Companies to stop paying dividend directly to margin loan receivers | Greenwatch Dhaka | The leading online daily of Bangladesh

Companies to stop paying dividend directly to margin loan receivers

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The retail investors enjoying margin loan through brokerage houses will no more get dividend directly on the shares they hold.The Securities and Exchange Commission said on Tuesday the dividend would be disbursed through the loan providers.The decision was made at a meeting of the commission held on Tuesday, it said in a statement.The SEC also decided that shareholders enjoying margin loan could no more transfer right shares against their stockholding to anyone.As per the decision, brokerage houses will send names and details of the margin loan receivers to the relevant companies, which will pay the shareholders’ dividend to the houses.Then the brokerage houses will disburse the dividend among the stockholders.The capital market watchdog made the decision amid demand by brokerage houses for long.Brokerage houses say many shareholders, whose equity has gone negative, are enjoying dividend for their shareholding but not paying the interest on their loan.They say they have to pay the interest for the loan receivers to the merchant banks.

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