Companies Failing to Disburse Declared Dividends, Investors Suffer

Several companies listed on the stock market are failing to distribute their declared dividends. As a result, investors are being deprived of their due returns. Moreover, due to the non-payment of dividends, these companies are being downgraded to the ‘Z’ category, which in turn further harms investors. Thus, investors are effectively facing losses on both fronts.
According to market analysts and investors, it is the company directors who are responsible for failing to distribute dividends, yet it is the investors who suffer the consequences when the company’s shares are relegated to the Z category. They have therefore urged reforms to ensure dividend disbursement and to revise the rule that sends companies to the Z category.
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17 Companies Did Not Pay Full Declared Dividends
According to data from the Dhaka Stock Exchange (DSE), among the companies whose fiscal year ended in June 2024, 12 are listed on the main board and 5 on the SME board.
The main-board companies include:
Lub-rref (Bangladesh), Alif Manufacturing, Saif Powertec, Aamra Technologies, Fortune Shoes, Orion Pharma, Aamra Networks, SK Trims & Industries, SS Steel, Aftab Automobiles, and Advent Pharma.
On the SME market, BD Paints declared a 12% cash dividend, Oraiza Agro Industries 5%, and Mostafa Metal Industries 4%, but none of them have paid the investors any amount. Himadri Limited has distributed 77.37% of its declared dividend, Bengal Biscuits 62.13%, and Masterfeed Agrotech 14.59%. Meanwhile, Krishibid Feed has yet to complete its dividend payment for 2023.
Aftab Automobiles has distributed only 12.06% of its declared 10% dividend, while Advent Pharma has paid 40.21% of its declared 1% dividend.
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Category Downgrade Punishes Investors, Not Companies
Companies that fail to distribute dividends are downgraded to the ‘Z’ category. As a result, settlement of their shares takes an extra day. Normally, shares in the A, B, or N categories are settled under the T+2 system—meaning shares become tradable on the third day after purchase. However, Z-category shares become tradable only on the fourth day.
Investors complain that this effectively punishes them, not the companies. While companies face no real consequence, it is the investors who bear the inconvenience and loss, even though the failure to distribute dividends lies with the companies.
Dr. Al Amin, Associate Professor at the Department of Accounting Information Systems, University of Dhaka, and a member of the Capital Market Reform Taskforce, told Banijjo Protidin, “Many companies are being negligent in distributing dividends. Since dividend declaration is the responsibility of the board, I believe that if the personal bank accounts of directors are frozen for failing to disburse declared dividends, they would be compelled to act. Unless directors face direct consequences, ordinary shareholders will never receive their dividends on time.”

He added that investors should not be the ones suffering. They are deprived of dividends on one hand, and then further penalized through category downgrades. The responsibility lies with the board, so why should investors be the ones to suffer?

BSEC Issues New Directive on Dividend Declaration

Meanwhile, the Bangladesh Securities and Exchange Commission (BSEC) has issued a new directive to companies regarding dividend declaration.
Abul Kalam, Director and Spokesperson of BSEC, said, “From now on, before holding the Annual General Meeting (AGM), any company declaring dividends must deposit the declared amount into a separate bank account at least one day before the AGM. The company must present a bank certificate and account statement at the AGM confirming that the dividend funds are in the designated account. The bank will also issue a certificate verifying the deposit. Therefore, companies will no longer have any opportunity to declare dividends without paying them. Additionally, the company must submit the bank certificate and deposit information to the stock exchange.”

Regulator’s Statement
Abul Kalam, the BSEC spokesperson, further told Banijjo Protidin, “We are taking enforcement actions against companies that have declared dividends but failed to distribute them. The process of implementing these punitive measures is currently underway.”