Amman, May 18 (Petra) — The Securities Depository Center (SDC) has announced a strategic initiative to take over the distribution of cash dividends to shareholders in public shareholding companies, in what officials describe as a significant milestone in modernizing the country’s capital market framework.

The move is part of a broader effort to align Jordan’s financial market with global standards, enhance governance practices, and strengthen investor protection. According to the SDC, the initiative will help establish greater transparency, reduce administrative burdens on companies, and ensure equitable treatment of investors.

SDC Director Sara Tarawneh said the step represents a “qualitative leap” in market operations, positioning Jordan among countries that adopt international best practices in capital market management.

“This is not merely a procedural shift,” Tarawneh said in remarks to the Jordan News Agency (Petra). “It is a structural reform that reflects a professional, investor-oriented approach to market regulation.”

Under current law, companies are required to distribute dividends within 45 days from the date of their general assembly meeting. While companies typically handle this process themselves, the SDC’s new role would centralize and streamline distributions through its advanced electronic systems.

“The Jordanian Companies Law provides a clear legal framework for dividend entitlement, but the process often faces delays due to outdated records or logistical hurdles,” Tarawneh explained. “By assigning the SDC this role, shareholders can receive their dividends efficiently, whether in cash or stock, through secure bank transfers or investment accounts with brokers.”

She emphasized that the SDC’s centralized infrastructure, which includes accurate and secure shareholder records, is well suited for the task. The center already maintains non-redundant identification numbers and digital registries that can support a seamless transition to automated payouts.

Tarawneh pointed to similar systems successfully implemented in markets such as Oman, Egypt, Qatar, Tunisia, Morocco, and Bahrain. These countries have adopted centralized dividend distribution mechanisms, where payouts are deposited directly with the depository center and transferred securely to investor accounts.

Despite the system’s advantages, some companies have expressed reluctance, citing concerns over losing internal control or unfamiliarity with the administrative burden associated with direct dividend handling. Tarawneh said such concerns reflect a traditional mindset and a lack of awareness about the efficiency gains and investor confidence a centralized approach offers.

“Timely and effective dividend distribution has a direct impact on a company’s reputation and on the attractiveness of its shares,” she said. “It strengthens management credibility, boosts shareholder trust, and contributes to the overall investment climate especially for foreign investors who value market transparency and governance.”

The SDC, a national non-profit institution, was established to safeguard investor rights and improve capital market infrastructure. It provides its services free of charge and is currently working with a specialized legal team on proposed legislative amendments that would formalize its new responsibilities.

Tarawneh confirmed the center’s technical readiness to implement the initiative as soon as the legal changes are approved. She described the reform as a natural extension of the SDC’s mandate and a key step in building a transparent, efficient, and investor-friendly financial ecosystem.

“Protecting shareholder rights is the cornerstone of a healthy market,” she said. “We believe this initiative will play a vital role in fostering long-term confidence and attracting both local and foreign investment to Jordan.”

//Petra// RZ
18/05/2025 11:19:39