Dividends for disclosure

10-01-2018

Moscow Exchange publishes recommendations for public JSCs
Kommersant, January 10
Moscow Exchange has drawn up dividend policy recommendations for public joint stock companies (PJSCs). These recommendations primarily apply to issuers whose shares are included in quotation lists of the first and second level.
Yesterday, Moscow Exchange published recommendations for drafting and implementing the dividend policy developed jointly with the Association of Institutional Investors. According to the Moscow Exchange Listing Rules, the availability of such a policy is mandatory for including shares of the PJSC in the top-level quotation lists (levels 1 and 2).
“The aim of these recommendations is to define the elements which, if included in the dividend policy, may improve the company’s investment appeal and ensure transparency of the mechanism for determining the amount of dividends and procedures accompanying dividend payment-related decisions,” the preamble of the document points out. Moscow Exchange recommends including in the dividend policy its underlying principles (observance of the rights and interests of shareholders, increasing the company’s investment attractiveness, ensuring transparency of the mechanism for determining the amount of dividends, etc.), specifying the time scope of their dividend policy (for the short-term, medium-term and long-term period) and the frequency of dividend payments, providing a clear description of procedural matters related to payments. It is also recommended that PJSCs include the description of their approach to preparing profit distribution recommendations and approach to the Board of Directors’ participation in decision making on dividends in the dividend policy.
In addition to guidelines for creating a corporate by-law, Moscow Exchange’s recommendations contain a description of the key aspects of implementing the dividend policy: the type of financial statements used for the calculation of dividend payments, disclosure of the target portion of FCF/net profit allocated for dividends (the payout ratio) in the dividend policy, the related benchmark, etc. Besides, Moscow Exchange recommends that companies set forth conditions under which payment of dividends may be inexpedient in their respective dividend policies. Excess of the target leverage level, failure to achieve the target liquidity ratios and breach of covenants on large loans raised by the issuer are mentioned among such potential conditions.
By: Maria Sarycheva

+7 (495) 510-53-06 Contact us | Join us