BSEC guidelines direct timely notifications of cash dividends to investors

The Bangladesh Securities and Exchange Commission (BSEC) introduced new guidelines today (November 4) to protect investors by regulating cash dividend distribution and “tax deduction on certificates of origin” for listed companies.

The capital market regulator has directed Dhaka Stock Exchange and Chittagong Stock Exchange to ensure that listed companies comply with these procedures.

According to the regulation, companies must distribute cash dividends and immediately notify investors of the tax deducted at source via SMS or e-mail. This allows investors to immediately receive details about dividend distributions and tax deductions in their Beneficial Owner (BO) accounts.

This initiative aims to increase transparency and accountability, make it easier for investors to manage tax information on their investments, and simplify income tax filing processes.

But a company secretary from a listed firm, on condition of anonymity, pointed out common problems when distributing dividends. Issues such as incorrect email addresses, phone numbers, mailing addresses, routing numbers, and other outdated information often prevent some shareholders from receiving these notices, while others receive them without issue.

Another difficulty arises with margin account holders. Cash dividends on these accounts are generally sent to the brokerage firm that manages the account; This means that brokers, not individual shareholders, receive notifications. As a result, these shareholders may be left unaware of dividend payments.

Some companies have only notified stock exchanges and regulatory authorities about dividend payments without directly informing all shareholders. Some investors have complained that despite companies’ announcements, dividends are not always distributed properly, causing difficulties for shareholders to receive the cash dividends they are entitled to.

The new BSEC guidelines now require companies to notify shareholders directly when cash dividends are paid and tax deduction certificates are issued.

This step aims to increase transparency and ensure that all shareholders receive timely updates, allowing them to accurately track dividend income.