Dividend distribution policy for listed companies
SEBI Board approved the proposal for the top 500 listed companies (by way of market capitalization) to formulate and disclose their dividend distribution policies in the annual reports and on their websites.
Such policy may include:
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.
This step will help the investors in taking well informed investment decisions.
Source SEBI Board Meeting,PR No. 98/2016, 19.05.16