The Securities and Exchange Commission (SEC) has issued a significant directive to all public companies and their registrars, instructing them to cease the practice of treating unclaimed dividends older than 12 years as "statute-barred." This instruction is particularly emphasized for dividends that date from before the enactment of the Finance Act 2020.

This directive from the SEC serves to reaffirm and enforce the provisions outlined in Section 60 of the Finance Act 2020. According to this section, any dividends that have been declared by a public company quoted on the Nigerian Exchange Limited and have remained unclaimed for a period of six years or more are mandated to be transferred to the Unclaimed Funds Trust Fund (UFTF).

Once these unclaimed dividends are transferred to the UFTF, they are to be held in trust and managed by the fund. Importantly, these dividends remain accessible to shareholders who may subsequently present a valid claim for them. The SEC has further clarified that shareholders are entitled to continue to claim their dividends that were not statute-barred (meaning, not older than 12 years) as of December 31, 2020, which is the date the Finance Act 2020 came into effect.

The Commission explained that this clarification, disseminated via a circular, was necessary because it had observed that paying companies and their registrars were continuing to treat unclaimed dividends of public companies older than 12 years as "statute-barred," without giving due recourse to the superseding provisions of the Finance Act 2020.

Furthermore, the SEC has provided guidance for the interim period. Pending the full establishment and operationalization of the Unclaimed Funds Trust Fund by the Federal Government, the Commission, exercising its powers under the Investments and Securities Act, directs all public companies and their registrars to continue to honour all legitimate requests from shareholders for the payment of unclaimed dividends as described. This interim measure is effective from December 31, 2020.

In conclusion, the Securities and Exchange Commission has mandated immediate compliance with this directive from all public companies and registrars. They are also required to submit periodic reports detailing their compliance efforts in the manner prescribed and stipulated in the Commission’s existing rules and regulations.