IBAN now a mandatory requirement for maintaining account with CDC
CDC’s core purpose is to automate Capital Market processes and make mechanisms smooth and efficient. In pursuance of this aim, the Company had been working towards introducing electronic disbursement of dividends mechanism by utilizing modern banking channels.
Recently, with the newly promulgated Companies Act, 2017, our efforts have been endorsed by the regulatory authorities. As per Section 242 of the Act, it has now become mandatory for all listed companies to pay dividends to their shareholders electronically. For companies to comply with this requirement it has become necessary that International Bank Account Number (IBAN) of investing public are available to facilitate payment of cash dividends in electronic mode.
As a result, CDC has made it mandatory for Capital Market investors to provide IBAN as part of the registration details for opening and maintaining Sub Account in the Central Depository System (CDS). This amendment in CDC Regulations has also been approved by Securities and Exchange Commission of Pakistan (SECP).
This regulation will help facilitate electronic payment of cash dividends directly into the bank account of shareholders, making the process in line with international practices.
The necessary tools for insertion of IBAN have also been made available in the Central Depository System (CDS) from September 14, 2017 (onwards) for the convenience of the clients. Furthermore, subscription of SMS alerts for all Resident Pakistani Individuals and email alerts for Foreign/Non-Resident Individuals and Corporate entities has also been made mandatory to maintain transparency by providing timely update of transactions.
Awareness sessions were also organized for all CDS Participants and Global Custodians to ensure smooth implementation of this regulation and ensure transparency.