NGX announces dividend policy to boost shareholders’ value

Nigerian Exchange Group (NGX Group) Plc has released its dividend policy to ensure that shareholders receive returns on their investments.

The policy document, which was approved by the directors of NGX Group and published on the company’s website, was formulated following the Nigerian investment and tax legislations, codes of corporate governance as well as internationally-recognised best practices.

According to the NGX Group policy document, “NGX Group, through its dividend policy, seeks to guarantee shareholder rights especially as it relates to return on investment. The policy is developed to address issues relating 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 the articles of association of the company.”

In terms of the administration of dividends by the Group, the policy document added that NGX would apply the policy on a yearly 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, before any declaration and/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 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 company said.

The NGX Group policy document also guided the dividend payable in cash in a year. According to the document, “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 the same year to which the dividend is applicable.

In addition, the policy indicated that the Group’s board of directors may recommend a scrip (bonus) issue in any year and in 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.

In keeping with best practices in corporate governance, the policy delegated the responsibility for the decision to pay dividends to the Board of Directors and the annual general meeting (AGM).

Furthermore, the policy document stated: “The decision to declare and pay a dividend, including the procedure for making dividend payments, shall be approved at the AGM of shareholders, upon the recommendation of the directors

“The 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 document equally provided guidance on the date for when shareholders should expect to receive dividends will be paid by NGX

It added: “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”.