Bangladesh Securities and Exchange Commission tightens cash dividend rules by requiring dedicated pre-funded dividend accounts and restricting eligible banks

The Bangladesh Securities and Exchange Commission has amended its 2021 directive on cash dividends, requiring issuers and mutual funds to transfer declared cash dividends into a separate bank “dividend account” used solely for dividend disbursement, supported by a bank certificate. For annual or final cash dividends, the declared amount must be transferred to the dividend account at least one day before the Annual General Meeting or within one day after the record date set by a mutual fund’s Board of Trustees. If the dividend approved at the AGM is lower than the declared amount, the issuer may withdraw the difference. Issuers must obtain a bank certificate confirming the transfer, attested by the Managing Director, Chief Financial Officer and Company Secretary, presented at the AGM and submitted to the relevant stock exchange(s). Mutual funds must obtain a similar certificate attested by the Fund Manager and submit it to the relevant stock exchange(s) for closed-end mutual funds or to the Commission for open-end mutual funds. For interim cash dividends, issuers must transfer the declared amount into the dividend account within 15 days of the record date. Where the issuer is a banking company, the dividend account must be maintained with a different bank, and issuers are prohibited from maintaining the dividend account with any bank where a common director exists between the issuer and that bank. The directive takes immediate effect.