividends, S. 382 gives Public Liability Company (PLC)powers to utilize these funds without hindrance or permission of the shareholder.
“It is therefore, imperative that these impediments are eliminated to enhance investors’ confidence in the Nigerian Capital Market.”
He said the enactment of the Unclaimed Funds Bill, 2018 would make the idle funds available for national development.
Speaking earlier, Chairman, Senate Committee on Capital Market, Senator Mustapha Bukar, said world over capital market contributes to the economy of the country.
He said Nigeria was a country of more than a N100 trillion economy, saying what the country appropriate as a budget every year was just a fraction of the economy worth.
He said as a N16 trillion market, the capital market sector was too important to be overlooked.
He also said the it was important for the sector not to over rely on foreign investment so as to insulate it from global shock and give room for local growth.
He said: “When we invest in the market locally, confidence will be built and the foreign investors will come on their own.”