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Some cos willing to cancel interim dividend

Our Bureau

KOLKATA, March 6

EVEN as the major stock exchanges on Wednesday decided against the relaxation of the minimum notice period required under Clause 16 of the Listing Agreement for declaring interim dividend, corporates generally took a non-confrontational posture.

Mr S.Y. Rajagopalan, Finance Director of ElectroSteel Castings, which, following the Budget, had proposed a 100 per cent interim dividend for 2001-2002, told Business Line that the company would not like a confrontation with the stock exchanges, the SEBI and the Finance Ministry.

"We are prepared to cancel the interim dividend proposal,'' he said.

During the previous fiscal, the company had paid 75 per cent and the dividend tax outgo was Rs 1.24 crore.

Balrampur Chini Mills Ltd, which has proposed an interim dividend of 75 per cent, is also inclined to fall in line with the stock exchanges.

A senior official of the company said that there was no point in crossing swords on the interim dividend issue with the regulator and the authorities.

Though the exchanges tacitly advised the companies which have fixed the record date/book closure date with an inadequate notice period required under the Clause 16 "to do the needful to ensure compliance,'' company law experts and company secretaries said that companies were now left with three options:

a) Make fresh applications changing the record/book closure date suitably along with due notice period of seven days for informing the stock exchange on the board meeting to declare interim dividend.

b) Withdraw the interim dividend proposal already made or

c) Go ahead with the proposal and face the flak, which could mean at the most suspension of trading for a period of time (depending on the stock exchange authorities), and pay a penalty of 0.001 per cent of the paid-up capital per day of suspension.

Meanwhile, registrars and share transfer agents have been flooded with requests for transfers.

Mr Vijay Sharma, Director of ABS Consultant, a category 1 registrar, said that pressure was there in the case of both dematerialised and physical shares this week after more than 150 companies rushed to declare interim dividend to beat the March 31 deadline.

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