Timely payout, shareholders’ rights… NGX Group releases dividend policy

Nigerian Exchange Group Plc has released a dividend policy to ensure adequate returns on investments by shareholders.

According to a statement by NGX, the policy document, which was approved by the group’s board of directors and published on the company’s website, was formulated in accordance with the laws of Nigeria, codes of corporate governance and investment and tax legislations.

According to the document, “NGX Group, through its Dividend Policy, seeks to guarantee shareholders’ rights especially as it relates to the determination and payment of dividends. The Group shall apply the policy, accordingly to determine any claim by any shareholder, individual or institution, regarding the dividends payouts by NGX Group subject to provisions in the Articles of Association of the Company”. 

In terms of the administration of dividends by the company, the policy document added that NGX Group would apply the policy on an annual basis to develop transparent and methodological dividend consideration and payouts.

“This approach will ensure that NGX Group has sufficient distributable profits and/or general reserves, as determined by a review of the company’s audited financial statements as well as consideration of other financial factors, prior to any declaration and/or payment of dividend,” the document reads. 

“To this end, the policy will guide the NGX Group in its approach to distributing surplus funds from its distributable profits and/or general reserves to shareholders, as may be determined by the profit and availability of cash for distribution; operating, and investment needs of the company; anticipated future growth and earnings of the company; and provisions of the Company’s Articles of Association among others.” 

The NGX Group policy document also provided guidelines on the dividend payout.

“The range of dividend payable in cash will range between a payout ratio 25 percent and 75 percent of the distributable profit of same year to which the dividend is applicable,” it added.

In addition, the policy indicated that the group’s “board of directors may recommend a scrip (bonus) issue in any year and any ratio as it deems fit for any year through the capitalisation of any undistributed retained earnings, wherein the board, in recommending a bonus issue, shall maintain a balance between the paid-up capital and the undistributed retained earnings”. 

NGX added that the policy delegated the responsibility for the decision to pay dividends to the board of directors and the annual general meeting (AGM). 

“The decision to declare and pay a dividend, including the procedure for making dividend payments, shall be approved at the Annual General Meeting (AGM) of shareholders, upon the recommendation of the board of directors,” the policy reads. 

“The Board of Directors may in its discretion declare an interim dividend based on profits arrived at as per quarterly or half-yearly unaudited financial results, noting that where no final dividend is declared, the interim dividend shall be regarded as the final dividend in the AGM.

“Dividend is to be paid on the date in which the AGM holds in the year that dividend is declared or at any other date that the shareholders at AGM shall approve, and no interest shall accrue on any unclaimed dividend.”