The Nigerian Exchange Group (NGX Group) Plc may pay between 25 per cent and 75 per cent of its net earnings as cash dividends.
As part of its post demutualisation reforms, the board of directors of NGX Group has approved a dividend policy for the group. The dividend policy is a distinctive document for the NGX Group, which had emerged from the conversion of the defunct Nigerian Stock Exchange (NSE) from a not-for-profit mutual organisation to a profit-making public limited liability company.
According to the dividend policy, “the range of dividend payable in cash will range between a pay-out ratio 25 per cent and 75 per cent of the distributable profit of same year to which the dividend is applicable.
The policy also indicated that the group’s board of directors may recommend a scrip or bonus issue in any year and in any ratio as it deems fit for any year through the capitalisation of any undistributed retained earnings.
The policy however, noted that in recommending a bonus issue, the board shall maintain a balance between the paid-up capital and the undistributed retained earnings.
“The decision to declare and pay 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 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,” the policy stated.
The framework also provided guidance on the date for when shareholders should expect to receive dividends stating that “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”.
According to the NGX Group , the dividend policy seeks to guarantee shareholder rights especially as it relates to return on investment as the policy was developed to address issues relating to the determination and payment of dividend.
The NGX Group will apply the policy on an annual basis to develop a transparent and methodological dividend consideration and payouts, which will ensure that NGX Group has sufficient distributable profits and 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 or payment of dividend.
“To this end, the policy will guide the NGX Group in its approach to distributing surplus funds from its distributable profits 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,” NGX Group stated.