At least eight companies listed on the Dhaka Stock Exchange (DSE) have been downgraded from the bourse’s the categories ‘A’, ‘B’ to the category ‘Z’ due to their non-compliance with dividend disbursements.
All these companies had previously declared cash dividends for the fiscal year 2021–22, but they finally did not disburse the announced dividends among their investors.
Meanwhile, five other companies listed on the capital bourse’s SME Board have also done the same wrongdoing, and they will now, as per securities laws, be offered other penalties because there is no category for the bourse’s SME companies.
If a listed company fails to hold an annual general meeting (AGM) for three straight years, fails to pay dividend for a single year, or pays less than 5 per cent dividend, it will then, as per securities laws, will be pushed down to the DSE’s category ‘Z’.
The stock regulator Bangladesh Securities and Exchange Commission (BSEC) in a recent letter to the non-compliant companies said their failure to disburse dividends among shareholders after dividend announcements within the stipulated timeframe was equal to market manipulation.
As a result, their category was downgraded, the letter read.
Of the eight companies, Fortune Shoes Limited, Taufika Foods and Lovello Ice-cream, Lub-rref (Bangladesh) Limited, Associated Oxygen Limited, and SS Steel Limited, have been shifted to the category ‘Z’ from their previous category of ‘A’
While, Advent Pharma Limited, Safko Spinnings Mills, and Pacific Denims Limited have been downgraded to ‘Z’ from the category ‘B’
Besides, five SME companies which did also not disburse dividends after announcements are Oryza Agro Industries Ltd, BD Paints Limited, Mamun Agro Products Limited, Krishibid Seed Limited, and Krishibid Feed Limited.
These companies had declared dividends ranging from 1 per cent to 15 per cent for the year ending in June 2022.
A listed company, as per the DSE’s listing regulations as well as securities laws, is required to distribute the dividend within 30 days after getting approval at its annual general meeting (AGM).
In case of the issuance of bonus dividend, the companies, however, need to take prior approvals from the securities regulator BSEC.
Of the listed companies, which firms pay at least 10 per cent dividend, are added to or kept in the category ‘A’ on the DSE.
If a company gives less than 10 per cent but not less than 5 per cent, then it becomes a ‘B’ category company, and if a main board’s company gives less than 5 per cent dividend it is recognised as a ‘Z’ category company.
Issuers of listed securities, according to the BSEC rules, are obliged to pay dividends within 30 days after the approval at AGM. Cash dividends are to be sent to the shareholders’ respective bank accounts, while stock dividends are added to the shareholders’ respective beneficiary owner (BO) accounts.
Earlier, the securities regulator had prepared a list of 15 companies that did not distribute dividends even after declarations for the financial year 2021–22.
Later, two of them – Beach Hatchery and Premier Cement – paid their declared dividends in delayed time which propelled the BSEC to exclude these two names from the final list of non-compliant firms.
Since there is no category of companies listed on the DSE’s SME Board, the accused SME firms will be fined and penalized in other way due to this wrongdoing, BSEC sources said.
Fortune Shoes Limited, which was listed in 2016, had announced a 10 per cent cash and 5 percent bonus dividend to shareholders for the year ending in June 2022.
On the other hand, Taufika Foods and Lovello Ice-cream, which got listed in 2021, announced a 12 percent cash dividend for the same fiscal year.
Lub-rref (Bangladesh) Limited had declared a 10 percent cash dividend for FY22.
