The Monetary Board has approved changes to rules governing dividend declarations of banks and quasi-banks (QBs) in the Philippines, the central bank said on Monday, in line with efforts to adopt international standards.
The Bangko Sentral ng Pilipinas (BSP), in a statement, said the policy amendments would protect shareholders, make bank boards and management more accountable and raise the transparency of dividend declarations.
The policy would bring publicly listed banks/QBs in a position to comply with the 30-calendar day timeline prescribed under the Association of Southeast Asian Nations (Asean) Corporate Governance Scorecard for the payment of dividends to shareholders of record.
The new rules also require that dividend declarations be immediately recognized as a liability in accordance with Philippine Accounting Standards and that these be disclosed in the statement of equity changes and in the notes to financial statements.
Dividend declaration is ultimately the responsibility of the bank/QB and its board of directors, the BSP said.
The central bank added that banks and QBs that meet the pre-qualification criteria including capital adequacy requirements would be qualified to declare and pay dividends without prior approval by monetary authorities.
“Basically, no more prior BSP evaluation/clearance before a bank can declare dividend unless a bank has been specifically directed by MB otherwise,” central bank Deputy Governor Nestor Espenilla Jr., said in a text message to reporters.
Espenilla added that it would be the bank’s responsibility to determine and certify its compliance with BSP requirements.
“Sanctions apply if a bank is later found to violate conditions including loss of privilege,” he said.
Any bank or QB that misrepresents or does not comply with the amended rules will be reverted back to the “prior Bangko Sentral verification” requirement.
“Those entities may also be subject to other enforcement actions provided by law/regulations including possible declaration of unsafe or unsound banking practice,” the BSP added.