Dividend Distribution Policy
Introduction:
This policy is called “Summit Alliance Port Limited- Dividend Distribution Policy” (hereinafter referred to as the “Policy”) and has been framed by Summit Alliance Port Limited (“the Company”) pursuant to Bangladesh Securities and Exchange Commission (BSEC) Directive No BSEC/CMRRCD/2021-386/03 dated January 14, 2021 and BSEC Gazzettee Notification BSEC/CMRRCD/2009-193/23/Admin/123, dated August 31, 2021.
Objective:
The objective of the policy is to guide stakeholders on the dividend distribution framework adopted by the company. The Board of Directors of the company (the “Board”) shall consider the policy while resolving on dividends in compliance with the provision of the Companies Act- 1994, Notifications and Directives issued by the BSEC with other applicable laws of the country if any.
Principles for Declaration of Dividends
The dividend shall be declared on a per-share basis on the Ordinary Shares of the Company. Presently, the Authorized Share Capital of the Company is divided into ordinary shares of face value BDT 10 each. The Board shall recommend or declare the amount of dividend on each share based on the financial parameters set out below:
Internal factor
- Financial Performance: Consolidated Net Profit after Tax for the year for which dividend is recommended;
- Cashflow position of the Company and Net Debt to EBITDA ratio;
- Internal Capital planning framework: Working Capital requirements;
- Capital Expenditure requirements;
- Corporate Actions: Resources required to fund acquisitions, merger/ demerger, establishment of a new business or expansion and/ or investment in subsidiaries/ associates of the Company;
- Cost of raising funds from alternative sources of Capital;
- Cash requirement to meet the contingencies;
- Outstanding borrowings and subsequent repayment planning;
- Dividend payout history;
- Such other factors and/ or material events, which the Board of Directors of the Company may consider.
External factor-
- Prevailing legal requirements, regulatory conditions or instructions laid down under the applicable laws of the country.
- Shareholders’ expectations
- Macro-economic environment
Interim Dividend
The Board of Directors of the Company shall take decisions about payment of interim dividends for the shareholders based on the financial statements for a specific period of that financial year and declaring a record date to determine the shareholders who shall be entitled to such dividends. No stock or bonus entitlement shall be declared as interim dividend. The Board of Directors may from time to time pay to the shareholders such interim dividend as appears to the Board to be justified by the profits of the Company. The decision about declaring interim dividend and entitlement for such dividend cannot be changed.
Final Dividend
The Board of Directors of the Company shall recommend final dividend for the shareholders based on annual audited financial statements and decide to fix a record date to determine shareholders entitled to such dividend subject to approval of the shareholders in the Annual General Meeting (AGM). The decision about recommending and not recommending final dividends and entitlement for such dividend, if recommended, shall be taken after considering the interim dividend already distributed and cannot be changed unless shareholders in tha AGM decides otherwise.
In case of declaration of stock dividend for a year, due disclosure should be made detailing mode of utilization of such retained amount as capital (stock dividend) shall be disclosed to the regulators as well as to the shareholders and in the annual report of the company as well as approval from Bangladesh Securities and Exchange Commission is also required.
Classes of Shares:
Currently, the company does not have any other class of shares other than ordinary (equity) shares. In the absence of any other class of shares and/or shares with differential voting rights, the entire distributable profit for the purpose of declaration of dividend is considered for the ordinary shareholders. In the future, if the Company issues multiple classes of shares, the parameters of the policy will be appropriately addressed.
Entitlement of Dividend
Shareholders whose name shall appear in the Members Register of the Company or in the Depository Register of the Central Depository Bangladesh Limited (CDBL) on the ‘Record Date’ fixed by the Board before holding of the Annual General Meeting or any time in case of declaration of Interim Dividend of any respective year, will be entitled to receive the approved dividend. Circumstances under which shareholders of the Company may or may not expect Dividend The decision regarding dividend payout is crucial as it determines the amount of profit to be distributed among the Shareholders and the amount to be retained in the business. The Board of Directors of the Company may not recommend any dividend if the eligibility criteria for the recommendation of dividend has not been met by the Company, including restrictions placed on the Company on declaration of dividend or if the Board strongly believes the need to conserve capital for growth or other exigencies which will be spelled.
Dividend Distribution
SAPL shall pay off dividend to the entitled shareholders in the manner as under:
- In case of interim dividend, within 30 (Thirty) days of the record date; and
- In the case of final dividend:
- For cash dividend, within 30 (Thirty) days from the date of approval by the shareholders in the AGM.
- For stock dividend, within 30 (thirty) days of record date, which shall be fixed not earlier than 5(five) market days but not later than 10 (ten) market days from the date of receiving the consent of the Commission, as guided in gazetted Notification: BSEC/CMRRCD/2009- 193/23/Admin/123, dated August 31, 2021.
Cash Dividend:
Cash dividend shall be paid directly to the bank account subject to compliance of circulars/directives of BSEC or other regulatory authority from time to time.
- Through Bangladesh Electronic Funds Transfer Network (BEFTN)
- Through bank transfer or any electronic payment system as recognized by the Bangladesh Bank (if not possible through BEFTIN)
- In case of margin loan and claim by loan provider, through the Consolidated Customer’s Bank Account (CCBA)
- To the separate bank account of the merchant Banker or portfolio manager through BEFTN;
- Through the security custodian following Foreign Exchange Regulation for non-resident sponsor, director, shareholder, unitholder or foreign portfolio investor (FPI);
- Through issuance of Cash Dividend Warrant and send it through post in case of non-availability of information of the shareholder or unitholder.
- Amount of declared cash dividend payable for the concerned year/period shall be kept in a separate bank account as per circular of BSEC or other regulatory authority from time to time.
Stock Dividend:
The stock dividend shall be credited subject to the clearance of the regulatory requirement, BSEC Gazette Notification BSEC/CMRRCD/2009-193/23/Admin/123, dated August 31, 2021 and the Central Depository Bangladesh Limited (CDBL)]
- To the BO account;
- To the suspense BO Account for undistributed or unclaimed stock dividend/bonus shares. A new Suspense BO Account should be opened every year for the respective year’s suspense shares;
- The bonus dividend shall be transferred to the suspense BO account if BO account is not available or BO account is inactive;
- The sale proceeds of fractional bonus dividend shall be paid off as per circular of BSEC or other regulatory authority from time to time.
Tax Matters:
Tax on cash dividend will be deducted at source as per applicable Tax laws of the country.
Payment of Unclaimed or Unpaid Cash Dividend and Stock Dividend
SAPL shall not forfeit any unclaimed cash dividend or stock dividend till the claim becomes barred by the Law of the Land i.e. Limitation Act 1908 (Article 120 of the First Schedule) in force, provided that the Directors at any time negate such forfeiture, if any, and pay such dividend if claim is received from genuine claimant. Besides above, SAPL shall comply with the provisions of applicable laws and regulations issued from time to time by BSEC regarding disposal of unclaimed or unpaid cash and stock dividend to the entitled shareholders.
Utilization of Retained Earnings
The Board may retain its earnings in order to make better utilization of the funds available for the company and increase the value of the stakeholders eventually which ultimately is beneficial for both the company and stakeholders having due regard to the parameters laid down in the policy. The Company may declare dividend out of the profits of the company for the current year or out of the profits for any previous year or years or out of the free reserves available for distribution of dividend in accordance with the parameters as laid down in the Policy supported by the provisions of the Companies Act, 1994, notifications issued by the BSEC and other applicable legal provisions as amended from time to time. The retained earnings of the Company may be used in any of following way:
- Capital expenditure, and for the purpose of any organic and/or inorganic growth
- Declaration of dividend
- Issue of bonus shares
- Other permissible usage as per the companies Act, 1994.
Submission of Dividend Distribution Compliance Report:
SAPL shall submit a dividend distribution compliance report to BSEC, DSE & CSE in the specified format issued by the regulator(s) within stipulated time of completion of dividend distribution to the entitled shareholders.
Review of the Policy:
The policy may be reviewed and modified as may in the opinion of the Board or if required due to the change of applicable laws and regulations, as deemed necessary.
Disclosure of Policy:
The policy will be available on the company’s website and will also be disclosed in the company’s Annual Report.
Disclaimer:
* in the event of a conflict between the policy and the existing statutory regulations, the statutory
regulations will prevail.
** The Policy will serve only as a guideline for the Board. The decision in respect of the amount of dividend recommended/ declared by the Board (for any given period) will be final and shall not be open for a challenge based on the Policy.
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