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2.5pc surcharge next weapon to make issuers pay dues to Stabilisation Fund

MOHAMMAD MUFAZZAL | June 06, 2023 00:00:00

The securities regulator has asked both the stock exchanges to impose 2.5 per cent monthly surcharge on dividends or other dues that have remained unpaid for more than three years.

The deadline is the last day of this month. Surcharge will be applicable to the issuers that will fail to pay the dues by that time.

Since companies' performance is monitored by the exchanges as per the listing regulations, a new provision of surcharge has to be incorporated in that, said Md. Monowar Hossain, chief operating officer of the Capital Market Stabilisation Fund (CMSF).

The latest measure has been taken after repeated attempts since the formation of the Stabilisation Fund failed to get undistributed dividends of investors transferred to its account by the issuers.

The surcharge provision will strengthen the regulator in realising undistributed dividends, said an official of the Dhaka Stock Exchange (DSE) preferring not to be named.

The Bangladesh Securities and Exchange Commission (BSEC) on Sunday sent a letter to the Dhaka and Chittagong bourses, giving them the instruction.

Earlier in May, it decided the move to make issuers pay 2.5 per cent surcharge per month on the amounts of undistributed dividends and shares, non-refunded public subscription money and on all the accrued interest.

The listing regulations require companies to submit to the exchanges a compliance report on the dividend distribution. The compliance report mentions the amount of undistributed dividends.

Surcharge will be imposed based on the companies' compliance reports.

The regulator has come up with the new measure as the Stabilisation Fund sought cooperation from the Finance Division to realize investors' undistributed dividends.

The penalty, if put in place, will intensify pressure on the issuers at a time when the BSEC is about to finalise an audit panel to determine the exact amount of undistributed dividends held with the issuers.

The Stabilisation Fund has recently sent a list of audit firms to the securities regulator.

The panel will be comprised of four firms chosen from that list. It will conduct audits of 50 non-compliant companies in the first phase.

According to an initial estimation, the amounts of unclaimed dividends (both cash and stock) to be paid by the 50 companies range between Tk 1 million and Tk 42 billion. And the total amount is likely to be Tk 63 billion.

Before formulating the rules for the Stabilisation Fund in June 2021, the securities regulator assessed undistributed dividends at Tk 210 billion based on reports from both the bourses.

Later, CMSF officials said the exact amount would be much lower than the initial estimation. They said all dues will be cleared on completion of the audit.

The BSEC formed the CMSF to help revitalise the market along with settling investors' claims of undistributed/unsettled dividends.

According to the CMSF, undistributed cash dividends amounting to Tk 5.19 billion have so far been received from issuers. It has also received more than 86.02 million undistributed bonus shares by May this year, the market value of which is Tk 6.69 billion.

Apart from settling claims of 401,960 bonus shares, the CMSF has ensured payments of Tk 21.10 million in cash dividends to investors.

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