The website of the Central Bank of the Russian Federation published Information Letter No. IN-02-28/9 dated 08 February 2024 “Information Letter of the Bank of Russia on Approaches to Determination and Disclosure of Dividend Policy (“Information Letter”). The Central Bank of the Russian Federation recommends that companies whose securities are admitted to organized trading (“PJSC”) develop and implement a transparent and understandable mechanism for determining the amount of dividends and their payment. For this purpose, the Bank of Russia proposes PJSCs to approve a dividend policy as a separate document and define therein:
- rules governing the procedure for determining the part of net profit allocated for dividend payments;
- conditions under which dividends are declared (not declared);
- the procedure for calculating the amount of dividends on stocks, the amount of dividends on which is not determined by PJSC’s Charter;
- minimum dividends on stocks of PJSC of different categories (types);
- determine the term of validity of the dividend policy, as well as the procedure, frequency and conditions of its revision;
- for PJSCs that prepare consolidated financial statements, – the procedure for determining the minimum part of consolidated net profit allocated for dividend payments.
In addition, in Information Letter the Central Bank of Russia recommends that in developing or amending the dividend policy, it should take into account the widest possible set of factors and financial/economic circumstances affecting the PJSC’s activities and the decision to pay dividends, the share capital structure, as well as the objective interest and need of shareholders and investors for information on the PJSC's activities.
In addition, the Bank of Russia recommends that the Board of Directors (Supervisory Board), when determining the dividend policy of a PJSC, assess:
- compliance of PJSC’s dividend policy with the recommendations of the Bank of Russia;
- relevance of the dividend policy and expediency of its revision;
- comparability of the dividend policy with PJSC’s operational and strategic development plans;
- compliance of PJSC’s practices of disclosure (provision) of information on the proposed distribution of net profit with the requirements of the legislation on countering illegal use of insider information and market manipulation;
- compliance of PJSC’s practices of disclosure (provision) of information on the proposed distribution of net profit, practices of interaction with interested parties stated in the dividend and (or) information policy with the principles, approaches, conditions, standards and recommendations of the Bank of Russia;
- consistency and uniformity of approaches to information disclosure when making a decision to pay (not to pay) dividends.
These recommendations of the Central Bank of Russia also apply to other companies if they have minority stockholders and (or) if the companies plan to raise capital in organized trading.