BSEC tightens dividend rules for listed firms

The Bangladesh Securities and Exchange Commission (BSEC) has decided to tighten compliance with dividend distribution rules by requiring listed companies to keep declared cash dividends in separate bank accounts to prevent their misuse.

It has also decided to simplify the process of reappointing independent directors.

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The decisions were taken at a commission meeting chaired by BSEC Chairman Masud Khan, according to a press release issued yesterday.

Under existing directives, listed companies declaring annual or final cash dividends must deposit the full amount in a separate dividend account at least one day before their annual general meeting (AGM).

They must also obtain a bank certificate confirming the deposit. The certificate must be certified by the managing director, chief financial officer and company secretary before being presented at the AGM and submitted to the stock exchanges.

However, some companies have failed to comply with these requirements, prompting the commission to take measures under the relevant securities laws and regulations.

The commission also decided to amend the existing directives to require companies to deposit the full amount of their declared dividends in a separate bank account and obtain the required bank certificate before placing dividend-related proposals at their AGMs.

Companies that fail to meet these requirements will not be allowed to place dividend-related proposals at their annual general meetings, according to the press release.

In another decision, the BSEC agreed to simplify the appointment and reappointment of independent directors at listed companies under the Corporate Governance Code 2018 and its amendments.

The move aims to simplify the appointment and reappointment process and ensure the smooth continuation of administrative activities at listed companies.

The commission decided that approval for reappointing existing independent directors would be granted, subject to the submission of an updated Credit Information Bureau (CIB) report from Bangladesh Bank.

The BSEC also clarified how waivers granted under the Corporate Governance Code 2018 apply.

If an independent director was previously granted an exemption or waiver regarding qualification and experience requirements, that waiver will automatically apply if the director is newly appointed to another listed company or reappointed to the same company.

In such cases, a fresh exemption will not need to be obtained, the press release added.