The securities regulator sees no bar in implementing its directive recently issued to settle investors' claims for unclaimed or unpaid or unsettled dividends.
It also finds no need of introducing any new provision in Companies Act to pull the accumulated dividends, which remained unsettled for three years, into a custodian for the purpose of settlement of investors' perpetual claims.
The Bangladesh Securities and Exchange Commission (BSEC) said this in the backdrop of receiving a set of recommendations from the Bangladesh Association of Publicly Listed Companies (BAPLC).
"There is no need of introducing any new provision in Companies Act to execute the directive regarding settlement of unclaimed or unpaid or unsettled dividend as such dividend will not be forfeited," said the BSEC chairman Prof. Shibli Rubayat Ul Islam.
In its recommendations, the BAPLC said there is a provision in India regarding transfer of dividends, which remain undistributed for seven years, into the government's exchequer.
"There is no such provision in our Companies Act. So, a clause will have to be included in the Companies Act to implement the BSEC's directive," the BAPLC said.
The BSEC chairman the BAPLC could not realise the BSEC's directive. "New provision will be required in Companies Act if the undistributed dividend if forfeited."
On January 14, the securities regulator issued a directive regarding dividend distribution policy along with settling the claims for unclaimed or unpaid or unsettled dividend.
One provision of the BSEC's directive said the cash dividend which remains unpaid or unclaimed or unsettled including accrued interest for a period of three years from the date of declaration or approval or record date, shall be transferred by the issuer to the fund as directed or prescribed by the commission.
"If any shareholder or unit holder claims his cash dividend after transfer of such dividend to the prescribed fund, its manager will pay off such dividend within fifteen days of receiving subject to proper verification," the BSEC's directive said.
"Unclaimed or unpaid or unsettled dividends will be transferred into a custodian account opened with a government's company. Issuers will not be allowed to utilise the unpaid dividends," the BSEC chairman said.
The BSEC issued the directive after collecting information regarding unclaimed or unpaid or unsettled dividends worth around Tk 210 billion.
"The unclaimed or unpaid dividend is forfeited in India after seven years of declaration. We have only moved to set a perpetual process to settle investors' claims regarding dividend," said the BSEC chairman Mr. Islam.
Echoing Mr. Islam, the BSEC commissioner Dr. Shaikh Shamsuddin Ahmed said the securities regulator would evaluate some other recommendations made by the BAPLC.
"We are not rigid. We will facilitate the issuers by revising some other provisions of the directive," Mr. Ahmed said.
Another provision of the BSEC's directive said within 10 days of declaration made by the board of directors or the board of trustee of the issuer, an amount equivalent to the declared cash dividend payable for the concerned year shall be kept in separate account dedicated for this purpose.
The BAPLC has differed with this clause saying that the declared dividend is not final one until it is approved at the annual general meeting (AGM).
"There are the instances of altering the declared dividend at the companies' AGM. Besides, there is a gap of 90 days between dividend declaration and AGM. So, the companies' capitals will be squeezed if the declared dividend is kept as per the BSEC's directive," the BAPLC opines.
The BSEC's commissioner Mr. Ahmed said they would extend the timeframe of keeping the declared amount into a separate account by the issuers.
Talking to the FE, the chief executive officer (CEO) of a leading brokerage firm said the cash dividend of many investors have remained pending for a long time due to the companies' reluctance and mismanagements.
"In many cases, the dividend warrants were not sent to the shareholders properly. Secondly, many shareholders failed to receive dividend warrants due to changes in addresses," the CEO said on anonymity.
He said the dividend that was not distributed properly cannot be termed as 'unclaimed'.
"Many of our clients talked to us about the re-distribution of unpaid dividend. So, that amount dividend should be transferred into investors' BO accounts which have already been updated as per the criteria of RTGS (Real Time Gross Settlement)," the CEO said.
In this regard, the BSEC officials said the unpaid dividend will not be transferred into BO accounts as many account holders remain inactive for a long time due to different reasons.
"Many investors who exist abroad have no news of their BO accounts. Moreover, we will transfer the dividend from the BO accounts into the custodian account. And investors will be allowed to realise such dividend subject to proofs," said a BSEC official.
Another senior official of Modern Securities said investors having paper shares mainly face difficulties in receiving dividends.
"Still now many investors have paper shares were not demated. Issuers intentionally send dividend warrants through the unknown courier services. That's why, investors fail to receive dividend warrants," the officials said.