Listed companies issue Rs941bln dividend warrants in 3 years

KARACHI: The listed companies on the Pakistan Stock Exchange (PSX) issued the dividend warrants of Rs941.26 billion to shareholders over the past three years, asking them to claim the declared payouts, an official said on Tuesday. 

The official, referring to data, said a total of 237 companies declared dividends of Rs359.32 billion in 2015 – the highest compared to the previous two years. Total 221 companies announced payouts of Rs318.93 billion in 2014 while 231 companies declared dividends of Rs263 billion in 2013. 

A law requires a company not to withhold or defer the dividends after the declaration and disburse the payments within one month.

“In case, the company fails to make the said payment within the specified time period, subject to certain provisions, the chief executive of the company is liable to penal action,” says the law.

However, billions of rupees of dividends are lying unclaimed.  Analysts estimated that an average unclaimed dividends amount to around Rs100 billion a year. 

The analysts said the PSX dividend payout ratio is 5.7 percent, which is highest in the world.  PSX’s market capitalisation stands at above Rs7,000 billion and 5.7 percent is equal to Rs399 billion

“However, between 10 to 20 percent dividends remain unclaimed or could not reach to the shareholders every year,” an industry source said. “Twenty percent unclaimed dividend means Rs80 billion.” 

The finance ministry put the unpaid payouts at Rs10 billion and that was also three years back. The ministry took notice of the situation and ordered that a committee should be formed for the investor awareness. No outcome has emerged as yet, however.  

The reporter couldn’t either verify the latest unclaimed dividends from the Securities and Exchange Commission of Pakistan and the PSX as both the institutes had no such records. 

“The data of dividends that remain unclaimed for a long time is not readily ascertainable from the company accounts,” an official at the SECP replied to a query. 

“Last exercise in this regard was carried out by the SECP in respect of annual accounts of public listed companies for the period ended till December 31, 2013, which showed an aggregate amount of around Rs6 billion. However, exact ageing and the current status is not available,” the official said.

Managing Director Nadeem Naqvi at the PSX also showed his inability to present the data.  

“We do not maintain such record and as such the same is not available with us,” Naqvi told The News in an email reply. 

The SECP’s official further said the Companies Ordinance, 1984 do not provide any mechanism for dividend utilisation. “As per the current practice, unclaimed dividend amounts continue to be held and utilised by the declaring companies in their business operations,” the official said. “Law does not require accrual of interest on unclaimed dividends.”

The unclaimed dividend issue is faced by the shareholders who don’t provide any bank account details and are sent payout alerts at their postal addresses. The dividend warrants couldn’t reach the claimant mostly in case of change in the addresses.  

It is not mandatory for the shareholders to opt for the online system. Of 100 percent shareholdings, 75 percent are traded online and the rest is in physical form, held by the government and sponsors.