BSEC cancels SS Steel’s stock dividend

The Bangladesh Securities and Exchange Commission (BSEC) has cancelled the bonus shares recommended by SS Steel Limited for fiscal 2020-21, the company said in a stock exchange filing on Tuesday.

The steel manufacturer had issued an 8% bonus shares for business expansion in fiscal 2019-2020 and again in the following fiscal year, it recommended the same amount of bonus shares as a dividend to utilise the retained amount as capital for business expansion.

Meanwhile, the National Feed Mill – another listed firm – has received the regulator's consent for the issuance of a 1% stock dividend.

The firm will utilise its retained amount as capital for the project of ongoing new storage facility expansion.

SS Steel had recommended a 2% cash dividend for general shareholders and an 8% stock dividend for all shareholders for FY21 in November last year.

The company said the declared dividends were approved by the shareholders in an annual general meeting. 

Accordingly, an application was filed with the commission and it cancelled the 8% stock dividend for FY21.

Now, SS Steel will pay only a 2% cash dividend to general shareholders, and the company has been downgraded to the "B" category from the "A" category.

Earlier, any listed firm could issue bonus shares without any restrictions. 
But BSEC has recently imposed some restrictions on unusual stock dividends to ensure proper justification for issuing bonus shares. 

From now on, a company needs to secure BSEC approval before issuing bonus shares.

Also, any listed firm may issue bonus shares or declare stock dividends only for balancing, modernisation, rebalancing, and expansion, regulatory requirement to raise capital, and profitable investment or reinvestment in the company.