DIVIDEND POLICY
1.0 Definitions
1.1 “The
Company” refers Global University Business Club Limited.
1.2 “Dividend
(s)” refers to either an interim or final Dividend(s).
1.3 “The Law” means
the Companies Act No. 1 of 2012.
2.0 Introduction
The Corporate dividend
policy of the Company is formulated in accordance with the Laws of the Republic
of Uganda, investment and tax legislations, Codes of Corporate Governance, as
well as internationally recognized best practices and principles. The policy is
a medium of guaranteeing some of the shareholder rights as contained the 2012
Companies Act code of Corporate Governance enshrined under Table F of the
Companies Act.
3.0
Applicability
Issues relating to the
determination and payment of dividend shall be subject to this policy. The policy
shall accordingly be employed in determining any claim by any shareholder,
individual or institutional regarding the dividend of the Company subject to
any provisions in the Articles of Association of the Company. The policy shall
be applicable to all classes of shares of the company.
4.0 Objectives
4.1 To define the
policy and procedures of the Company in relation to the calculation,
declaration and settlement of Dividends and the determination of the form and
time periods within which Dividends are paid.
4.2 To ensure that the
Company has sufficient distributable profits and/or general reserves, as
determined by a review of the Company’s audited financial statements, prior to
any declaration and/or payment of Dividends.
4.3 To create a
transparent and methodological Dividend policy, adherence to which will be
required on annual basis, with any deviations clearly identified and promptly
communicated to appropriate stakeholders.
4.4
To ensure that Dividends are either paid for in cash or in stock
5.0 Declaring
Dividends
5.1 The Company’s Board
of Directors shall be responsible for generating all resolutions on the
declaration and payment of Dividends.
5.2 The decision to
declare and pay Dividends, including the procedure for making Dividend payments
on each type and class of shares, shall be made at the Annual General Meeting
(“AGM”) of Shareholders, upon the recommendation of the Board of Directors. The
resolution of the Board of Directors shall be presented in the form of a
recommendation to the Shareholders.
5.3 The decision on
whether to declare and pay Dividends shall be a separate item of agenda at the
AGM.
5.4 The decision on
the Dividend amount payable and the payment procedure shall be made by the
Board of Directors at a meeting where the resolution for preliminary
distribution of the Company’s net profit for the fiscal year is made by the
directors, and recommended to the Shareholders.
5.5 Any
declaration to pay Dividends must provide the following:
5.5.1
The type and class of shares on which the Dividends have been declared;
5.5.2
The amount of Dividends per share of each type and class;
5.5.3
The period for payment; and
5.5.4
The form of payment.
5.6 The decision to
declare Dividends on common shares may be made only after a decision has been
made to declare Dividends on all classes of preferred shares and in the full
amount, as determined in the Articles of Association.
5.7 In case of the
Company’s classes of preferred shares, a decision to declare Dividends on the
preferred shares shall be made pursuant to clause 5.6 and in accordance with
the Company’s Articles of Association.
5.8 Where there is an
inconsistency between clause 5.6 and the Company’s Article of Association with
respect to the order of priority of Dividends, the provisions set forth in the
Company’s Articles of Association must be adhered to.
5.9 The Company will
not declare any Dividend(s) where:
5.9.1
There are reasonable grounds for believing that the Company is or would be,
after a Dividend payment, unable to pay its liabilities or discharge its
obligations as and when they become due;
5.9.2
Pursuant to Dividend decision date, the Company is insolvent or bankrupt in accordance
with the provisions of insolvency or bankruptcy law, or where, as a result of
paying Dividends, the Company would be rendered insolvent or bankrupt;
5.9.3 Prior to the Dividend decision date, the net asset value of the Company is less than its Articles of Association capital, reserve fund and the excess of the liquidation value over the nominal value of the outstanding preferred shares as set forth in the Articles of Association; or 5.9.4 There is any other case set forth by any law.
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6.0 Common or
Preferred Shares
6.1 Dividends
shall be paid out of the Company’s
distributable profits and/or general reserves, and
shall be allocated among shareholders on a pro rata basis according to the number
of each type and class of shares held.
6.2 Dividends on
preferred shares may be paid out of the Company’s funds specifically designated
for its purpose.
6.3 The amount of
Dividends on common shares is determined upon recommendation of the Board of
Directors as provided in the Articles of Association and may not exceed the
amount so recommended.
6.4 The amount of
Dividends on one common share shall be equal to the total amount of common
Dividends to be paid divided by the total number of the Company’s common
shares outstanding, as of the Dividend
record date, on which Dividends may be
payable pursuant to the Law.
6.5 The
amount of Dividends on preferred shares
is determined by the terms of the agreement
underlying the preference share. These terms shall however be subject to the
provisions of the Company’s Articles of Association
6.6 The amount of
Dividends for one preferred share of a particular class shall be equal to the
total amount of Preferred Dividends divided by the total number of the
preferred shares of that class.
6.7 Preferred and common Dividends distributed to shareholders shall be declared before tax deductions from Dividends.
7.0 Taxation
Policy
7.1 Dividends
shall be paid to shareholders after deduction of withholding tax at
the prevailing rate currently fixed at ten (10) percent based on the
existing tax legislation.
7.2 The
rate of the withholding tax deducted from dividend paid to shareholders
resident in countries having tax treaties with Uganda shall be in line with the
relevant provisions of the applicable treaty.
7.3 Withholding
tax deducted from Dividends paid by the Company shall be remitted in accordance
with the provisions of the relevant tax legislation or tax treaty.
8.0 Persons
Entitled to Receive Dividends
8.1 The
list of persons entitled to receive Dividends shall be prepared by
the Company’s External Registrar according to the instructions of the
Company.
8.2 The
list of persons entitled to receive Dividends shall be prepared as of the
record date on which the list of persons entitled to participate in the AGM at
which the decision to declare Dividends is to be considered.
8.3
Such list shall include registered shares, and the persons on behalf of whom
the nominal holders own the shares as of the record date.
8.4
For the preparation of the list of persons entitled to receive Dividends,
nominal shareholders shall provide information on the persons for whom they
hold shares.
9.0 Paying
Declared Dividends
9.1 The
date on which annual Dividends are paid shall be determined by the outcome of
the AGM.
9.2 The
Company shall continue making payments of declared Dividends as to those shares
for which the owners have not received the accrued Dividends, or for which they
have not claimed the Dividends within the period defined pursuant to the Law.
9.3 No
interest shall accrue on unclaimed Dividends, provided:
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9.3.1 Where Dividends
are returned to the Company unclaimed, the Company shall send a list of the
names of the persons entitled with the notice of the next AGM.
9.3.2 After the
expiration of three months of the notice mentioned in 9.3.1, the Company may
invest the unclaimed Dividend for its own benefit in an investment outside the
Company and no interest shall accrue on the Dividends against the Company.
9.3.3 Where Dividends
have been sent to members and there is an omission to send to some members due
to the fault of the Company, the Dividends shall earn interest at the current
rate from three months after the date on which they ought to have been posted.
9.3.4 For the purpose
of liability, the date of posting the Dividend warrant shall be deemed to be
the date of payment and proof of whether it has been sent is a question of
fact.
9.4 The
Company is responsible for paying all declared Dividends. Accordingly, the
Company shall be liable to its shareholders for the failure to discharge this
duty, pursuant to the Law.
9.5 The
preparation, coordination, and all arrangements required from the Company in
connection with the payment of Dividends set forth herein shall be the
responsibility of the Corporate Secretariat Office, the functions of which
include relations with shareholders.
9.6 The
Company shall notify its shareholders of the time, form, place, and procedure
for the payment of the Dividends by distribution of notices by mail or SMS or
other devices to the residential or email addresses or telephone numbers set
forth in the shares registers and/or the processes of E– Dividend payment or by
publication of such information in the print media as specified in the
Company’s Articles of Association for notification of shareholders.
9.7 For
the purposes of organizing and completing the payment of Dividends, the Company
shall have the right to engage an external entity, a “Payment Agent”, on a
contractual basis. However, such arrangement shall not release the Company from
liability to shareholder for the payment of Dividends.
9.8 The
Company is obligated to inform shareholders of its use of a Payment Agent,
including their replacement, where relevant, and the expiration of the term of
their authority by way of publication of such information in the print media as
established in the Company’s Articles of Association for notification of
shareholders and/or by distribution of notices by mail or SMS or other devices
to the residential or email addresses or telephone numbers set forth in the
list of persons entitled to receive Dividends or by any publication in the
annual report presented to the AGM.
9.9 The
Company shall be a tax agent for the purposes of the withholding and
submission, to the relevant tax authority, of taxes payable on dividends. The
Company shall perform the necessary calculations and deduct taxes on Dividends
in accordance with the procedures and within the period required by the Law.
9.10
The Company does not have the right to pay declared Dividends on shares in the
following cases:
9.10.1 If there are
reasonable grounds for believing that the Company is or would be, after the
payment, unable to pay its liabilities or discharge its obligations as they
become due;
9.10.2 If, as of the
date of such decision, the Company is insolvent or bankrupt pursuant to the
provisions of the insolvency or bankruptcy law, or if, as a result of paying Dividends,
the Company would be rendered insolvent or bankrupt;
9.10.3 If, as of the
date of such decision, the net asset value of the Company is less than its
Articles Of Association capital, reserve fund, and the excess of the
liquidation value over the nominal value of the outstanding preferred shares as
set forth in the Articles Of Association, or if the net asset value will be
less than such amount as a result of such decision; or
9.10.4 In any other
case set forth by the Law.
9.11
Upon termination of those circumstances set forth in 9.10 hereof which
precluded the payment of Dividends, the Company shall, within a reasonable
period of time and according to the Law, pay to shareholders the Dividends so
declared.
9.12
Any matters relating to the payment of Dividends and not governed by the Law,
the Company’s Articles of Association and policies, shall be resolved in a
manner, which takes into consideration and complies with the rights and
legitimate interests of shareholders.