Undistributed dividends for CMSF: BSEC to penalise transfer failures from June 1

The Bangladesh Securities and Exchange Commission (BSEC) will start taking punitive measures from June 1 against entities yet to transfer undistributed cash and stock dividends to a Capital Market Stabilisation Fund (CMSF) despite repeated time extensions to do so. 

Most listed companies, including banks and non-bank financial institutions, did not abide by the BSEC order for the transfers.

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Undistributed dividends are profits of a company that have not been paid out to eligible shareholders by way of dividends.

The BSEC in June last year decided to use undistributed and unclaimed dividends of listed companies in the CMSF, which aims to safeguard the interests of investors in the stock market.

The market regulator ordered all listed companies, including banks and non-bank financial institutions (NBFIs), to submit their undistributed dividends to the fund.

The CMSF has received cash and stock dividends worth Tk 798 crore from the listed companies and around Tk 7,918 crore are still at the hands of listed companies.

"We have increased the time for submission to the fund repeatedly but now are going to take action against the companies who will fail to transfer the cash and stocks to the CMSF," said BSEC Chairman Prof Shibli Rubayat-Ul Islam.

His comments came in a "BSEC-BAPL-CMSF Tripartite Dialogue: Strengthening the Capital Market through Partnership" at Bangabandhu International Conference Center on Thursday.

Once a regulatory audit begins, the BSEC will not be able to provide no other way out as an alternative, Islam said, adding that the audit would be run for each company from the year they became listed.

Among 359 listed companies, 223 companies still have not transferred their undistributed dividends, according to the CMSF data.

Among the listed 33 listed banks, 27 lenders are yet to place their cash dividend amounting Tk 128 crore, which is the highest among all the sectors.

Apart from the cash dividend, the value of undistributed stock dividends of the banking sector is substantial among that of all the sectors.

Ensuring proper distribution of dividends is the responsibility of the listed companies and if they fail to do so then they should submit the funds to the CMSF, said the BSEC chairman.

Investors will get their dividends back soon after they make their claim with the CMSF, he said.

"When we started the process to know the scenario of the undistributed amounts the listed companies showed us they have a huge amount of funds. Following the transfer order, the issuers have been failing to provide the fund," said Islam.

"Why? Did they spend the fund? We will find out where the fund has gone," he said.

A top official of a listed bank preferring anonymity said they were yet to transfer the funds as Bangladesh Bank had not permitted it.

"So, the BSEC and Bangladesh Bank should sit together and give a directive in consensus so that we can follow the order," he said, adding that the banks can not refuse the order of the BB as it was their prime regulator.

Anis Ud Dowla, president of the Bangladesh Association of Publicly Listed Companies (BAPLC), BSEC Commissioner Shaikh Shamsuddin Ahmed, Md Nojibur Rahman, chairman of the CMSF, and Md Monowar Hossain, chief of operation of the CMSF, also spoke at the event.