The Bangladesh Securities and Exchange Commission (BSEC) is looking for hundreds of crores of undistributed and unclaimed dividends paid to investors every year by listed companies.
The regulators are also planning how to use the undistributed and unclaimed money for the protection of investors and the capital market after the final settlement of accounts.
Mohammad Rezaul Karim, Executive Director (Current Responsibilities) and Spokesperson, BSEC, said, “We are trying to find out the amount of undistributed and unclaimed dividends (cash and stock) from various sources.”
An official involved in the work said BSEC has already sent letters to about 400 registered companies and mutual funds. Information has also been sought from stock exchanges.
Preliminary information obtained by BSEC from Central Depository Bangladesh Limited (CDBL) shows that cash and stock dividends of around Tk 17,000 crore remain unpaid and unclaimed by the companies. Of this, Tk 3,000 crore is cash dividend and the rest is stock dividend.
The official said the CDBL had provided the information till October 25 this year. It may change in the update.
Of the four hundred companies, two hundred and fifty have been accounted for. The final calculation will be done after receiving the information from all the companies and stock exchanges. Combining data from all sources, it can be seen that the amount of unallocated and unclaimed money is quite large.
What is undistributed and unclaimed dividend?
After the companies declare dividends, it is sent to the investors from their dividend accounts. Cash dividends are deposited directly into investors’ banks. And stock dividends are credited to their BO (Beneficiary Owners) account.
Shares in the name of those who die, move abroad, or do not search for a long time, their bank accounts are closed or void. The same thing happens with BO calculations.
In such cases, the dividend money or shares are returned to the company without being deposited in the investor’s bank or BO account. In case of death of the investor, his nominated heir no longer claims the money due to lack of information or documents.
Apart from this, due to legal complications or other reasons, dividends often do not reach the hands of the investors. The company then prepares a final financial statement showing that the dividends were deposited as ‘suspended’.
As many as 3315 suspended CDBLs have been found to have undistributed and unclaimed dividends of around Tk 16,000 crore.
A senior regulator said the majority of listed companies still have such undistributed and unclaimed dividends. Over time, some of these dividends may be claimed, and some may be settled.
We first want to calculate how many dividends are undistributed and unclaimed. If there is no claimant, we have the idea to use that money to protect the investor and the market after finalizing the account.
The regulator is taking new steps to stabilize the market after a change in the top positions of the BSEC, including chairman and commissioner, in May.
Citing the example of neighboring India, the BSEC official said undistributed and unclaimed dividends could be suspended for up to seven years. Then it goes to the investor protection fund. But we do not have any such fund or policy here. We are thinking of doing something like this this time.