Dividends should be credited direct to bank accounts

  • Business
  • Thursday, 01 May 2003

By Wong Sulong

Reading a story on the work of Malaysian Central Depository Sdn Bhd in StarBiz on Tuesday, headlined Depositors remain MCD’s main priority, prompted investor Pui Cheng Wui to call up with a suggestion. 

“Would MCD (which keeps tabs on the share ownership and movements of three million accounts for KLSE investors) kindly consider taking over the function of handling dividend payments, including crediting dividends to the bank accounts of shareholders?” he asked. 

Pui pointed out that in Singapore this function is being undertaken by the Central Depository Pte Ltd (CDP), which is Singapore’s equivalent of MCD. 

By undertaking this function, Pui said, dividend payments by publicly listed companies in Singapore are centralised under one agency and this saves time and money and is convenient. 

I think this is a good idea. So over to you, MCD, and the relevant parties concerned. 

In Australia, dividend payments are undertaken by the respective company registries as in Malaysia, but with one exception. 

Australian companies encourage their shareholders to ask for their dividends to be paid directly into their bank accounts. All the shareholder gets is a statement by post from the company registry confirming the number of shares he/she owns and the amount of dividend that had been credited to his/her account. This statement is to be retained by the shareholder for tax purposes. 

Malaysian shareholders get their dividend payments by cheques through the post, and they have to bank in these cheques. This is time consuming. Then, there are times when a shareholder forgets to bank in the cheque within six months, or misplaces the cheque, for which he will have to write to the company registry for a new cheque and this involves time and money. 

All this inconvenience and cost can be eliminated if dividend cheques are credited directly to the respective shareholders’ bank accounts. 

Since this is the start of the AGM season (which ends in June for companies whose financial year ends in December), I would like to make a comment on company annual reports. 

These days many corporate annual reports weigh more than a kilo. They are printed on glossy paper, in two or even three languages, and are full of colour photos and illustrations. They cost a bundle to produce, print and distribute, particularly for companies that have thousands of shareholders. 

I believe not many shareholders will take the time to seriously go through an entire annual report. Most of these reports end up together with old newspapers and magazines in the storeroom to be collected later by the paper lama man. 

In many Western countries, companies will ask their shareholders whether they want to receive the full annual report, an abridged version or no annual report at all. Many opt for the abridged version, which contains the relevant financial information without the public relations hype. In this way, a company is able to save a fair bit of money on annual reports. Mind you, it’s not uncommon for large Western corporations to have 50,000 shareholders or more. 

These companies also post the full annual report (plus other useful corporate information/announcements) on their websites so that shareholders can get access to such information at any time. 

Malaysian companies should emulate this good practice, particularly in the current difficult economic environment where it’s important to cut costs. 

NOTE: To the reader who wrote in twice to say he had not received his 18 sen per share interim dividend cheque from Hume Cemboard Bhd on March 18.  

The company’s registry said all cheques were sent out on the specified date. You should contact the company registry, Hong Leong Nominees Sdn Bhd (tel: 03-2164-1818), on the matter. 

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