A row has erupted between the Unclaimed Financial Assets Authority (UFAA) and the Central Depository and Settlement Corporation (CDSC) over the cost of moving more than two billion abandoned shares, worth about Sh95 billion, into the custody of the state agency.

UFAA chief executive Laban Molonko told the National Assembly's Finance and National Planning Committee that the depository charges about Sh200 to transfer each share unit, which would put the bill for moving some 2.03 billion idle shares at roughly Sh400 billion, more than four times the value of the shares themselves, Business Daily reported.

"These shares are being held by various institutions including registrars. We do not have control of those shares," Molonko told MPs. "We want to bring these shares from wherever they are held."

CDSC: we charge per account

The CDSC has rejected the claim. In a statement responding to the report, the depository said its fees are set under the Central Depositories rules and that the transfer charge is Sh200 per account, regardless of how many shares the account holds.

  • "The transfer fee is charged per account, not per share," the CDSC said, according to Business Today.
  • The depository says transfers to UFAA are ongoing, with more than 16 million shares moved into the authority's custody so far.
  • Reconciliation and transfers are done monthly, and CDSC staff are deployed to UFAA clinics around the country to help owners reclaim their shares.

The dispute matters because the per-account interpretation would cut the cost of the exercise from hundreds of billions to a fraction of that, depending on how many dormant accounts hold the idle shares.

Why UFAA wants the shares

UFAA was appointed a custodial depository agent more than a decade ago, but says it still relies on stockbrokers, registrars and investment banks to reunite shares with their owners, leaving it without control over the assets. Under the law, shares are deemed abandoned when owners fail to take part in corporate actions such as meetings, dividends or stock splits for at least three years, or when the issuer cannot trace them.

Holding the shares directly would let the authority collect dividends, attend shareholder meetings and even seek board seats in firms where its stake is large enough. Business Daily reported that the authority had considered a pilot transfer of 400,000 units at a cost of about Sh80 million, and that it is in talks with the Nairobi Securities Exchange and the stockbrokers' association, both shareholders in CDSC, to bring down costs.

Billions waiting for owners

Unclaimed assets often pile up when people die without telling their families about their investments, or when inheritance disputes block claims. They also include bank accounts dormant for more than five years, uncashed banker's cheques and safe deposit box contents left unclaimed for over two years.

Kenyans who suspect a deceased relative held shares or other assets can search the UFAA database and lodge claims, a process that requires proof of ownership or, for beneficiaries, a valid will or letters of administration.

Photos: Nation Media Group via Business Daily (Francis Nderitu; file). Thumbnail design: HAMASTA MEDIA.