Bank Austria Creditanstalt (BA-CA) has reported from Sofia that the Bulgarian Financial Supervisory Commission is likely to appoint the local central securities depository (CSD) as the sole paying agent for the payment of dividends.
At present, all Bulgarian companies pay dividends through banks they have designated as paying agent. However, the paying agents are required to solicit a written instruction from each shareholder. In the case of foreign investors, this process has proved complex, with investors obliged to provide their custodian not only with payment instructions but also with a set of documents proving the validity of these instructions. “All those documents had to be translated and legalised and consequently be submitted to the respective company in order to receive the dividend,” explains a BA-CA spokesman in Bulgaria.
BA-CA believes that in future the CSD will calculate the dividends and inform the respective company about the total amount of dividend payments; the company will then pay the overall amount to the CSD; and the CSD will then distribute the respective amounts to the accounts of the custodians on behalf of their clients.
“For proper reconciliation, the CSD will distribute a list of underlying clients of each custodian to the respective custodians, enabling them to credit their clients’ accounts with the respective dividend amounts,” adds the BA-CA spokesman. He says the new dividend procedure will make the market more efficient and less risky.