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Securities regulator issues notification

Mandatory requirements in case of issuing stock dividend

FE Report | May 26, 2019 00:00:00

The securities regulator has issued a notification on mandatory requirements to be fulfilled by the listed companies in case of issuing stock dividend.

The Bangladesh Securities and Exchange Commission (BSEC) issued the notification on Thursday in line with its previous decision regarding compliances of the issuance of bonus shares.

The notification was issued to ensure proper utilisation of the fund to be raised through bonus shares.

As per the BSEC notification, no listed company shall be allowed to declare bonus shares without justified reasons including the BMRE (Balancing, Modernisation, Rehabilitation and Expansion) or any of its components.

In case of declaration of bonus shares, the listed companies will have to disclose, among others, the price sensitive information (PSI) mentioning different contents.

The contents will include the reasons for declaration of bonus shares and utilisation of such retained amount as capital.

The companies will have to mention that the bonus shares are declared out of accumulated profit or share premium.

The companies also will have to mention that the bonus shares are not declared from capital reserve

or revaluation reserve or any unrealised gain or out of profit earned prior to incorporation of the company or through reducing paid-up capital or through doing anything so that the post-dividend retained earnings become negative or debit balance.

The securities regulator approved the draft notification regarding the declaration of bonus shares on May 21 last to ensure qualitative development of operations and functions of the listed companies.

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