Basically two types of capital finance are required for formal industrial, commercial and service oriented ventures, one is long term capital and other is short term working capital. Long term capital is required for capital expenditures to set up the venture and short term working capital is required for operation of the venture. Usually sponsors initially provide finance for capital expenditure subscriber in memorandum of association purchasing shares. The venture starts operation getting finance as working capital from commercial bank. Sponsors collect additional long term capital from capital market offering shares to public and institutional investors. That is, long term capital expenditure is collected from sponsors and general shareholders and short term working capital is collected from commercial bank.

In Bangladesh capital market is not vibrant, sponsors are reluctant to go to capital market and general public do not consider capital market as good place for investment. They do not get lucrative dividend from investing in capital market, that is, purchasing shears, mutual funds and debentures. In Bangladesh the listed companies of Bangladesh origin are reluctant to pay possible maximum dividend to shareholders. Whatever net profit Bangladesh origin listed companies make, they keep a big chunk of profit as retain earning and distribute a negligible portion of profit to shareholders as dividend. Whereas when any one looks into the scenario of multinational companies listed in stock exchange in Bangladesh, it is usually seen that maximum net profit is distributed amongst shareholders as dividend and a small portion is kept as retain earning. It is one of the basic reasons, the market price of shares of multinational companies are getting high. On the other hand, price of Bangladesh origin shares of companies' are continuously getting down. For instance, in 2018, June end financial year Rangpur Foundry earned net profit per share Tk4.38. It distributed Tk2.30 dividend per share. In 2018, June end financial year BSRM Steel earned Tk4.20 per share but it distributed 10% bonus share. In 2018, June year end Bengal Windsor earned Tk1.30 per share, it distributed Tk0.50 dividend per share. In yearend 2018, Padma Oil earned Tk28.36 net profit per share and distributed Tk13.00 as dividend per share. Summit Power in year end June 2018 earned Tk5.08 per share but distributed Tk3.00 as dividend per share. Dhaka Electric Supply Company earned in year end June 2018 Tk3.52 and distributed dividend Tk 1.00 dividend per share. Titas Gas in June 2018 year end earned Tk4.28 per share but distributed dividend Tk2.50 per share. United Commercial Bank earned Tk2.37 net profit per share but distributed Tk1.00 per share for year 2018. Amraa Technologies in year end June 2018 earned Tk1.96 per share and gave dividend Tk1.00 per share. The directors who administer the companies are, in general, interested to take financial and materiel benefits in informal ways. They are not interested to take reasonable profit from possible maximum dividend to all shareholders, irrespective of small or large shareholders. In different ways they unofficially take benefit from plc. For instance, the directors enjoy full time vehicle facility at cost of the company, that is, company purchase vehicle, employ driver, pay fuel, maintenance and documentation cost. It is shown that the vehicle is used for the company's purpose. In practice, the vehicle is used by the director for personal and family purpose. The directors take materiel and financial benefit at cost of company but not in formal way.

In Bangladesh when any one looks into the performance of multi-national companies (MNCs) enlisted with stock exchange the opposite scenario is seen. They provide dividend in such a way that maximum portion of net profit is distributed among shareholders. For instance, Reckitt Benckiser BD in June end 2018 year earned Tk55.84 and distributed Tk79.00 per share. Berger Paints in 2018 earned Tk35.52 per share and gave 100% bonus share and Tk20.00 cash per share as dividend. Marico Bangladesh earned Tk65.85 per share in year end March 2018 and distributed dividend Tk60.00 per share. Heidelberg Cement in year end June 2018 earned Tk15.59 per share and distributed dividend Tk15.00 per share. Like way, Singer Bangladesh in year end June 2018 earned Tk11.96 per share and gave dividend 300% bonus share per share. In fact there is dearth of MNCs. Small investors' do not have opportunity to invest in share of MNCs overhear.

To make the capital market vibrant board of directors of Bangladesh origin plc are to be encouraged to pay maximum dividend to shareholders from net profit. Reduced corporate tax is imposed on profit of publicly listed companies nowadays. Government can design provisions for corporate tax and income tax in such a fashion that directors encourage paying maximum profit to all shareholders. Corporate tax at lower rate is to be imposed on profit earned by the company and distributed to shareholders in cash. On the undistributed profit corporate tax at higher rate is to be imposed. For instance, 25% corporate tax is imposed on net profit of a listed company and 30% corporate tax is imposed on net profit of a non-listed company in same sub-sector. It does not encourage the directors of Bangladesh origin listed companies to pay maximum possible profit of the company to its shareholders. If 15% corporate tax is imposed of net profit that is distributed among shareholders as dividend and 30% corporate tax is imposed on the remaining profit as retain earning (non-distributed net profit) the directors will be encourage to recommend maximum dividend to shareholders. Income tax at 10pc from individual shareholders and 25pc from institutional shareholders on dividend income from company is to be imposed at source. After deducting that tax at source the amount is to be treated as tax paid income of shareholder concerned. Net dividend income from a listed plc of a shareholder will not be added to other taxable income of the shareholder to determine tax amount. In such event, board of directors of local listed plc will also recommend possible maximum portion of net profit of the company as dividend. Public will be interested to invest in shares of plcs. Capital market will be vibrant. Entrepreneurs will get their long time finance from capital market and short time finance from commercial banks. It will facilitate formation of new companies and increase business as we as employment. It would aid to achieve SDG.

Millions of potential investors are turning their face from capital market. Sponsors are losing opportunity of collecting essential long term finance from capital market. Commercial banks are hesitant for long term financing to any venture as they connect deposit from clients for short time. BSEC, DSC, CSC and other institutional stakeholders have been suggesting different measures but capital market is not improving as desired. When directors of listed companies will behave rationally and provide possible maximum dividend to all shareholders, public having small saving individually but huge saving collectively will opt for purchasing shares of listed companies. When general shareholders will get handsome dividend regularly form their shares they will not sale their shares. They will sale their shares only when they will badly need money, e.g., to send their kids abroad for higher study, to buy flat, to purchase land, to purchase health service in serious sickness, spends money for marriage of daughter etcetera. In long run as a consequence capital market will be vibrant. This way economy will progress fast. BSEC on last 20 June 2018 issued a notification where listed companies were directed not to pay dividend from retain earning. As per the notification, dividend only could be de-cleared from current year's profit. It will discourage directors to pay dividend in a year when profit earning will be less even retain earning deposit remain good. I like to urge BSEC authority to review the notification and to make such provision that will encourage directors to pay maximum possible dividend to shareholders. BSEC can make mandatory provision that when retain earning or reserve is equal or higher then paid up capital of a listed company, directors have to recommend earned full net profit as dividend to shareholders. To prevent continuous falling share price has no alternative but to pay higher dividend to shareholders. It would aid to achieve SDG.

Md. Ashraf Hossain, Company Secretary, Power Grid Company of Bangladesh Ltd., Aftab Nagar, Badda, Dhaka 1212