SEC Halts ‘Statute-Barred’ Label on 12-Year-Old Dividends

The Securities and Exchange Commission (SEC) has directed all publicly listed companies and their registrars to stop labelling dividends older than 12 years as “statute-barred.”

The directive, issued on Tuesday, clarifies the proper treatment of dividends declared before the enactment of the Finance Act 2020. It reinforces the stipulations found in Section 60 of the Act, which provides guidelines for managing unclaimed dividends.

Under the Act, dividends that remain unclaimed for more than six years must be moved into the Unclaimed Funds Trust Fund (UFTF), where they will remain accessible to shareholders who may eventually come forward to claim them.

SEC Director-General Mr. Emomotimi Agama stated that shareholders still retain the right to claim any dividends that are not older than 12 years as of 31 December 2020.

Agama pointed out that some companies and registrars had been incorrectly categorising such dividends as no longer valid, contrary to the provisions of the Finance Act. “In response to ongoing inquiries, the Commission wishes to clarify the proper interpretation and handling of such unclaimed dividends,” he said.

He stressed that funds transferred to the UFTF must remain there in trust, ensuring that rightful owners can recover them at any time.

Until the UFTF becomes fully functional, the SEC has instructed companies and their registrars to continue honouring all legitimate dividend claims dated from 31 December 2020 onward.

Agama also emphasised the need for strict adherence, stating that affected entities must comply with this directive without delay and ensure timely reporting in line with the Commission’s existing regulations.