Ambee Pharma restrained from paying stock dividends

The Bangladesh Securities and Exchange Commission (BSEC) has restrained Ambee Pharmaceuticals from paying stock dividends until it fulfils necessary conditions.

The drugmaker had announced 10% cash dividends and 20% stock dividends for fiscal 2021-22.

But the market regulator has cancelled the stock dividend as the company's past dividend record was not satisfactory and it failed to comply with the conditions related to stock dividend.

Ambee Pharmaceuticals did not pay any dividend for fiscal 2020-21 due to a loss of Tk1.30 crore because of the coronavirus pandemic.

Not only that, the company did not pay any cash dividends to its shareholders in the previous five financial years.

Thus, it has retained the entire profit through issuing stock dividends.

From the 2015–16 to 2019-20 financial years, the drug manufacturer has paid stock dividends ranging from 15% to 30%.

As the stock dividend was announced in fiscal 2021-22 as well, the commission found a violation of its stock dividend policy.
BSEC Executive Director and spokesperson Rezaul Karim told The Business Standard, "The company has not been able to fulfil the rules for declaring stock dividends."

"The guideline has some specific points to determine which companies are eligible for paying stock dividends. For cancelling a stock dividend, companies' past records and their ability to pay dividends in the future are taken into consideration," he added.

According to the commission's policy issued in August 2021, listed companies cannot pay bonus dividends unless they have declared at least 10% cash dividends for two consecutive years.

As per the terms of the policy, since Ambee Pharmaceuticals did not pay a cash dividend in the previous financial year, the stock dividend was cancelled, commission officials said.

Md Hasanul Kabir, company secretary of Ambee Pharmaceuticals, told TBS, "The commission cancelled the stock dividend as it was not declared as per the policy."

As the record date to select shareholders has already passed, now the investors will get only the cash dividends for fiscal 2021-22.

However, if the company wants to change the stock dividend to cash dividend, it should follow the proper process and announce the decision, said BSEC Spokesperson Rezaul Karim.

In fiscal 2021-22, the company's revenue was Tk18.09 crore, which is almost 83% higher than the previous year.

The net profit of the company was Tk80.59 lakh despite the fact that it had incurred losses in the previous financial year.

Ambee Pharmaceuticals was established in 1976 and listed on the stock market in 1986.

It began operations with a modest 17 joint ventured products and is now fully operational with 76 products.

The company manufactures all kinds of drugs, medicines, pharmaceuticals, chemicals, medical products, or any other preparations.