Dividends from public bodies reduced
Cabinet has approved the reduction of dividends from 50 per cent to 35 per cent to be paid by public bodies as required by law.
This is confirmed in the F.K. (18) 25 issued on August 8, 2018 with the new policy going into effect July 1, 2018.
The Cabinet directive stated that for the financial year 2018-2019, the dividend is to be paid in two installments. Attached with the F.K. document was an information paper, which outlined the new dividend policy that there will be no exemptions to the minimum dividend requirement, unless the public bodies fail the solvency test.
“Directors are required to formally consider the solvency and document their decision and supporting information. Exemptions for solvency are to be explained in writing including rationale and circumstances to the shareholding ministers and copied Ministry of Public Enterprises,” stated the Cabinet directive.
According to the information paper attached to the Cabinet directive, an interim dividend of 35 per cent of actual net profit after taxes for the six months to December 31, is calculated using the tear-to-end results in the October-December quarterly report provided to M.P.E.
“The interim dividend must be paid on or before 28 February. A final dividend of 35 per cent is calculated using July-June (Y.T.D.-N.P.A.T. less any interim dividend paid and the final dividend must be paid by31 August.”
Furthermore, the Public Trading Bodies (P.T.B.) are required to formally review their ability to pay an addition special dividend based on cash and financial assets; debt management and capital expenditures requirements
The information paper also stated that while the policy is effective July 1, 2018 it can be initially applied to the financial year 2017-2018 results.
“This means all outstanding dividends payments prior to the financial year, ending 30 June, 2018 results will be computed based on the old dividend policy of 50 per cent of N.P.A.T.”