Share dividends not claimed for five years will be transferred to a government fund according to a proposal to deal with billions of rupees in liabilities carried by publicly listed companies, said the Securities and Exchange Commission of Pakistan (SECP).
The SECP and the Ministry of Finance have suggested amendments in the Companies Ordinance 1984 and the Insurance Ordinance 2000 that will vest unclaimed dividends of such shareholders with the federal government, it said.
Amendments in the ordinances will require an Act of parliament and at least one parliamentarian, who heads a listed company, to push the proposal.
“Many companies including ours are sitting on millions in cash that we cannot touch,” said Isphanyar Bhandara, CEO of Murree Brewery and a member of National Assembly. “It’s better to use this money somewhere else.”
According to financial statements of the listed firms for 2013, the accumulated balance of unclaimed dividends is approximately Rs6.7 billion. Around Rs4.12 billion of this is lying with just 12 companies, according to the SECP.
As per the Companies Ordinance, the dividend once declared becomes debt of a company and must be paid to its shareholders within 30 days of declaration.
Companies continue to deliver declared dividends to the registered address of a shareholder even if someone has migrated or passed away. But the amount of unclaimed dividend continues to rest with the company as a liability.
Bhandara says companies are more than happy with silently sitting on all the cash.
He has raised the subject on the assembly’s floor. “My suggestion is that our country is cash-strapped and the government should use this money for something productive. It should be distributed among charities after a certain time.” He said.
