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Shareholders Contemplate Court Action to Stop Unclaimed Dividends Fund

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Securities and Exchange Commission (SEC)

Determined to stop the Securities and Exchange Commission (SEC) from moving unclaimed dividends of 12 years to the proposed Nigerian Capital Market Development Fund (NCMDF), some shareholders are planning a court action.

The capital market apex regulator is planning to establish the NCMDF for dividends that have been unclaimed for 12 years and above. The Companies and Allied Matters Act (CAMA) provides that unclaimed dividends for 12 years are statute barred and are returned to the companies that paid the dividends.

However, SEC has proposed a new rule on application of 12 years and above unclaimed dividends.

“All companies and registrars shall not later than 30 days after the end of every calendar year forward to the Commission a report of unclaimed dividends in their custody, which shall specify compliance with Sub Rule (1) of this Rule. Companies shall disclose details of compliance with this Rule in their annual reports,” SEC said in the rule.

According to the commission in proposing the rule, it relied on provisions of Section 313(1)(n) of the Investments and Securities Act (ISA) 2007, which gives it powers to make rules for the orderly governance of the capital market.

Although some shareholders have kicked against the rule, investigations showed that the shareholders will resort to legal action should SEC decide to go ahead with the establishment of the NCMDF.

“We have been impressed with other recent efforts made by SEC to tackle the issue of unclaimed dividends in the market. But this new plan is not acceptable to us. We have registered our feelings with the commission. But if it goes ahead with the plan, we shall stop it in the law court,” the leader of shareholders’ said on Monday.

According to him, this is an unpopular move that has failed in the past, stressing that it will fail again.

The National Coordinator, Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, had already said his group would resist the plan, which he described as “very offensive” attempt to take their private monies.

He said SEC and other regulators have sufficient funds and avenues to mobilise resources to perform their statutory roles of market development, noting that dividends belong to shareholders and the paying companies.

Also, co-founder of Nigeria Shareholders Solidarity Association (NSSA), Alhaji Gbadebo Olatokunbo, said the plan would lead to corruption and discourage investors from the domestic market.

“Unclaimed dividends belong to shareholders who are the owners of companies and their going back to the companies after 12 years is legitimate. We respectfully call on the federal government to urgently call the regulatory agencies to order, before they add more damage to our already sick economy,” Olatokunbo said.

However, President, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr. Faruk Umar, hailed the plan, saying it is a healthy development that would discourage sharp practices around the unclaimed dividends.

“The truth of the matter is that bulk of the unclaimed dividend that is more than 12 years belongs to people who are dead, multiple applicants who do not have bank account in their names, or small amounts of money that is not worth claiming. Someone that has not claimed his or her dividend in 12 years is unlikely to do so now. So, the Trust Fund should be established as this will discourage people from benefitting from the unclaimed dividend,” Umar said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Markets

Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd

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Oil

The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.

The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.

The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.

The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.

Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.

The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.

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Markets

Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins

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Oil Prices Recover from 4 Percent Decline as Joe Biden Wins

Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.

This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.

Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.

On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.

Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.

“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”

The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.

There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.

“Either you’re crimping energy demand or consumption behavior.”

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Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020

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oil-rig

Revenue of OPEC Members to Drop to 18 Year Low in 2020

The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.

EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.

If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.

The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.

It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.

It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.

“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”

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