State starts takeover of idle Sh26bn shares

An investor at the Nairobi Securities Exchange trading floor. The Unclaimed Financial Assets Authority (UFAA) say the idle shares will be transferred from companies and private share registers to a single account owned by the agency. FILE PHOTO | NMG 

By JAMES KARIUKI
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Summary

• The Unclaimed Financial Assets Authority (UFAA) say the idle shares will be transferred from companies and private share registers to a single account owned by the agency after it got licensed as a non-trading Custodial Depository Agent (CDA).
• The shares targeted for transfer to the CDA account are those whose owners have failed to participate in corporate actions for at least three years.
• The UFAA reckons it is struggling to re-unite the cash with their rightful owners or beneficiaries.

Treasury will from Tuesday start the process of taking over unclaimed shares worth Sh26 billion, allowing the State to directly earn dividends from the stocks.

The Unclaimed Financial Assets Authority (UFAA) say the idle shares will be transferred from companies and private share registers to a single account owned by the agency after it got licensed as a non-trading Custodial Depository Agent (CDA).

The authority had given owners of the over 800 million shares up to end of August to claim ownership of the stocks.

Many Kenyans, said the authority, including billionaire businessmen, former powerful government officials and prominent politicians remain disinterested in pursuing funds legally belonging to them or their families.

Now, UFAA will receive dividends, participate in shareholder meetings and get a grounds to push for board seats if idle shares from a single firms are substantial to allow for directorship position.

“Presently, reported unclaimed shares have remained in the hands of reporting institutions and share registrars,” said UFAA chief executive John Mwangi.

“This was necessitated by the need by the Authority to put in place infrastructures to hold unclaimed shares in one basket. UFAA is now licensed as a non-trading Custodial Depository Agent (CDA).”

The agency reckon it will have the right to sell shares that have been transferred to the CDA account.

“Whereas the law provides for sale of such assets at prevailing market rate, it also dictates the process to actualise the sale. The law requires that the authority first assume title to the reported unclaimed shares,” Mr Mwangi said.

The shares targeted for transfer to the CDA account are those whose owners have failed to participate in corporate actions for at least three years.

The actions include attending annual shareholder meetings, collection of dividends or taking up additional shares during stock splits.

The unclaimed shares stood at 132.1 million, worth Sh9.36 billion, in 2016.

The law requires the holding company to search for the rightful owners of an asset before declaring it unclaimed and forwarding it to the UFAA.

Most of the unclaimed assets are attributed to failure by the deceased to inform the beneficiaries of the assets besides the absence of a will.

The UFAA reckons it is struggling to re-unite the cash with their rightful owners or beneficiaries, claiming some are being turned off by the worth of assets under Treasury’s custody.

The inheritance fights have denied beneficiaries a valid will or letters of administration required to gain authority over the assets.

A Business Daily review of the authority’s public database found a long list of prominent Kenyans whose funds have helped swell the fund.

Top among them are former Vice-President Kalonzo Musyoka, Bungoma Senator Moses Wetang’ula, past Cabinet minister Simeon Nyachae, longtime intelligence chief James Kanyotu, politician JM Kariuki and former Cabinet minister Mbiyu Koinange.