Digitised settlement infrastructure for listed firms
View(s):The Colombo Stock Exchange (CSE) has urged listed firms to initiate paying dividends to shareholders through the digital process.
CSE officials told the Business Times that digital payment methods need to be deployed now to settle shareholder funds. “This is especially true for dividends,” an official noted saying that about two months ago, the CSE had sent a circular to all listed firms requesting them to remit the dividends to the account provided by the shareholders. This is called dividend disposal instructions. CSE is encouraging this as now there is a high volume of cheques issued as dividend payments from the listed companies of the CSE, even for very small values.
The Central Bank (CB) recently highlighted the importance of the CSE using settlement infrastructure noting that the CSE needs to consider the possibility of mandating use of electronic payment methods that are currently available. “We encourage and request the CSE to consider the possibility of the mandatory use of electronic payment methods for dividend payments. Similarly, there are new technologies that can be explored by securities and exchanges,” CB Governor Dr. Indrajit Coomaraswamy advised at a recent meeting. He added that a committee set up to find ways to reduce physical cheque payments found that dividend payments by listed firms made up a large volume of cheques still issued in the country. “Some of these cheques were for very small amounts,” he said.
The CSE official added that last year they had implemented electronic payment methods for dividend payments and now the onus is on the companies and the shareholders to go through with it.
(DEC)