The Bangladesh Securities and Exchange Commission has decided that it will allow companies to issue cash dividend before get listed with the stock exchanges once they get approval for their initial public offerings, said high officials of the BSEC. As per a condition under the BSEC’s special power, no company is allowed to issue any short of benefits or dividends basedon its immediate preceding year’s financial performance before get listed with the stock market.
‘Companies which are scheduled to hold their annual general meetings before the subscription of their IPOs will be allowed to issue cash dividends for their shareholders. But, none of them will be permitted to issue stock dividends,’ a BSEC high official told New Age on Thursday.
The companies which are not scheduled to hold their AGMs before the IPO subscription will not be allowed to issue any dividends before their stock market listing.
As per the changed dividend policy, the BSEC in January this year permitted Shahjibazar Power Company to issue cash dividend for its shareholders before get listed with the stock exchanges.
Earlier on August 3, 2011, the BSEC for the last time had allowed Zahintex Industries to issue dividend for its shareholders after IPO approval before putting a cap on the facility.
Since then the commission approved IPOs of 34 companies and did not allow them to issue any dividend before get listed with the stock exchanges.
After the stock market crash in 2010, the commission had offered the opportunity up to August 3, 2011 in a bid to attract investors to subscribe IPO shares, another BSEC official told New Age.
The BSEC in August last year issued a show-cause notice to Familytex (BD) as the company violated listing condition by taking decision on dividend declaration before its listing.
The BSEC had approved Familytex’s IPO on January 22 last year but its board of directors decided not to issue any dividend for its shareholder for the year ended on April 29, 2013 before it get listed with the stock exchanges on June 18, BSEC officials said.
The company, however, on the day of listing on June 18 in a notice posted on the DSE web site claimed that it had made no decision on dividend declaration following the listing condition set by the BSEC.
After the notice the DSE placed the shares of Familytex under ‘Z’ category from ‘N’ category only one and a half months after its listing because of the company’s failure to declare any dividend.
-With New Age input
