Clearing shareholders‘ confusion over returns they get from equities, market regulator SEBI on Friday made it mandatory for companies to declare dividend on per share basis, besides prescribing a uniform procedure for dealing with unclaimed shares.
“It has been decided to mandate that listed companies shall declare their dividend on per share basis only,” SEBI said while issuing an amendment to the Equity Listing Agreement.
The step, the regulator said, is expected to bring uniformity in the manner of declaring dividend amongst listed companies.
At present, a company can declare dividend as a percentage of face value of the share or in rupee per share, independent of the face value.
“SEBI’s initiative clears the confusion of shareholders who get confused whether the dividend is a percentage of face value or market price,” Jagannadham Thunguntla,equity head of SMC Capital, said.
To deal with the unclaimed shares, SEBI said, all companies will have to maintain a separate suspense account for such shares and deposits, bonus shares etc into the account.
These initiatives come into force with immediate effect, SEBI said.
Thuguntula further said that the amendments introduced by SEBI in the Equity Listing Agreement would ensure better corporate governance and help avoid misallocation of unclaimed shares.
SEBI has also reduced the timeline for notice period for payment of dividend.
“The notice period for record date has been reduced to seven working days and for board meetings has been reduced to two working days,” it added.
On the unclaimed shares, the market regulator said all corporate benefits “accruing on unclaimed shares such as bonus shares, split etc shall also be credited to such (suspense) accounts”.
The companies, it said, will be required to credit the benefits to the allottees after proper verification and on their demand. Also, the voting rights of the shares in the suspense account will remain frozen till the owner of the shares claims it, SEBI added.
These details, SEBI added, will have to be disclosed in annual report till the unclaimed shares remain in the suspense account. Along with this, the company will also have to disclose the voting rights pattern in the company, SEBI said.