People walking in and out the National Social Security Fund offices in Nairobi. Pension funds, commercial banks and insurance firms are some of the institutions that hold billions in unclaimed assets. PHOTO | FILE
What you need to know:
Companies are required to surrender unclaimed assets held in their books to the authority every November.
Kenya will be the first country to set up an authority managing unclaimed assets in Africa and has to borrow from the experience of European and American markets.
The authority is pushing to have unclaimed assets held by companies disclosed in financial reports to ease tracking.
Unclaimed Financial Assets Authority (UFAA) has confirmed receiving Sh300 million from the Kenya National Assurance Company as its first collection but says will start handling other idle cash in November.
The authority said it did not collect financial assets estimated at over Sh50 billion last year as it lacked administrative structures. It is currently in the process of recruiting a chief executive and other top managers.
“The authority is prepared so come November 1, companies have to comply as the authority is ready,” chairman Vincent Kimosop said.
The cash is at the Central Bank where UFAA opened a trust fund.
Banks have been involved in vicious battles to host the authority’s account in the hope of utilising the cheap long-term deposits to grow business. The insurer was put under receivership in 1996 after mismanagement.
Companies are required to surrender unclaimed assets held in their books to the authority every November. The authority is mandated to look for the owners of the assets or heirs with claim to the wealth.
It can however invest the wealth in various vehicles and the government has been eyeing the fund to access cheap debt. In other countries the assets have been used to fund infrastructure development, bursary programmes and health centres.
Kenya will be the first country to set up an authority managing unclaimed assets in Africa and has to borrow from the experience of European and American markets.
Such assets include cash accounts that have been dormant for over five years, bankers cheques not cashed for two years and contents in safe deposit boxes unclaimed for more than two years.
Other assets include matured life insurance policies unclaimed for more than two years and shares whose dividend has not been collected for more than three years.
The authority is pushing to have unclaimed assets held by companies disclosed in financial reports to ease tracking. Currently listed companies have been disclosing unclaimed dividends but other assets remain undisclosed.
Since last year companies have been notifying shareholders of intention to hand over the unclaimed assets through media notices indicating preparedness to hand over the wealth. Companies have also been changing their articles of associating to give them mandate to hand over the wealth.
Dormant accounts and other idle assets have been major targets of fraudsters with perpetrators hoping no one would file a claim.
It is estimated that 56 per cent of the unclaimed assets are held by banks and it remains to be seen what impact the submission of the assets will have on the sector.
