Listed firms seek amendment to dividend directive

The companies listed on the country's stock exchanges have requested the securities regulator to amend its recent directive on dividend distribution and management of the unclaimed dividends.

In a letter to the chairman of Bangladesh Securities and Exchange Commission (BSEC) on 8 February, the Bangladesh Association of Publicly Listed Companies (BAPLC) forwarded four recommendations by its member companies.

The commission in its 14 January directive ordered the listed companies to set aside the amount equivalent to the recommended cash dividends to a dedicated bank account within 10 days of the board meetings concerned.

Currently, the companies have to disburse the dividend within 30 days after shareholders approve the board-recommended dividends in annual general meetings (AGMs).

The BAPLC said that the recommended dividend is uncertain as shareholders might not approve boards' recommendations and even the amount might be changed in AGMs.

Also, there remains a gap of three months between the dividend recommendations in board meetings and AGMs.

If the money – dedicated for dividend payment – is set aside too early as per the BSEC directive, it might shrink the listed companies' working capital and adversely impact the companies' profitability.

"It would be a lose-lose situation for the companies and the investors if the sum is set aside three months earlier. No one would benefit from it and that is why the BAPLC seeks to relax the deadline," said Md Amzad Hossain, secretary general of the BAPLC. 

The BAPLC called for amending the deadline to set aside the sum for dividends and making it 10 days from AGMs, instead of 10 days from board meetings.

Currently, listed companies may take 30 days to disburse stock dividends after AGMs and the BSEC directive ordered them to take the clearance from stock exchanges and the Central Depository Bangladesh Limited (CDBL).

Obtaining the CDBL clearances before crediting stock dividends would be cumbersome and also unnecessary, said the BAPLC and they recommended expunging the obligation of the clearance.

The securities regulator said issuers must transfer all the unclaimed dividends after three years to a special fund planned by the BSEC and the regulator would ensure the sum is used to help the market stable.

The BSEC also said, any investor, the actual owner of the unclaimed dividend would be entitled to claim it any day and the special fund officials would refund it within 15 days.

The BAPLC recommended further clarification for the enactment of the provision.

It referred Indian context where the Companies Act allows the central government-established fund to take dividends unclaimed for seven years.

In Bangladesh, the Companies Act has no provision like this and before the enactment of the BSEC provision, a provision regarding this needs to be included in the Companies Act, opined the BAPLC.

The BSEC directive also said that issuer companies themselves or by any agent would have to maintain the database and details of their shareholders.

The BAPLC said it is mainly brokerage firms' task and when needed, listed companies can collect those from depository storage.