Despite only 0.36% remaining unclaimed in between 1993 and 2023, reasons for unclaimed dividends are a cause for concern
From 1993 till 2023, a total of Nu 16.7 billion (B) in dividends has been declared by 15 companies, out of which Nu 16.6B has already been disbursed. This leaves only Nu 60 million (M) in unclaimed dividends, which accounts for just 0.36% of the total amount, according to the Royal Securities Exchange of Bhutan Limited (RSEBL).
An official from RSEBL assured that the unpaid amount is not a cause for concern. “If we look at the overall picture, Nu 16B has already been distributed. The remaining Nu 60M, though notable, is minimal in percentage terms,” the official said.
Unclaimed Dividends: Causes and Challenges
According to RSEBL, one of the primary reasons for unclaimed dividends is lack of financial literacy among shareholders. “Many investors are unaware of their rights and responsibilities after making investments, including the need to attend Annual General Meetings (AGMs),” the official stated.
Other contributing factors include outdated or incorrect banking details and changes in Citizenship Identity (CID) card numbers that have not been updated in the Central Depository.
“In many cases, investors fail to update their records, making it difficult for companies to disburse dividends,” the official explained. “For instance, in 2004, the CID number format changed from seven digits to 11 digits, and many shareholders never updated their records. Similarly, in 2009, banking ID numbers were shortened from 17 digits to nine digits, creating further discrepancies.”
A majority of the shareholders even tend to forget to update themselves of the shares they have invested in. A woman in Tsirang bought shares in 2020 and forgot all about it until recently, when she got a call from the company to come and claim her dividends.
“I was so shocked myself and even felt embarrassed at one time to go and claim the dividends. It is mainly because we Bhutanese are not culturally inclined in the share/stock market business. That’s why we don’t bother much about it,” she said.
RSEBL’s Efforts to Address the Issue
To tackle these challenges, RSEBL launched an intensive data-clearing exercise last year, working in collaboration with banks, the Census Office of Bhutan, listed companies, and other stakeholders.
“Out of over 100,000 shareholders, 64,000 updated their records during the six-month exercise, bringing the total number of shareholders with corrected data to 93,000,” the official reported. “As a result, 16 listed companies have been able to pay dividends based on the updated information.”
Future Initiatives and Investor Protection
Going forward, RSEBL has introduced the Investor Protection Fund Regulation, developed in partnership with the Corporate Regulatory Authority of Bhutan. The primary objective of this regulation is to ensure proper management of unclaimed dividends and protect shareholder interests.
Additionally, RSEBL plans to launch a financial literacy program in April, in collaboration with financial institutions and other stakeholders, to enhance investor awareness and ensure shareholders keep their records up to date.
With these measures in place, RSEBL aims to minimize unclaimed dividends and promote a more efficient and transparent stock market for all investors.
Meanwhile, the declaration of dividends for the year 2024 is currently under progress.
Sherab Dorji from Thimphu
