BSEC directs 44 firms to transfer Tk1,000cr in unclaimed dividends to CMSF

Infographic: TBS

As part of efforts to recover unclaimed or undistributed dividends originally owed to investors, the Bangladesh Securities and Exchange Commission (BSEC) has instructed 44 listed companies to transfer these funds to the Capital Market Stabilisation Fund (CMSF) without delay.

In a meeting with senior officials of the firms on Thursday (10 July), the stock market regulator reiterated the directive to submit all unclaimed dividends to the CMSF — a special fund created in 2021 to manage and utilise such undistributed investor assets, according to sources.

According to CMSF sources, these firms collectively hold around Tk1,000 crore in unclaimed dividends, the bulk of which — about Tk900 crore — is in the form of stock dividends, with the rest in cash.

By collecting the funds from listed companies, the CMSF will settle investors' claims upon submission of proper documents.

Some of the major companies holding unclaimed dividends are: British American Tobacco (BAT) Bangladesh, Bangladesh Submarine Cables, Investment Corporation of Bangladesh, Singer Bangladesh, Apex Footwear, Square Pharmaceuticals, IBN SINA Pharma, Heidelberg Cement, Olympic Industries, Padma Oil Company, Atlas Bangladesh, Monno Ceramics, GQ Ball Pen, Samorita Hospital, Navana CNG and Maksons Spinning Mills.

Unclaimed cash dividend refers to any cash dividend distributed to investors through dividend warrants, cheques, bank drafts, or other means but not collected or claimed by the investors within three years or more from the date of distribution.

The meeting on 10 July, held at the BSEC Bhaban in the capital's Agargaon, focused on the audit report regarding unclaimed or undistributed dividends and subscription money. It was attended by BSEC officials, representatives from the CMSF, and top executives of the concerned companies.

The 44 companies are reported to hold a significant amount of unclaimed cash dividends, stock dividends, rights shares, and public offering subscription money that has remained idle for years.

An official at the CMSF said some listed firms have raised objections about the amount of unclaimed dividends, as previously determined by the BSEC. A few companies even distributed parts of the unclaimed dividends to shareholders after the BSEC directed them to submit those amounts to the CMSF.

"Now, following discussions with the companies, the BSEC has instructed them to submit the unclaimed amounts — investors' money that actually remained undistributed — to the CMSF as soon as possible," he added.

At the end of a financial year, listed companies declare dividends for their shareholders. According to listing rules, the declared cash dividend must be paid to investors within 30 days of approval at the Annual General Meeting (AGM).

However, due to incomplete bank account information or other issues, listed companies often fail to distribute the declared dividends to some investors.

In such cases, companies are required to keep the undistributed dividend amounts in a separate bank account.

According to CMSF data, many companies failed to maintain separate bank accounts to preserve these undistributed dividend funds. In some instances, the companies used the funds as part of their working capital—an act that constitutes a clear violation of the law.

About the CMSF

The CMSF was established by the Capital Market Stabilisation Fund Rules, 2021 (CMSF Rule 2021) of the BSEC.

CMSF acts as a custodian of undistributed cash and stock dividends, non-refunded public subscription money, and unallotted rights shares from the issuer of listed securities.

Cash and stocks in the fund will be returned to the due claimants by the shareholders or investors at any time in the indefinite future.

According to rules, a maximum of 40% of the cash balance of the CMSF may be used for direct buying and selling of listed securities, at least 50% of the cash balance of the fund shall be used for providing loan to market intermediaries for refinancing as margin loan, and a maximum of 10% of the cash balance of the fund may be used for investment in other securities such as fixed deposits, government securities, fixed income securities, mutual funds, and so on.

Since its inception, the CSMF has received Tk697.10 crore in cash from the issuer companies and of the cash fund, it has settled investors' claims of Tk9.40 crore.

It also received 14.37 crore shares, which were declared as stock dividends but not disbursed to investors. Of the shares, CMSF settled claims of 3.15 crore shares.

To stabilise the capital market, the CMSF lent Tk225 crore to the Investment Corporation of Bangladesh (ICB). It had a plan to lend capital market intermediaries at a low cost, but it did not actually occur after the 2024 change of political regime.

Also, to date, its board has remained vacant as the tenure of its previous board expired in August last year.

Recently, the BSEC refused a request from the finance ministry to transfer approximately Tk1,500 crore held in the CMSF to the state treasury.

The amount includes Tk632 crore in cash and Tk913.21 crore in unclaimed stock dividends belonging to general investors.

The finance ministry, in two separate letters, instructed the capital market regulator to deposit the cash reserves into the government's coffers and to liquidate the unclaimed stock dividends through the ICB to channel the proceeds similarly.

Furthermore, the ministry proposed dissolving the fund and incorporating a new clause in the relevant legislation to mandate the transfer of such funds to government accounts.

However, the BSEC has countered, asserting that appropriating the funds belonging to general investors is not legally permissible.