The Hindu Business Line : SEBI tells SEs to act tough on dividends

In a notice, the market regulator directed all stock exchanges not to relax the 30 days' and 42 days' notice periods for book closure/record date for paying the interim dividend.

With this move, nearly 300 companies that have announced their plans to pay interim dividend before March 31 will not be able to do so during the current fiscal.

The SEBI notice to the stock exchanges said: "No relaxation of the said notice period of 30 or 42 days as applicable would be permitted.''

It added that the stock exchanges are advised to take a uniform view in the matter, namely to advise the companies of the requirement of the due notice period under clause 16 of the Listing Agreement.

As per this clause, companies have to give a minimum of 30 days' notice for book closure in case of securities under mandatory demat trading and 42 days for other securities.

In addition, the exchanges can relax this period.

But with the directive from SEBI, stock exchanges had decided not to relax the 30 or 42 days period, a stock exchange official said.

The notice also stated that the move by companies would enable the promoters and shareholders to avoid the tax liability proposed to be imposed by the Finance Bill 2002.

Following the notice, BSE and NSE have issued statements that they have decided not to relax the period for book closure.

They said that if companies failed to comply with the 30 or 42 days' notice, it would be treated as non-compliance of the Listing Agreement.

"Companies which have given shorter notice to the exchanges under clause 16 of the Listing Agreement are hereby advised to do the needful to company with the said clause,'' BSE said in a statement.

A number of companies that have announced hefty interim dividends are likely to either pay the dividend after March 31 or review their decision to pay interim dividend.

After March 31, the tax on dividend would have to be paid by the shareholders.

This is likely to affect many big corporate promoters who have large equity holding in companies.

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