Worldwide, as is the case in Kenya, unclaimed financial assets are held by the government until owners claim them. They are in the form of shares, matured life policies, bank accounts, dividends, court refunds, and pension money among others.
A common misconception is that the government walks away with unclaimed assets. Others assume financial institutions holding “abandoned” wealth take them once they realise their owners are not claiming the haul.
In our case, the Unclaimed Financial Assets Act, 2011 provides for perpetual right to reunification — for owners and heirs. No one, not even the State, can take away that right to one’s property in the period of temporary separation.
In Kenya the Unclaimed Financial Assets Authority (Ufaa), a State organ, is mandated to receive escheated financial assets from holding institutions such as banks, insurance companies, telecoms firms, listed and unquoted entities among others. Upon receipt of such assets, the authority holds them in trust and eventually reunite rightful owners and beneficiaries with their ‘lost’ money.
So, the authority is not auctioning ‘abandoned’ and unclaimed shares after August 31, 2020.
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.
At present, reported unclaimed shares have remained in the hands of reporting institutions and share registrars. The Ufaa is now licensed as a non-trading Custodial Depository Agent (CDA).
Secondly, by virtue of volume and value — way above 802 million units — it has been found prudent to require owners and beneficiaries to take up as many shares as is possible prior to the planned consolidation. Residual shares will then be transferred into the custody of the authority’s CDA.
Only then can Ufaa, and in fulfilling the legal requirements spelt out in Section 26 of the Act will the shares be liquidated. And upon issuance of sufficient notices to owners and beneficiaries to redeem unclaimed shares in their present form.
The determination of financial assets as unclaimed presupposes that the records of the asset holder do not reflect the identity of the person entitled to the assets.
The unclaimed financial assets regime gives the primary responsibility of reunification to the holder. Only when the holder has tried, and failed, to pay or deliver the assets to the owner within prescribed time period, are such assets escheated to Ufaa. Owners of reported unclaimed financial assets have perpetual right to reunification.
Six years on, holders have surrendered Sh16.7 billion assets in cash and reported 802 million units of shares, 1,592 safe deposit boxes and assorted units trusts.
Consequently, the Ufaa has received claims of about Sh700 million and five million units of shares from about 10,000 claims. Out of these, about Sh450 million and more than four million units of shares have been reunited. We are raising reunification through public awareness campaigns.