With many big corporates sitting on huge cash piles, Sebi
said it wants listed companies to have a dividend distribution policy and
hoarding of cash should be discouraged.Sebi Chairman U K Sinha said the regulator is working on a
proposal to encourage companies to distribute a certain amount of dividend
among shareholders for a certain profit made by them.He, however, added that this should not mean that the entire
cash should be distributed by the companies."Nobody is asking that the entire cash should be paid,
but there should be a dividend policy so there is some amount of certainty that
if a company is making an X percentage of profit, then so much will be
distributed."
The comments come at a time when a large number of companies
including Infosys, Bajaj Auto and Hero are said to be sitting on large cash
piles. There have often been demands that companies with large cash balances
should either distribute dividend or use the cash for other business needs.Noting that there is a strong investor sentiment worldwide
against companies hoarding cash and being stingy with dividend payouts, Sinha
said Sebi is "looking at a method to incentivise corporate India to have a
dividend distribution policy".Pointing out that there is "no declared dividend policy
in the country", Mr Sinha said shareholders have been demanding that the
regulator ensure that at least there is a dividend policy.
