- ‘proceeding to pay the dividend would have contravened provision of CAMA Section 368
The decision by Union Diagnostic and Clinical Services plc to back off from earlier proposed dividend payment and the strange mood of acceptance by Oscar Onyema-led management of Nigerian Stock Exchange (NSE) on Union Diagnostic pronouncement became an issue of discourse yesterday by equity dealers at Customs Street, Lagos.
Union Diagnostic had given investors between August 17 and 21, 2015, for closure of its register as the company proposed dividend payouts of 2.5 kobo scheduled for October 2, 2015.
“It is very strange that a company had to withdraw its decisions on proposed dividend payout even after many investors were attracted by the proposal and took positions in their shares in preparation to reap from the dividend payout,” a stockbroker told BusinessDay.
“Unfortunately, the NSE accepted this. How do you then protect investors? This caused uproar yesterday at the Exchange,” she said.
In response to BusinessDay’s enquiry, the NSE said: “The Exchange accepted the decision of Union Diagnostic & Clinical Services plc to withdraw the interim dividend it earlier declared because proceeding to pay the dividend would have been contrary to the provision of CAMA Section 368.”
According to the NSE, “although the company recorded a profit for the half-year ended 30 June 2015, its revenue reserve is still in the negative as the interim profit could not wipe off the negative reserve.”
As half-year results trickle in at the NSE, most companies propose dividend payments to their shareholders as recommended by their respective board of directors. Dividend payment affects share prices as their demand rises.The statement of c
omprehensive income of Union Diagnostic for the period ended June 30, 2015, shows that the company’s revenue rose to N623.425 million from N517.732 million in the corresponding half-year period of 2014. Its half-year profit before income tax expense rose to N113.157 million from N47.485 million, while profit for the H1’15 period rose to N105.991 million from N41.938 million. The company’s profit per share rose to 2.98 kobo from 1.18 kobo. The company has issued and paid up share capital of 3,553,138,528 ordinary shares at N0.50, while its authorised share capital stood at N4.5 billion ordinary shares of N0.50 each.
In the stock market, only shareholders who own shares before the closure date of a company registers are paid dividend. If they sell before this date they won’t get dividend, but if they sell after the closure date, they will still get dividend but the new owner will not get.
