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Chuks Udo Okonta
The National Insurance Commission (NAICOM) has reaffirmed conditions that should precede payment of dividends to shareholders.
NAICOM in a document obtained by Inspenonline stated that any dividend distribution shall be subject to submission of prior written application by the insurer and approval of the Commission.
It noted that all dividend payments shall be made from distributable profits, adding that an insurer shall not distribute or pay any dividend to its shareholders if: It fails to comply with Section 24 and 25 of the Insurance Act, 2003; or the payment or distribution would result in it failing or being likely to fail to comply with Section 24 and 25 of the Insurance Act 2003; or it fails to satisfy any other prudential requirements.
Non-payment of dividends by some insurance firms has remained a battle shareholders have continued to fight. They often express anger over poor return on their investments in low performing insurance companies.
According to the shareholders, the most worrisome part is the usage of what would have amounted to the dividend being used for settlement of unnecessary fines.
Worried about their losses, they even threatened to commenced the recovery necessary fine by some insurance companies from their management team.
The Coordinator Emeritus, Independent Shareholders Association of Nigeria (ISAN) Sir. Sunny Nwosu, at an insurance firm Annual General Meeting (AGM) implored underwriters to work assiduously to avoid paying careless fines.
According to him, owing to the harsh economic situation in the country, it would be inappropriate for companies to pay fines due to carelessness, stressing that it is worrisome that at a time where shareholders are denied dividends, some companies pay huge sum of money as fine over things they have capacity to manage.
He noted that shareholders as owners of companies have rights to invoke the recovery of unnecessary fines from management who failed to do what is expected.
Sir. Nwosu noted that regulators have in recent time demanded that shareholders take keen interest in the management of their funds without necessarily interfering with day-to-day management of the firms.
He maintained that shareholders would not fold their hands and allow few individuals to mismanage their hard earned funds, adding that shareholders invested in companies to earn return on investment and would not allow their funds be used to pay for individuals carelessness.
One of the insurance sector regulators had a few years ago imposed $4 million on some insurance companies for non-compliance with operational rules and guidelines.
Speaking on the fine, the regulator said: “As regards breach of operational guidelines, there are some companies that will pay as much as over $4 million dollars in penalties. There are no kid gloves anywhere anymore. If you default, we will give you ample opportunity to come and defend yourself. We will open it up for discussion but eventually if you are found to have defaulted, you will have to pay a price because adequate warnings have been given.”