14 firms under regulatory pressure to pay cash dividend

The Bangladesh Securities and Exchange Commission (BSEC) has directed 14 publicly listed companies to submit their dividend disbursement reports as soon as possible.

The directive was delivered verbally to the companies' top officials during a meeting on Sunday.

BSEC officials told TBS that they inquired about the reasons behind the companies' failure to disburse dividends within the stipulated time. They also asked for the companies' plans to meet the requirements promptly.

The companies involved include Lub-rref Bangladesh, SK Trims & Industries, Shepherd Industries, VFS Thread Dyeing, Fortune Shoes, Associated Oxygen, Desh Garments, Indo-Bangla Pharmaceuticals, Beach Hatchery, Advent Pharma, Khulna Power Company, Libra Infusion, Pacific Denims, and Union Insurance Limited.

According to the officials, the companies provided varied explanations over the issue as the BSEC applied pressure on them to expedite the disbursement process.

Several companies stated that they had disbursed around 80% of the dividends but had not submitted the reports, preferring to wait until they completed 100% of the disbursement. However, listed companies are allowed to submit disbursement reports once 80% of dividends are disbursed. Some companies admitted to disbursing only around 60% so far.

The companies also cited the current economic situation as a factor affecting their ability to disburse dividends fully.

The officials further said if the companies comply with the regulatory requirements, it will not only make it easier for them to upgrade their category on the stock exchanges, but they may also qualify for a waiver from daily fines imposed by the stock exchanges.

Currently, if a listed company fails to disburse dividends to general investors within 30 days of receiving approval at its annual general meeting, the stock exchange imposes a daily fine of Tk5,000.

The new leadership of the BSEC has taken a firm stance on protecting investor interests and ensuring accountability.

Last Thursday, BSEC summoned the chairmen, managing directors (MDs), and company secretaries of the companies for failing to distribute dividends to shareholders after declaring them in the most recent fiscal year.

The companies declared dividends for shareholders but failed to distribute them within the required time frame. Consequently, on 26 September, the companies were placed in the "Z" category, reserved for underperforming or non-compliant companies. Some companies have since distributed their dividends and were removed from this category.

Investors have long complained about delayed dividend payments, which has been negatively affecting the stock market.

As a result, shareholders having investments in the companies are not getting their benefits even after the expiry of the stipulated one-month period since their approval at annual general meetings.

Lub-rref Bangladesh, a producer of lubricants under the BNO brand, declared a 10% cash dividend for FY22 and a 2% cash dividend for FY23. However, the company has faced liquidity issues and has not been able to fully disburse the dividends to investors. Besides, the 13 other companies also did not pay dividends fully to their shareholders as per the stipulated time.

A dividend is a reward paid to shareholders for their investment in a company's equity, and it usually originates from its net profits.

Usually, dividends are commonly distributed among shareholders annually in the form of both cash and stock, though some good fundamental companies in the country's stock market pay quarterly and semi-annually as interim dividends.