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Quarterly dividends allowed even where QR not a must

Quarterly dividends allowed even where QR not a must

Source: Business Times
Article Date: 07 Feb 2020
Author: Claudia Tan

Previously, under SGX rules, an issuer is not allowed to make any dividend announcement unless accompanied by financial results of the relevant period or if results have been announced.

With mandatory first and third-quarterly reporting lifted, listed companies can still make quarterly dividend announcements even if they are not accompanied by financial results - provided they meet certain conditions.

According to a practice note issued by the Singapore Exchange Regulation (SGX RegCo), these conditions include a committed dividend policy to announce quarterly dividends and confirmation that it has sufficient resources to fulfil its liabilities.

In addition, if the issuer is a company, it has to comply with the Companies Act, which states that firms can only pay out dividends from its profits.

Previously, under SGX rules, an issuer is not allowed to make any dividend announcement unless accompanied by financial results of the relevant period or if results have been announced.

Around 30 issuers here, including real estate investment trusts (Reits), pay out quarterly dividends, according to official data.

The practice note on dividend payment was issued amid queries on the impact of the removal of quarterly reporting (QR) on companies that distribute quarterly dividends.

"We have heard some questions on how companies paying quarterly dividends will be affected by the rule change, so that is something we took into account and decided to issue this clarification," Michael Tang, SGX RegCo's head of listing policy and product admission, told the media.

QR was implemented in 2003 for listed companies with market capitalisation of above S$20 million, and subsequently raised to S$75 million amid cost concerns for smaller companies.

In a bid to shift away from a size-based approach, SGX RegCo announced in January that it will no longer require QR from listed companies, unless they are associated with higher risks.

The regulator had since disclosed a list of 109 companies that still have to undertake QR because they do have clean audit opinions or face financial and regulatory compliance issues.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

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