BSEC warns dividend payout defaulters of strict action

The Bangladesh Securities and Exchange Commission (BSEC) has warned that firms failing to disburse declared dividends to shareholders on time, along with their directors, will face strict punitive measures. 

In a press release issued on Monday (9 December), the stock market regulator said that in the interest of the country's capital market and investors, it is working to engage with listed companies downgraded to the Z category due to various issues, including non-compliance with dividend distribution requirements.

Emphasising its ongoing efforts to address non-compliance, the BSEC has warned companies to distribute declared dividends within the prescribed timeframe.

Previously, Confidence Cement was downgraded to the Z category for failing to pay the declared dividend for FY23 on time. Additionally, the company's top officials were summoned by the BSEC.

The BSEC stated that as a result of their intervention, the company has now distributed the 2023 dividends, leading to an upgrade of its category from Z to A.

According to listing regulations, listed companies are mandated to disburse declared or approved dividends within 30 days after approval in their annual general meetings (AGMs).

If any listed companies fail to pay off dividends within the stipulated time, respective directors shall be jointly and severally liable to pay a penalty of Tk5,000 for every day that the default continues.

On 14 November, the BSEC set a deadline for Advent Pharma to disburse the declared 2% cash dividend for FY22 by 30 November this year. 

The commission warned that if the company failed to comply, its seven directors, including the managing director, would each be fined Tk4 lakh, with an additional Tk10,000 penalty per day for further delays.

However, the company has already submitted its dividend compliance report to the DSE.

A senior officer at Advent Pharma, on the condition of anonymity, told TBS that the company has been unable to disburse even a small portion of the declared dividend due to the unavailability of shareholders' account details. The undisbursed amount is between Tk1 lakh and Tk2 lakh.

Earlier on 10 November, the BSEC set a new deadline for the undisbursed dividends of nine listed firms, warning that failure to comply will result in a total fine of Tk26.83 crore for the companies' directors.

Among these firms, four are listed on the stock exchange's main board, while the other five are on the SME platform. 

The companies whose managing directors and directors may face fines include Safko Spinning Mills, Pacific Denims, Lub-rref (Bangladesh), Oryza Agro, Mamun Agro, Krishibid Seed, Krishibid Feed, BD Paints and Associated Oxygen.

At a commission meeting, the BSEC directed the payment of due dividends by 15 December and a fixed amount of fines if they again fail to disburse the declared dividends within the stipulated time.

According to the BSEC sources, the companies failed to disburse declared dividends for the 2021-22, and 2022-23 fiscals within the stipulated time.

Previously, at the end of September, the Dhaka Stock Exchange (DSE) downgraded over two dozen firms to the Z category owing to failure to pay declared dividends within the stipulated time, and failure to declare dividends for two consecutive fiscal years. 

Later, some companies returned to their previous categories from the Z category as they submitted dividend compliance reports.