The stock market regulator has finally decided to impose a 2 per cent penalty per month for failure to transfer unpaid or undistributed or unclaimed cash dividends to the Capital Market Stabilisation Fund (CMSF), effective from March 1 this year.
Any issuer of listed securities will also have to pay the fine if they fail to transfer un-allotted or unsettled stock dividends or bonus shares to the BO (beneficiary owner's) account of the CMSF.
The amount to be paid in fine in that case will be calculated on the basis of market value of the shares based on the due date.
The penalty will be compounded for a lingering delay in the payment.
The fine is also applicable to non-refunded public subscription money and non-transfer of un-allotted or unsettled rights shares.
The Bangladesh Securities and Exchange Commission (BSEC) has adopted the stricter measure to realise unclaimed and undisbursed dividends as many companies are yet to respond to its previous warnings and meet the previous deadlines.
Any firm that will miss the March 1 deadline will have to pay a fine, according to a directive issued by the BSEC on Monday.
Undistributed dividends are profits of a company that have not been paid out to eligible shareholders by way of dividends. An unclaimed dividend is any dividend that is not collected or claimed by investors from the issuers within three years or more from the date of distribution.
To help revitalise the capital market, the securities regulator formed the CMSF in June 2021.
The objective of the CMSF is to support the stock market alongside settling investors' claims on undistributed or unsettled dividends.
The CMSF is working as a custodian of undistributed cash and stock dividends, non-refunded public subscription money, and un-allotted right shares from the issuers of listed securities.
Preferring anonymity, a BSEC official said some companies had defrauded shareholders for years. "Dividends are shareholders rights. The companies have deprived them of their rights by not paying dividends."
As of December 2023, the CMSF fund size stood at about Tk 16 billion -- nearly Tk 10 billion worth of stock dividends and cash.
According to the CMSF rules, 40 per cent of its fund can be invested in the share market, 50 per cent can be provided in loans to market intermediaries, and the remaining 10 per cent must be set aside in cash in its own accounts.
Early this month, the CMSF board approved a Tk 1 billion loan to stock market intermediaries to ensure strength and stability of the country's stock market.
It had also provided loans amounting to Tk 2.25 billion to the Investment Corporation of Bangladesh (ICB) to stabilise the market.
The CMSF also launched a closed-end mutual fund last year named "ICB AMCL CMSF Golden Jubilee Fund" worth Tk 1 billion, giving Tk 500 million from its own fund.
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