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The Bangladesh Securities and Exchange Commission (BSEC) has decided that it will take action against listed companies that fail to show an accurate account of undistributed dividends.
Undistributed dividends are profits of a company that have not been paid out to eligible shareholders by way of dividends.
Prof Shibli Rubayat Ul Islam, chairman of the BSEC, warned listed firms of this decision at an event styled “Birthday Celebration of the Father of the Nation and Shareholders’ Claim Settlement”, organised by the Capital Market Stabilisation Fund (CMSF) at Hotel Purbani International in Dhaka yesterday.
Some investors filed applications for their dividends after the BSEC started using undistributed profits to support the domestic stock market.
“So, it is a great pleasure for the regulator that the investors are getting the money after a long time,” Islam said.
“With this, general investors have regained the confidence that there is a regulator which is working for their rights,” he added.
As such, the BSEC asked all listed companies to give a detailed account of their undistributed dividends, but some of them are repeatedly seeking more time to do so.
However, the commission will go strict in this regard after March 31 as listed firms were already given a considerable amount of time to submit the data.
“If any company fails to give a proper account or inform where their unclaimed funds are, we will levy a penalty that surpasses the amount of dividends owed,” Islam said.The BSEC chairman went on to say that the amount of undistributed profits accumulated by firms since their trading debut, and whether it is being used illegally needs to be sought out.
“No one has the right to establish their own building with the money,” he added.
The BSEC decided in June last year to use undistributed and unclaimed dividends of listed companies in the CMSF, which aims to safeguard the interests of investors in the stock market.
After that, it ordered all listed companies, including banks and non-bank financial institutions (NBFIs), to submit their undistributed dividends to the fund.
The BSEC was later informed by Bangladesh Bank that listed banks and NBFIs cannot comply with the order.
The CMSF recently played a vital role when the market index was in a falling trend, Islam said.
The BSEC had ordered the CMSF authorities to invest Tk 100 crore in the stock market at a time when the DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), dropped 6,447 points to reach its lowest level in several months.
After the order came, the index started inching upwards to close at 6,765 points as of yesterday, DSE data shows.
“The BSEC observed that investors are not getting their dues properly so the stock market stabilisation fund was formed to help return peoples’ money,” said Shaikh Shamsuddin Ahmed, a commissioner of the BSEC.
“The CMSF is already working to utilise the fund in the stock market or return it to investors, which are both welcome tasks,” he added.
The way the CMSF is being managed proves that the BSEC’s decision to form the fund was correct and investor friendly.
“With its work for market support and returning dividends to the investors, people will get the confidence back. Confidence is necessary for sustainability in the market,” Ahmed said.
Md Nojibur Rahman, chairman of the CMSF, focused on the utilisation of the fund in recent times.
“Some of the fund has been invested in the stock market while some has been returned to investors who claimed them,” he said, adding that the CMSF has already settled 18 claims.
Azam J Chowdhury, the immediate past president of the Bangladesh Association of Publicly Listed Companies, and Md Monowar Hossain, chief of operation of the CMSF, also spoke at the event.
(TDS)
