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Nineteen companies, including a 100% export-oriented firm listed on the country's capital market, have failed to pay their declared dividends on time.
As a result, shareholders having investments in the companies are not getting their benefits even after the expiry of the stipulated one month period since their approval at annual general meetings (AGMs).
The Dhaka Stock Exchange (DSE) has repeatedly written to the companies asking them to comply with the listing rules, but to no avail.
A dividend is a reward paid to shareholders for their investment in a company's equity, and it usually originates from its net profits.
Usually, dividends are commonly distributed among shareholders annually in the form of both cash and stock, though some good fundamental companies in the country's stock market pay quarterly and semi-annually as interim dividends.
Officials told The Business Standard that some companies are unable to pay dividends due to a fund crunch, while others failed to do so due to the complexity of the payment procedure through the Bangladesh Electronic Funds Transfer Network (BEFTN) and banks.
According to the listing rules, dividends were supposed to be credited to shareholder accounts – cash to bank accounts, and stocks to beneficiary owner (BO) accounts – within 30 working days after approval at an AGM.
That means shareholders of any listed firms should get declared dividends deposited into their accounts within 30 working days, but 19 listed companies, including some SME firms, have not been paying dividends to their investors on time.
According to the listing rules, if any issuer company fails to pay its dividend in due time, it will face a penalty of Tk5,000 for every day of default, and its directors and officers will be liable to pay the penalty.
As such, non-compliant firms overdue on dividend payments will face a huge penalty if default continues, as per DSE sources.
Faruq Ahmad Siddiqi, former chairman of the Bangladesh Securities and Exchange Commission (BSEC), said, "The non-payment of dividends by listed companies is unlawful. Shareholders suffer due to late payment."
He suggested that the regulator take appropriate action against the companies that are not distributing the dividend on time.
A DSE official said, "Several letters have been sent to non-compliant companies asking them to comply with the rules, and some of them sought time extensions. If they do not disburse the dividend, action will be taken against them as per rules."
The firms that fail to pay dividends
According to the country's premier exchange, the 19 firms, mostly from the textile, pharmaceutical, fuel and power, and engineering sectors, have failed to pay dividends to their shareholders.
Fortune Shoes, a 100% export-oriented shoes maker in the country, reported a 52% growth in profit in fiscal 2021-22 compared to Tk37.41 crore a year ago.
In October last year, its board declared a 10% cash and 5% stock dividend for its shareholders, which were approved at its AGM on 8 December.
According to rules, the dividend was supposed to be disbursed by 8 January this year, but the company failed to do so. It will thus face a penalty of Tk5,000 every day.
Taufika Foods and Lovello Ice-cream PLC reported a 12.88% growth in sales to Tk96.04 crore and a 28% rise in net profit to Tk12.16 crore for fiscal 2021-22.
It has decided to pay a 12% cash dividend but has yet to disburse the amount into shareholders' accounts.
Company Secretary Mohammad Didarul Alam told The Business Standard, "The delays happened mainly because of processing complexities. We are trying to resolve the matter as soon as possible."
Alif Manufacturing Company, a manufacturer of cotton yarn of different counts, declared a 2% cash dividend only for general shareholders.
Despite shareholders' approval at its AGM on 29 December last year, the company has failed to pay off the dividend on time.
The dividend was supposed to be disbursed in January this year, but shareholders have yet to receive the benefit.
"The non-payment of a cash dividend was very unfortunate," Azimul Islam, managing director of the company, told TBS. "Basically, the delays occurred due to the complexity of the Bangladesh Electronic Funds Transfer Network (BEFTN) and banks."
He hoped all the shareholders would get their dividends within the next week.
Lub-rref (Bangladesh) Limited, a fuel and power sector firm that got listed on the stock exchange in 2021, has failed to disburse a 10% cash dividend to its shareholders.
Seeking anonymity, an official of the company said it could not disburse the dividend due to a fund crunch.
"The dividend amount was kept in a separate account to be disbursed to shareholders, but owing to a liquidity crunch, the management used the fund to import raw materials to keep the company operational in full swing," he added.
The official further said, "The company faced the fund shortage as it has to pay 100% margin, instead of 5-15%, to open letters of credit for imports of its raw materials due to the strong dollar."
The other firms that have failed to disburse the dividend on time include Dacca Dyeing, Advent Pharmaceuticals, Safko Spinning Mills, Associate Oxygen, and Pacific Denim.
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Midway News Team
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