Euroclear Belgium plans launch of direct dividend payment service

Euroclear Belgium Plans Launch Of Direct Dividend Payment Service

09/09/09

Euroclear Belgium intends to launch a new service for the electronic payment of dividends for securities held in dematerialised, physical and nominative forms. Barring any regulatory objection, the new service, expected to commence in November, will increase operational efficiency, simplify the dividend payment process and reduce the cost to issuers of making dividend payments.

Euroclear Belgium will streamline and harmonise the dividend payment process by offering to receive funds directly from issuers and distribute dividends directly to custodians that hold securities on behalf of their clients. Today, issuers deposit funds for dividend payments to paying agents, which make payments bilaterally to custodians upon presentation of the relevant dividend coupon. Euroclear Belgium will also centralise all tax-related documentation pertaining to dividend payments, such as tax declarations, refund filings and so forth.

Several Belgian companies have already expressed interest in Euroclear Belgium’s new service. After the successful execution of Business Solutions Builders International SA’s (BSB) dividend payment, ABATAN and Auriga International have decided to use the service in pilot mode.

Stéphane Bernard, Chief Operating Officer of the Euroclear central securities depositories in Belgium, France and the Netherlands, said: “Market practices have changed since the Belgian securities dematerialisation law came into force in 2008. For example, issuers have become direct clients of Euroclear Belgium actively using its Euroclear CapitrackTM (Capitrack) dematerialisation and nominative register services. As a neutral partner to the Belgian capital market, Euroclear Belgium is looking to add value to issuers specifically, by reducing dividend payment processing costs, shortening the duration of time from the issuer’s release of funds to the distribution of dividend payments to investors and easing payment reconciliation. Centralising dividend payments and tax-related data will bring greater efficiency and transparency to the entire process.”

Michel Isaac, Chairman of the Board of Business Solutions Builders International SA, commented: “Since the initial public offering in 2008, BSB has used Euroclear Belgium’s Capitrack service for the management of all its dematerialised and nominative registered shares. Faced with a more diversified and larger shareholder base, BSB considers the direct dividend payment service to be offered by Euroclear Belgium as a logical continuation of Capitrack. Thanks to this very efficient payment service, our dividend for the year 2008 has been paid within only five working days of the ordinary general meeting.”