Kenyans have failed to claim Sh67.16 billion worth of shares of 47 companies that are listed on the Nairobi Securities Exchange (NSE), highlighting the difficulties that the State faces in reuniting the assets with their rightful owners.
Data from the Unclaimed Financial Assets Authority (UFAA) shows that Safaricom tops the list in both number and value of shares, with 705.46 million units worth Sh20.28 billion unclaimed at the end of September this year.
KCB Group and East African Breweries Plc (EABL) are second and third with Sh11.16 billion (190.1 million shares) and Sh5.54 billion (25 million shares) unclaimed respectively. The value of the shares are based on market prices at the close of trading on the Nairobi bourse on Friday last week.
Shares are deemed to have been abandoned if the owner has not claimed dividends or other distribution they are entitled to and the company remains unaware of the owner’s whereabouts for more than three years.
UFAA has for years struggled to reunite unclaimed assets with their rightful owners as Kenyans shy away, mainly due to a lengthy verification process, low value assets and costly expenses like travel to file the physical documents.
The 47 listed firms had a total of 1.85 billion unclaimed shares as at September this year.
UFAA said it had attained a reunification rate of under five percent, a performance that was recently flagged by the Auditor-General.
The unclaimed shares include Sh3.45 billion worth of 150.6 million units of Co-operative Bank of Kenya, 26.72 million units of Diamond Trust Bank worth Sh2.95 billion and Sh2.74 billion worth of 32.9 million units of NCBA Group.
Other firms with unclaimed shares with a total value of over Sh1 billion are Absa Bank Kenya with units valued at Sh2.4 billion, Jubilee Holdings with Sh1.85 billion worth of units and BAT Kenya with Sh1.82 billion worth of units.
UFAA has since adopted measures to boost the reunification efforts such as decentralising services to Huduma centres, publishing names of potential claimants in national newspapers and proposed amendments to the law to make the process cheaper.
The authority has cited low staff numbers handling operations countrywide, low awareness levels among beneficiaries as other impediments derailing the reunification efforts.
The Unclaimed Assets Act of 2011 requires that most assets that remain unclaimed for up to five years be relinquished to UFAA.
Besides shares, other assets that firms are required to forfeit to UFAA upon expiry of five years are dormant bank accounts, deposits from collapsed financial institutions, uncollected money in betting wallets, death benefits and annuities from insurance companies.
Most assets are declared unclaimed in case the owner of the particular asset dies, when there is no communication between the owner of the asset and the holder beyond the maximum dormancy period of five years.
Cheques and life insurance policies are some of the assets deemed to be abandoned if they are not cashed in within two years.
UFAA is allowed by the law to invest unclaimed assets in government securities and use a portion of the income to fund its operations, both subject to approval by the Treasury Cabinet Secretary.
But the authority does not operate an account at the Central Depository and Settlement Corporation (CDSC), denying it powers to receive and manage non-cash assets like shares. A CDSC account is critical in facilitating the transfer of unclaimed shares, posing the risk of loss and devaluation.
Inability to manage the unclaimed shares has left UFAA with a conundrum over how to maintain their value. This is because of the high fluctuation rates of the share prices at the bourse.
For example, shares of listed firms could be relinquished to UFAA with a market value of Sh20 each but this could drop to Sh15 by the time the rightful beneficiaries are lodging claims.
“The Authority [UFAA], through The National Treasury, should develop a framework for the receipt and management of unclaimed non-cash assets from holders, for subsequent safeguarding and reunification,” the Auditor-General Nancy Gathungu said in a report on the agency’s finances.
BAT shares are the most valuable of all the unclaimed shares with a unit price of Sh431 behind those of Limuru Tea where a single share is priced at Sh460.
The least valuable of the unclaimed shares are those of Mumias Sugar, each priced at Sh0.27, followed by Uchumi Supermarket at Sh1.08 and Eveready East Africa at Sh1.31 each.
The three were once dominant in the 1990s and early 2000 but have since collapsed amid stiff market competition and mismanagement.
