Listed companies have sought waiver from the payment of accrued interests on unclaimed or undistributed dividends or non-refunded public subscription money saying that such funds were included in reserves as non-operating income.
Bangladesh Association of Publicly Listed Companies (BAPLC) on Thursday made the plea through a letter sent to the chairman of the Bangladesh Securities and Exchange Commission (BSEC).
The BAPLC's proposal came following the BSEC's recent directive regarding transfer of the unclaimed or undistributed or unsettled dividend or non-refunded public subscription money or others including accrued interest to the market stabilisation fund.
Terming the process of transferring the accrued interest as 'extremely complicated', the BAPLC said all listed companies will require to restate their incomes for all years to transfer the accrued interest to the market stabilisation fund.
Asked, the BAPLC's president Azam J Chowdhury said the securities regulator will not be able to settle investors' claims regarding undistributed dividends if the listed companies do not transfer the funds.
"On the other hand, it's true that the companies have not kept the accrued interest in separate accounts as there is no provision in this regard. So, it may be feasible if the companies initially are allowed to transfer only the principal amounts of undistributed dividend or non-refunded public subscription money," Mr. Chowdhury said.
He said the securities regulator may allow the companies to transfer the accrued interest in future as the investors are the owners of such money.
On June 27, the securities regulator issued the rules on the formation of the market stabilisation fund worth Tk 210 billion to be formed with unclaimed or undistributed dividends, non-refunded public subscription and accrued interest on such funds.
As per the information of the securities regulator, 335 listed companies have unclaimed cash dividends worth Tk 9.56 billion and unclaimed or unsettled stock dividends worth Tk 199.86 billion.
According to the BSEC directive, the listed companies are required to transfer the funds including accrued interest to the market stabilisation fund by Auguest 30.
Besides, the listed companies will have to submit detailed information of shareholders or securities holders.
The objective of forming the market stabilisation fund is to settle investors' long-pending claims on undistributed or unclaimed dividend or un-refunded public subscription money along with supporting the stock market.
In its letter, the BAPL said all listed companies will require to restate their incomes for all years to transfer the accrued interest to the market stabilisation fund.
The BAPLC said the listed companies had been treating or showing accrued interest as non-operating income in their respective financial statements every year as there was no specific guideline regarding such interest.
"This, as a result, have enhanced the net income of our companies," said the BAPLC.
Based on net income, companies have declared dividend along with paying income tax, according to the association of the listed companies.
"…the net income has impacted the companies' retained earnings every year which have duly been approved by the shareholders."
This interest income impact will require almost all of the listed companies to restate their incomes for all years where there has been unclaimed dividend.
"We would much appreciate the commission if it considers waiving the interest payment to avoid an extremely complicated process of restatement," the BAPLC urged.
It has also sought a regulatory directive regarding the issue of the payable interest.
Earlier, the securities regulator asked the listed companies to transfer the unclaimed or undistributed or unsettled dividend or non-refunded public subscription money or others including accrued interest to the market stabilisation fund by within July 31 last.
Detailed information regarding the shareholders or securities holders were supposed to be submitted within that timeframe. Later, the securities regulator extended the timeframe till August 30.
The BAPLC has also urged the securities regulator exclude the lockdown period from the continuing time for notifying the shareholders and publishing such the list in the companies' official websites.
In this regard, the association said due to strict lockdown continued till August 10 the listed companies were not able to work on preparing detailed information of the shareholders or securities holders.
"The banks also were operated for limited hours. The officials were not able to work due to closure of offices amid lockdown," the BAPLC said.
According to the rules approved for forming the market stabilisation fund, a maximum 40 per cent of the cash balance of the fund may be used for direct buying and selling of the listed securities.
And at least 50 per cent of the cash balance of the fund shall be used for providing loan to market intermediaries for refinancing as a margin loan.
The remaining 10 per cent of the cash balance may be used for investment in other securities such as fixed deposits and government securities.
Asked, Mohammad Rezaul Karim, a BSEC spokesperson, said the commission sent letter to the listed companies regarding the transfer of funds in line with the directive on the market stabilisation fund.
"The commission will see whether the companies distributed dividends including the accrued interests in their profits," Mr. Karim said.
He said the matter may be judged on case to case basis if the listed companies individually make proposals regarding waiver of accrued interest on undistributed or unsettled dividends or non-refunded public subscription money.
"It's not possible to speak about the commission's complete decision at the moment regarding the proposal of the BAPLC," Mr. Karim added.