KCB puts shareholders on notice over dividends

The Kenya Commercial Bank (KCB) has notified its shareholders that it will submit unclaimed dividends that have been outstanding for more than three years to the government.

The bank is to hand over the dividends — estimated at millions of shillings — in November, which is the first compliance date for surrender of unclaimed assets to the Unclaimed Financial Assets Authority.

Unclaimed assets held by banks, listed companies, pension funds, insurers, stockbrokers and other institutions are estimated to have soared to Sh200 billion, prompting the enactment of the Unclaimed Financial Assets Act that seeks to provide a legal framework to handle the cash.

“The Act requires the bank to surrender to the government all unclaimed dividends which have been outstanding for more than three years by November 2012,” says the note to shareholders sent by KCB company secretary.

“Shareholders who will not have claimed their dividends before the deadline will have to pursue payment of the same from the Unclaimed Financial Assets Authority established by the government to hold unclaimed assets.”

The Minister of Finance is, however, yet to appoint a board that will have the role of hiring the authority’s management team since the law became effective in December last year.

KCB’s notice follows that issued by Barclays Bank of Kenya to its shareholders during its annual general meeting.

KCB financials do not reveal the actual figure of unclaimed dividends. As at end of 2011, Barclays Bank was holding Sh573 million, Centum Investment had Sh34 million, NBK had 21 million and Bamburi Cement had Sh29 million in unclaimed dividends underlining the magnitude of the issue.

Creation of the authority is meant to safeguard assets of the claimants, and also provide funds for financing social projects since the authority will have the mandate to invest the accumulated funds.

Some companies have been writing back unclaimed assets as retained earnings in their books, and may be required to review their articles of association to comply with the new law.

In 2011, Diamond Trust Bank wrote back Sh21.3 million from unclaimed dividends.

Investment company Centum wrote back Sh6.2 million in the same year.

“The Act supersedes all previous legislation on unclaimed assets therefore such companies may be forced to review,” said Joe Ngigi, the CEO of Unclaimed Property Assets Register, a private company.

The accumulation of unclaimed wealth has been attributed to widespread fears of writing a will, which is viewed as a taboo subject in African culture.

Retail investors also often fail to collect small dividend payments.