Top 500 Companies to disclose Dividend Distribution Policy

 

SEBI, in its Board meeting held on 19 May, 2016 has approved proposal for top 500 companies by market capitalisation to formulate and disclose their dividend distribution policies in the annual report and on their websites.

 

The policy includes:

a)         The circumstances under which their shareholders can or cannot expect dividend;

b)         The financial parameters that will be considered while declaring dividends;

c)         Internal and external factors that would be considered for declaration of dividend;

d)         Policy as to how the retained earnings will be utilized.

e)         Provisions in regard to various classes of shares.

 

When the company proposes to declare dividend on the basis of parameters other than what is mentioned in such policy or proposes to change its dividend distribution policy, the same along with the rationale shall be disclosed.

 

InGovern has, since 2011, recommended shareholders to ask companies to have a dividend policy and disclose it to shareholders. InGovern welcomes this decision by SEBI and sees it as another step towards good corporate governance practices.