In order to facilitate shareholders of companies and to encourage payment of dividend through direct credit into shareholder accounts in banks, the Securities and Exchange Commission of Pakistan (SECP) has introduced certain amendments to the ‘transfer deed’.
SECP took the step after finding that the shareholders of companies had faced problems in receipt of cash dividend through dividend warrants, says a press release.
These problems included misplacement of dividend warrants, delay in encashment of dividend warrants, fraudulent encashment of dividend warrants, delay and loss of dividend warrants in postal services, etc.
Furthermore, SECP pointed out, the unclaimed dividend had also been piling up on the books of listed companies. A study conducted on 10 blue-chip companies showed that more than Rs4 billion stood as unclaimed dividend in their books for the year 2011.
SECP expressed the hope that amendments to the transfer deed and directives for payment of dividend through prompt credit into shareholder accounts would not only bring efficiency, but would also eliminate malpractices such as fraudulent encashment of dividend warrants, delays and loss of dividend warrants in postal services and would minimise issuance of duplicate dividend warrants.
“This will also improve the unclaimed dividend position in the books of companies,” it said.
A mechanism has been put in place according to which all prospective shareholders by filling the dividend mandate portion of the transfer deed will get the dividend directly into their bank accounts.
In order to provide the dividend mandate option to existing shareholders, the SECP said it had given necessary directive to all listed companies.
Published in The Express Tribune, June 6th, 2012.