The Bangko Sentral ng Pilipinas (BSP) on Monday announced the liberalized rules governing the declaration of dividends by banks and quasibanks while aligning local standards with international best practices.
In a statement, the central bank said the Monetary Board approved rule changes allowing banks and quasi-banks to declare dividends on shares of stock and similar capital instruments.
The central bank explained the policy will bring publicly listed banks and quasi-banks in a position to comply with the 30-calendar day timeline prescribed under the Asean Corporate Governance Scorecard for the payment of dividends to shareholders of record.
“The policy amendment aligns the dividend declaration standards with international standards on the rights of shareholders in particular; holds more accountable the board of directors and management of the bank and quasi-bank on the declaration of dividends,” the central bank said.
The liberalization was also seen to make more transparent to the public the dividend declaration given the strict regulatory disclosure rules.
The BSP also said policy requires that dividend declarations be immediately recognized as a “liability” in accordance with Philippine Accounting Standards and that it be disclosed in the statement of equity changes and in the notes to financial statements.
Banks and quasi-banks that choose not to comply with amended regulations on dividend declaration shall be reverted back to “prior Bangko Sentral verification” requirement.
They may also be subject to other enforcement actions provided by law or by regulations, including possible declaration of unsafe or unsound banking practice.
“Dividend declaration is ultimately the responsibility of the bank/quasi-bank and its board of directors. Banks and quasi-banks that meet the prequalification criteria, including capital adequacy requirement shall be qualified to declare and pay dividends without prior Bangko Sentral verification.