Three firms fined for late dividend payment

The Dhaka Stock Exchange (DSE) has slapped fines on SS Steel Ltd, Oimex Electrodes Ltd, and Information Services Network Ltd because they failed to disburse the dividends declared for the fiscal 2021-22 in due time.

According to the listing regulations, a company must complete the distribution of its declared dividends within 30 working days from the date of annual general meeting (AGM). Failure to do so would result in a penalty of Tk5,000 for each day of default.

Therefore, as per rules and also the directives by the Bangladesh Securities and Exchange Commission on 14 January 2021, the premier bourse has imposed fines on the companies.

The fine amounts are Tk1.15 lakh for SS Steel, Tk1.45 lakh for Oimex Electrodes, and Tk1.75 lakh for Information Services Network.

Along with the payment of penalty, in separate letters to these companies, the DSE sought a clarification from them about the aforesaid non-compliances of securities laws.

Why the delay

Officials at the companies blamed complexities of Bangladesh Electronic Funds Transfer Network (BEFTN), technical glitches, and delay by the banks to deposit the amounts in shareholder accounts for the late payment of dividends.

They said in some cases, payments bounced back because of incorrect BEFTN. But after resolving the issues, the dividends were finally credited to the shareholders' accounts.

Md Mostafizur Rahman, company secretary at SS Steel, said the company disbursed all the dividends to the entitled shareholder accounts through BEFTN, but many of those accounts were not up to date for receiving the dividends.

This is why, payment of 80% of the dividends got delayed, he added.

Oimex Electrode Company Secretary SM Rejwan Rizvi cited similar problems behind the company's delay of dividend disbursement.

"The company accomplished the disbursement of 95% of the announced dividends. The undisbursed portion would be distributed through dividend warrant papers that will be sent to the shareholders' mailing addresses," Rizvi added.

The disbursement timelines

SS Steel, which got listed on the stock market in 2019, declared a 1% cash dividend only for its general shareholders for FY22.

The declared dividend was approved in its AGM held on 30 March this year. According to rules, the dividend was supposed to be disbursed within 29 April. But in a letter to the DSE, the company said it completed the dividend disbursement on 22 May.

Oimex Electrodes, owned by the SS Steel entrepreneurs, declared a 10% dividend – 2% only for general shareholders and 8% stock – for FY22.

The declared dividends were approved in an AGM held on 30 March, and were supposed to be disbursed within 29 April. But the company completed the disbursement a month later.

Lastly, Information Services Network declared a 3% cash dividend for FY22 which was approved in an AGM on 6 February. The dividend was supposed to be disbursed by 8 March, but the company submitted the dividend compliance report to the DSE on 12 April.