Banks, insurance firms and listed companies have until this Friday to prepare reports of unclaimed cash that is in their possession whose owners cannot be traced.
The funds, which are estimated at more than Sh200 billion, will then be surrendered to the Unclaimed Financial Assets Authority (UFAA) which will hold them in trust for the claimants.
Chairman of the newly created authority, Vincent Kimosop, told the Business Daily in an interview yesterday that even though the law requires the financial institutions to hand over the unclaimed cash, they may be allowed to hold the funds for a short duration until the State agency is operational, but they must all prepare the report in the next four days.
“The institutions will have to fill a report on what they have, the only difference is we will give them mandate to continue holding them on behalf of the authority as we are yet to be operational,” said Mr Kimosop.
This will be the second time that the country will miss the deadline on collection of the idle financial assets since the law came into effect in 2011. A delay last year to meet the deadline was caused by the failure of the then Finance minister Njeru Githae to appoint a board.
“The report shall be filed on or before the first day of November of each year for the 12-month period ending on the immediately preceding thirtieth day of June,” reads the Unclaimed Financial Assets Act, which is now operational.
The agency is soon expected to issue a gazette notice with the timelines of when to hand over the assets to it. Regulations that will effect the Act, which was passed two years ago, are yet to be published but a draft was released last week for discussion by the stakeholders.
Assets that fall under the unclaimed assets category include cash accounts which have been dormant for over five years, bankers cheques not cashed in for two years and contents in safe deposit boxes that have been unclaimed for more than two years.
Other assets include matured life insurance policies unclaimed for more than two years and shares whose dividend has gone for more than three years without being collected.
The authority will be the central custodian of all the unclaimed assets and will put them in active use in the economy before a claim is made on any of them. Money held by the authority will be invested in government debt instruments such as bonds to help finance major public projects such as the building of roads, dams, power generation and airports.
As per the regulations commercial banks will be required to break the safe deposit boxes in the presence of an official from the authority and a fiduciary agent who will value the contents of the box.
The banking industry has sought to have the regulations specify that the agent will be a licensed valuer and the definition of the safe deposit boxes expanded to include lockers and parcels. Institutions will have to disclose to the authority income made from the use of the unclaimed assets in their holding together with whether interest or dividend payment was discontinued on the asset at any time.
Banks are said to be lobbying to have the authority bank with them with the expectation that such an account would help boost their deposits base.
The authority was, however, noncommittal on whether it will have other lenders submit their unclaimed assets to a bank selected by it or they would hold accounts in all the banks. It is estimated that 56 per cent of the unclaimed assets are held by banks.
More than half of the 61 listed companies have notified their shareholders of intention to hand over the unclaimed assets to the authority through media notices and have changed their articles of associations to give them mandate to do so.