BSEC summons 14 firms over delays in disbursing declared dividends
The Bangladesh Securities and Exchange Commission (BSEC) has summoned the chairmen, managing directors (MDs), and company secretaries of 14 publicly listed companies for failing to distribute dividends to shareholders after declaring them in the most recent fiscal years.
A meeting is set for Sunday (6 October) at the BSEC headquarters, where the commission will meet with the officials in question, according to a notice issued by the securities regulator on 3 October.
The companies involved include: Lub-rref Bangladesh, SK Trims & Industries, Shepherd Industries, VFS Thread Dyeing, Fortune Shoes, Associated Oxygen, Desh Garments, Indo-Bangla Pharmaceuticals, Beach Hatchery, Advent Pharma, Khulna Power Company, Libra Infusion, Pacific Denims, and Union Insurance Limited
These companies declared dividends for shareholders but failed to distribute them within the required time frame. Consequently, on 26 September, these companies were placed in the “Z” category, reserved for underperforming or non-compliant companies. Some companies have since distributed their dividends and were removed from this category.
According to BSEC sources, the meeting will look into the reasons for the delay in dividend distribution and urge the companies to complete the process promptly. If the companies continue to delay, BSEC will take strict action against their boards of directors.
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).
Investors have long complained about delayed dividend payments, negatively affecting the stock market. The new leadership of BSEC has taken a firm stance on protecting investor interests and ensuring accountability.
BSEC Executive Director Mohammad Rezaul Karim said that the commission is committed to protecting investors and ensuring transparency and accountability in the stock market.
He also mentioned that swift actions will be taken, and a task force will be formed to implement medium- and long-term reforms to strengthen the market.
One of the companies in question, Lub-rref Bangladesh, a producer of lubricants under the BNO brand, declared a 10% cash dividend for the fiscal year 2021-22 and a 2% cash dividend for FY2022-23. However, the company has faced liquidity issues and has not been able to fully disburse the dividends to investors.
A senior company official, speaking anonymously, told TBS that Lub-rref is gradually paying dividends as they face a liquidity crisis. A large portion of shareholders has already received their payments, and the company is continuing the process in stages.
The official explained that the company is struggling with higher global raw material prices and is unable to open large letters of credit (LCs) due to the ongoing dollar shortage. This has forced the company to inject two to three times the usual funds to import materials.