B Mirror Desk : A recent significant decision by the Bangladesh Securities and Exchange Commission (BSEC) will streamline the cash dividend process for listed companies. Previously, following a cash dividend announcement by the board of directors, the funds must be transferred to a separate bank account within 10 days. This money sits in the bank until the annual general meeting (AGM), which lowers the company’s effective working capital and negatively affects profit, EPS, and NAV.

According to the new BSEC directive, from now on, the cash dividend declared in the board of directors meeting will have to be deposited in the bank one day before the AGM. However, after depositing this money, the stock exchange will have to be informed along with the necessary documents. This move will enable companies to increase their working capital by using their idle funds, which will strengthen their financial position.

The Bangladesh Association of Publicly Listed Companies (BAPLC) had earlier approached the BSEC in this regard, proposing that the dividend money be allowed to be deposited in a separate bank account 10 days after the AGM. However, the BSEC has made a provision to deposit this money a day before the AGM, which will be more convenient for the companies.

“The commission is taking the latest judgment after evaluating the rationale of BAPLC’s demand,” stated Abul Kalam, the director and spokesperson for the BSEC. Consequently, cash dividend funds won’t need to be retained in the bank for an extended period of time. In addition to being convenient for investors, this shift will improve the companies’ financial management.