Sunday 29 November, 2020

Some shareholders will receive dividends amid COVID-19 pandemic

Some shareholders owning one per cent or less of issued shares within financial institutions are set to receive dividends declared for the 2019 and 2020 financial years. 

This development follows last month’s announcement by the Bank of Jamaica (BOJ) that local financial holding companies (FHCs) and deposit-taking institutions (DTIs) would suspend the distribution of dividends for the 2020 financial year. 

The central bank, in a press release on Thursday, said after discussions with the Jamaica Stock Exchange (JSE), it had communicated with FHC designates and DTIs indicating its non-objection to shareholders owning one per cent or less of the issued shares being paid their dividends for both periods.

Payments to shareholders owning issued shares of one per cent or less, would cover over 100,000 small and medium-sized shareholders representing, on average, 90 per cent of all shareholders in these FHC designates and typically about 28 per cent of the annual dividends, according to the central bank.

Meanwhile, payments to other shareholders would be postponed until circumstances normalize.

Once the economic conditions improve, it is expected that FHC designates and DTIs will return to normal dividend practices, the BOJ advised. 

Peter Melhado, Chairman of Sagicor Group Jamaica

Local conglomerate, Sagicor Group Jamaica on Friday, indicated that it intends to pay declared dividends to shareholders with shareholdings of one per cent or less as at April 24, 2020. 

“This is subject to the consent of the shareholders who currently hold more than one per cent of the shares of the company, and this approval is currently being sought,” the company said in a press release. 

Peter Melhado, Chairman of Sagicor Group Jamaica said, “Many of our small shareholders were adversely impacted and we are therefore very pleased with the latest decision by the Bank of Jamaica in conjunction with the Jamaica Stock Exchange.”

Melhado went on to say: “our funding and liquidity position will comfortably allow us to support the payout of the previously announced dividend to all other shareholders of record as of April 24, 2020, as soon as the Bank of Jamaica advises that it is appropriate.”   

Other institutions, namely JMMB Group and NCB Financial Group said they have noted the BOJ’s non-objection and will make a disclosure regarding dividends in due course. 

From left to right: Michael Lee Chin, chairman of the NCB Financial Group and Archibald Campbell, chairman of the JMMB Group

The central bank said the suspension of divividends was being done to conserve capital and further enhance licensees’ lending and loss-absorption capacities, given the challenges that bank customers will likely face in servicing loans as a result of the fall out in major segments of the economy. 

“This agreed position on the conservation of capital will help preserve financial system stability in the best interest of all stakeholders and is not intended to signal that any financial institution presently has liquidity or capital concerns”, the BOJ reaffirmed in a press release on Thursday.  

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