BSEC mulls making BEFTN mandatory to pay cash dividends

The Bangladesh Securities and Exchange Commission (BSEC) is going to make Bangladesh Electronic Funds Transfer Network (BEFTN) mandatory for the listed companies to pay cash dividends to the shareholders.

The regulator has recently sent a letter to both the stock exchanges seeking their views in this regard and the final decision will come after receiving the feedback from the bourses.

Sources said the BSEC wants to impose more conditions on listed companies to send declared cash dividends. They are: making BEFTN mandatory for sending cash dividends, or sending investor's dividends to Bangladesh Bank approved any other online system.

For this, the dividend-related law will be amended.

Most of the companies use Bangladesh Electronic Funds Transfer Network (BEFTN). However, some companies are using BEFTN for 20 percent, some for 40 percent while some for 80 percent. The rest of the dividends are issued in cheques, most of which are returned to the company.

The BSEC wants to increase the use of BEFTN to 100 percent in the investors' interests.

Sources said for different reasons, shareholders often do not get dividends which companies declared for them at the end of the year. The first of the reasons is the address that the Beneficiary Owners mentioned during opening the account, maybe they do not live in that address now. 

The second, if someone dies or is abroad after investing in the stock market, they do not receive the dividends declared by the company.

Third, someone may have received so little dividend that it is not viable to go to the company to collect the money.

During investigation, it was found that the amount of unclaimed dividend in most of the companies is equal to the capital raised by some companies using the book building method.

The Olympic Industries Ltd has been paying dividends to investors since 1988. Its unclaimed dividend stands at 20.57 crore, according to the latest financial report of the company.

Padma Oil, Jamuna Oil and Meghna Petroleum, three state-owned oil companies, have an unclaimed dividend of around Tk27 crore, according to the companies' annual statements since 2006. The Power Grid Company of Bangladesh has an unclaimed dividend of around Tk3 crore.

British American Tobacco Bangladesh Company Ltd has an unclaimed dividend of around Tk5 crore.

If the companies send the dividend to the investors through BEFTN or the approved online systems of Bangladesh Bank; then the amount of unclaimed dividend will not increase further, sources said. 

Manjurul Islam of the capital's Uttara area invested in the stock market through a brokerage house in Motijheel. He will get Tk22,000 as dividend in one of the listed companies. The company has issued a cheque, but he has yet to receive it from the courier.

He also claimed now the company's share division is not cooperating.

Another investor, on condition of anonymity, narrated the same experience.   

He also said investors would benefit if BEFTN was made mandatory to pay dividends.

The bonus dividends declared by the companies are sent to the Beneficiary Owners Account of the investors while margin borrowers' cash dividends are sent to brokerage houses rather than to the investor's bank.