Nigerian Exchange Group Plc (NGX) has released its dividend policy in ensuring that shareholders received returns on their investment.
The policy document which was approved by the Group’s Board of Directors and published on the company’s website was, according to the group, formulated in accordance with the laws of the Federal Republic of Nigeria, investment and tax legislations, Codes of Corporate Governance, as well as internationally recognized best practices and principles.
The document stated: “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 dividend. 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 Group, the Policy document added, “NGX Group will apply the policy on an annual basis to develop a 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.
“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 provided guidance on 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 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 capitalization 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 practice 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).
The policy document stated, “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 document equally provided guidance on the date for when shareholders should expect to receive dividends will be paid by NGX, stating, “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.”
Equity investor group under the aegis of Independent Shareholders Association of Nigeria (ISAN) have expressed displeasures with the Federal Ministry of Finance and the Central Bank of Nigeria, CBN, over the policy impacts on the economy.
According to them, “There is obvious need for the two bodies to use the instrumentality of the monetary and fiscal policies to stem the ravaging hunger and privation in the land.”
Speaking through its National Co-ordinator, Dr Anthony Omojola, the group said their advise is that the monetary and fiscal authorities should emulate other nation’s across the world by introducing palliatives such as un-banning of certain vital food imports temporarily, granting tariff relief to certain industries and reducing taxes for some sectors.
According to him the government would be deceiving itself if it fails to acknowledge the poverty ravaging Nigerians, arising from the war in Europe as well as the devastating insurgency and insecurity in Nigeria.
He said the situation was worsened by food crisis, education crisis, the fuel crisis, debt crisis and the massive on-going theft in the oil and gas sector that have ensured the country missed the global windfall for oil and gas producers.
He said: “OPEC has increased its quota thrice since the Russia-Ukraine war but we are unable to benefit yet, and we have debts to pay”.
ISAN maintains that the government should eliminate corruption in the system; Duplication of charges and taxes; and where certain sectors of the economy are being over taxed, those sectors should be helped.
He stated: “FG has to un-ban those food products like wheat, corn etc that are essential so that there maybe food adequacy. Bread for instance is going out of reach of the masses as a result of wheat shortages. But the fear by government is obviously that imports may negatively effect our exchange rate and further de-value the Naira.
“That is why we are saying there should be a comprehensive review of the economy so that we can ably weigh the needed changes and their impacts on the overall economy.”