BSEC guidelines direct timely cash dividend notifications for investors

The Bangladesh Securities and Exchange Commission (BSEC) introduced new guidelines today (4 November) to protect investors by streamlining cash dividend distribution and the issuance of "tax deduction at source certificates" for listed companies. 

The capital market regulator directed the Dhaka Stock Exchange and the Chittagong Stock Exchange to ensure that listed companies adhere to these procedures.

According to the guidelines, companies must distribute cash dividends and immediately notify investors about the tax deducted at source via SMS or email. This ensures that investors promptly receive details about their dividend distribution and tax deductions in their Beneficiary Owner (BO) accounts.

This initiative aims to increase transparency and accountability, making it easier for investors to manage tax information related to their investments and simplifying their income tax filing process.

But a company secretary from a listed firm, speaking on the condition of anonymity, highlighted common issues during dividend disbursement. Problems such as incorrect email addresses, phone numbers, mailing addresses, routing numbers, and other outdated information often prevent some shareholders from receiving these notifications, while others receive them without issue.

Another challenge arises with margin account holders. Cash dividends for these accounts are typically sent to the brokerage house managing the account, meaning that brokerage firms – not the individual shareholders – receive the notifications. As a result, these shareholders may be left uninformed about their dividend payments.

Some companies have only notified stock exchanges and regulatory authorities about dividend payments without informing all shareholders directly. Some investors have complained that, despite companies' announcements, dividends were not always properly distributed, causing difficulties for shareholders in receiving their entitled cash dividends.

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

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