Companies who are expected to pay dividends to their shareholders are being cautioned against flouting Sections 73 and 74 of the new Companies Act, Act 992.
According to the Act, all unclaimed dividends are to be handled in a standardized manner which will ensure the dividends are kept for a period of up to 8 years in interest bearing accounts by the companies in question as well as the Registrar of Companies, after which period the dividends cease to belong to the shareholders.
Prior to the coming into force of the Act, affected institutions including banks and other limited liability companies handled unclaimed dividends in varied ways.
Nana Otuo Acheampong is a banking consultant, and he warns of punitive measures for institutions that fail to abide by the provisions.
“The Registrar of Companies is the one who will ensure that when the returns are made, if there are any unclaimed dividends, you have to follow Sections 73 and 74 of Act 992 and you have to comply. Because if you don’t, they would have their penalties to impose which are very stringent.”
On the way forward, Nana Otuo Acheampong advocated for improved education for the general public on the subject matter of unclaimed dividends and ways to recover them.
“The public needs to be aware of this. Because sometimes people inadvertently become victim to unclaimed dividend because sometimes, the address they used while buying the shares may have changed without the company being notified. Just as banks update their KYC, there is a request that companies update their shareholders records along with the electronic sharing of share certificates among other measures are important.”
Below are details of Section 73 and Section 74 of Act 992
- (1) Where any dividend declared by a company cannot be paid by reason of the dividends being unclaimed by the member entitled to the dividend and remains unclaimed for a period of three months, the company shall forthwith
(a) open an interest bearing unclaimed dividend account, and
(b) credit to that account the total amount of the unclaimed dividend of its shareholders unless that account has already been opened.
(2) Where payment of the dividend cannot be made or is not claimed within a further period of twelve months after the transfer made under paragraph (b) of subsection (1), the company shall pay to the Registrar the total amount of the unclaimed dividend plus interest accrued on the amount.
(3) The Registrar shall pay into the account under subsection (4)
(a) the amount received under subsection (2), and
(b) the amount received under subsection (3) of section 74.
(4) The Registrar shall with the approval of the Board open an interest bearing bank account for the safe keeping of moneys received from any company under subsection (2).
(5) The Registrar is responsible for the moneys lodged and disbursed from the interest bearing account.
(6) The company shall on the date of the payment under subsection
(2), notify the respective shareholder or the estate of the shareholder at the last address known to the company of the payment made in respect of the dividend.
(7) The shareholder or the estate of the shareholder shall on providing satisfactory evidence, be entitled to make a claim for the dividend and any accrued interest during the period that the (a) company had possession of the dividend under subsection (l); and
(b) Registrar had possession of the dividend under subsection (3).
(8) The Registrar shall publish annually in the Companies Bulletin and in a daily newspaper of national circulation, details of shareholders whose dividends have been transferred to the Registrar for safe keeping.
Management by Registrar of unclaimed dividends account section 74
- (1) The Registrar shall keep unclaimed dividends lodged in the account under subsection (4) of section 73 for, seven years.
(2) The Registrar shall on the expiration of the seven year period referred to in subsection (1)
(a) transfer to the Consolidated Fund fifty percent of the total amount of money lodged in the interest bearing account under subsection (4) of section 73, and
(b) donate or apply fifty percent of the total amount of money lodged in the interest bearing account under subsection (4) of section 73, for the purpose of investor education, research, entrepreneurial development and advancement in company law.
(3) Where a company on the commencement of this Act has in the possession of the company unclaimed dividends, the company shall immediately transfer the total amount of the dividends to the Registrar to be applied in accordance with subsections (1) and (2).