The Druk Wang Alloys has declared 65% dividend to their shareholders
Out of the 19 companies registered with the Royal Securities Exchange of Bhutan Limited (RSEBL), only one company, the Druk Wang Alloys Limited, has declared dividend for their shareholders for the year 2020 during their Annual General Meeting (AGM).
During the companies’ AGMs, most of the companies have decided not to declare dividend to their shareholders though some of them have made profit last year. Further, some are not declaring dividend because they have been into a loss for the year 2020.
Most of the companies attributed the Covid-19 pandemic for not being able to declare dividend for their shareholders.
Out of the 13 companies from which the RSEBL received audited accounts, four of them were into profit and the remaining ones were into losses.
However, the RSEBL is yet to receive audited accounts from other companies since most of the companies are in Phuntsholing, which is currently under a lockdown.
For the year 2019, eight registered companies and for the year 2018, 12 companies have declared dividend to their shareholders.
According to the RSEBL, for the year 2020 only the Druk Wang Alloys has declared 65% dividend to their shareholders.
Meanwhile, the Druk Wang Alloys has also declared dividend even in the previous year. In 2019, the company declared 30% dividend and in 2018 the company declared 20% dividend.
The policy head of RSEBL, Dawa Dakpa said that there is no such a rule that companies should declare dividend even if they make profit.
He said that it will depend on the individual company to declare dividend. The RSEBL will only monitor if a company has fulfilled all the criteria.
The criteria include 75% of the shareholders having to endorse the decision whether to declare dividend or not during the AGM; a company has to call notification before 21 days of the AGM and the attendance of the shareholders during the AGM will also be checked.
After the AGM, a company has to inform the RSEBL for disclosure of the dividend with 24 hours of the AGM.
However, Dawa Dakpa said that even in the previous year there were companies that made profit, but didn’t declare dividend.
He said for this year, not declaring profit may or may not be attributed to the pandemic. Companies may or may not decide to declare dividend on various reasons.
Some companies need to build reserves before they give dividend and companies need to roll back the money to operate their business.
“If dividend is not declared it will have effect on the value of the shares in the secondary market. If the reserve increases the value of per shares will also increase whereby creating wealth generation in the secondary market,” he said.
For the financial institutions, the central bank has issued a notification for them not to declare divided.
It states that in the view of the uncertainty posed by the COVID-19 pandemic, it is imperative that financial institutions continue to conserve capital to support economy and absorb losses. In order to strengthen the financial institution’s balance sheet and support lending to the economy, financial institutions will not make any dividend payment of the year 2020.
The registered financial institutions are T Bank Limited, Druk PNB Bank Limited, Bhutan National Bank Limited, Royal Insurance Corporation of Bhutan Limited (RICBL), Bhutan Insurance Limited and GIC Bhutan Reinsurance Corporation Limited.
So far of the total registered companies, 17 of them have conducted their AGMs and only two companies, the RICBL and Druk PNB, did not conduct their AGM.
Dechen Dolkar from Thimphu