New SEC directive on dividend declaration
Starting from July this year, it has been mandated that every listed company will have to disclose earning per share (EPS), net asset value (NAV) and net operating cash flow per share while declaring dividends, an initiative that will bring transparency in the market.
The stock market regulator took the decision at a meeting yesterday, presided over by Chairman Ziaul Haque Khondker.
"Sometimes it has been seen that companies declare dividends, although they have not performed well.
The general investors are misguided by the dividend declaration, which ultimately results in market volatility," Anwarul Kabir Bhuiyan, executive director of Securities and Exchange Commission, told journalists after the meeting.
If the companies disclose the EPS, NAV and net operating cash flow per share while announcing dividends, the investors will gain insight into the real scenario of the company, he said. "It will also bring more transparency in information dissemination in the market."
"The new rule will come into effect in July, following a gazette notification," he said.
Presently, the listed companies do not disclose the NAV and net operating cash flow per share even after the dividend announcement. However, the EPS is disclosed a few days after the announcement.
The SEC reduced the dividend payout time to 30 days from the existing 60 days, meaning that the listed companies will have to credit the dividend to the shareholders' account within 30 days of the declaration of dividend.
The market watchdog also decided that dividends will have to be directly credited to the shareholders' bank accounts.
Presently, the company sends a dividend warrant to the respective shareholders and they deposit the warrants with their bank accounts.
The SEC approved the prospectus for a Tk 100 crore mutual fund sponsored by Eastern Bank in the meeting.
The commission also gave a nod to two trust deed agreements of two other mutual funds.
[email protected]
Comments