Now BSEC limits SMEs' stock dividends

The Bangladesh Securities and Exchange Commission (BSEC) has now imposed restrictions on stock dividends given by securities listed on boards other than the main market of the Dhaka and Chattogram stock exchanges.

Last year, the restrictions were only for the firms listed on the main market.

From now on, listed companies on the small medium-sized enterprises (SME) platform, Over-the-Counter (OTC), and Alternative Trading Board (ATB) will have to secure approval from the commission before issuing any stock dividend.

Also, business expansion, regulatory requirements to raise capital and profitable investment shall be the only purposes for declaring stock dividends.

On 6 November, the BSEC published a gazette imposing the restrictions on declaring stock dividends and said companies must receive the regulator's approval if they want to issue stock dividends in the first three years following their listing.

The regulatory approval will also be mandatory for companies seeking to issue stock dividends in the first three years of listing or raising capital through qualified investors' offers, direct listings, right shares or repeat public offers (RPOs).

Companies failing to pay out at least 10% cash dividends for two consecutive years will also need the regulator's approval to issue stock dividends.

In September 2021, the Dhaka Stock Exchange (DSE) introduced the SME platform where at present shares of more than a dozen firms are being traded.