Payment of dividends during COVID-19 disruption: new ICSA guidance

Payment of dividends during COVID-19 disruption: new ICSA guidance

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For most companies, the focus during the current crisis is on conserving cash resources. It may be difficult to justify payment of a dividend, especially in the light of directors’ duties owed to the company and the focus on prioritising its survival. 

Directors may conclude that it is no longer appropriate to recommend or declare a dividend due to be voted upon at the company’s next AGM.  Or they may conclude that the dividend should still be paid but the amount should be reduced.   

A new note was published on 29 April 2020 by ICSA, The Chartered Governance Institute, on issues surrounding this topic.  In particular it covers:

  • What a company can do if it wishes to amend or withdraw its dividend resolution
  • What is the impact on proxy votes if a resolution is being amended to reduce the dividend after proxy votes have been submitted?
  • The impact on stock exchange announcements, whether inside information and whether a trading update should be made at the same time.

The ICSA note provides very general advice in this area.  Please do get in touch if we can be of any assistance.

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