As the Company foresees significant opportunities in the near to medium-term, it aims to distribute 20-30% of the Group's net profits as dividend to its shareholders.
The Company will, at all times, have a clear and predictable dividend policy established and revised annually by the Board. The dividend policy forms the basis for the Board’s proposals on dividend payments to the general meeting and shall be disclosed.
In deciding whether to propose a dividend and in determining the dividend amount, the Board of Directors will take into account applicable legal restrictions, as set out in the Norwegian Public Limited Companies Act, the Company’s solidity and future capital requirements. This includes liquidity and solidity risk, market opportunities, timing effect from portfolio recoveries, financial covenants, general business conditions and capital restrictions etc. at the time of the dividend to be assessed and paid. Except in certain specific and limited circumstances set out in the Norwegian Public Limited Companies Act, the amount of dividends paid may not exceed the amount recommended by the Board of Directors.
As the Company foresees significant opportunities in the near to medium-term, it aims to distribute 20-30% of the Group's net profits as dividend to its shareholders, started at the lower end of this range for the financial year 2016 (2016: NOK 0.15 per share, 2017: NOK 0.30 per share, 2018: NOK 0.45 per share). The Company believes that the Group's strong cash generation capacity supports a higher longterm pay-out target, and potential distribution through both dividends and share buybacks.
There can be no assurance that a dividend will be proposed or declared in any given half year. If a dividend is proposed or declared, there can be no assurance that the dividend amount or yield will be as contemplated above.
Legal constraints on the distribution of dividends
Dividends may be paid in cash or in some instances in kind. The Norwegian Public Limited Companies Act provides the following constraints on the distribution of dividends applicable to the Company:
- Section 8-1 of the Norwegian Public Limited Companies Act provides that the Company may distribute dividend to the extent that the Company’s net assets following the distribution covers (i) the share capital, (ii) the reserve for valuation variances and (iii) the reserve for unrealised gains. The total nominal value of treasury shares which the Company has acquired for ownership or as security prior to the balance sheet date, as well as credit and security which, pursuant to Section 8–7 to Section 8-10 of the Norwegian Public Limited Companies Act fall within the limits of distributable equity, shall be deducted from the distributable amount.The calculation of the distributable equity shall be made on the basis of the balance sheet included in the approved annual accounts for the last financial year, provided, however, that the registered share capital as of the date of the resolution to distribute dividend shall be applied. Following the approval of the annual accounts for the last financial year, the General Meeting may also authorise the Board of Directors to declare dividend on the basis of the Company’s annual accounts. Dividend may also be resolved by the General Meeting based on an interim balance sheet which has been prepared and audited in accordance with the provisions applying to the annual accounts and with a balance sheet date not further into the past than six months before the date of the General Meeting’s resolution.
- Dividend can only be distributed to the extent that the Company’s equity and liquidity following the distribution is considered sound.
The Norwegian Public Limited Companies Act does not provide for any time limit after which entitlement to dividends lapses. Subject to various exceptions, Norwegian law provides a limitation period of three years from the date on which an obligation is due. There are no dividend restrictions or specific procedures for non-Norwegian resident shareholders to claim dividends. For a description of withholding tax on dividends applicable to non-Norwegian residents.
Manner of dividend payments
Any future payments of dividends on the Shares will be denominated in NOK, and will be paid to the shareholders through the VPS. Investors registered in the VPS whose address is outside Norway and who have not supplied the VPS with details of any NOK account, will, however, receive dividends by check in their local currency, as exchanged from the NOK amount distributed through the VPS. If it is not practical in the sole opinion of DNB, being the Company’s VPS registrar, to issue a check in a local currency, a check will be issued in USD. The issuing and mailing of checks will be executed in accordance with the standard procedures of DNB. The exchange rate(s) that is applied will be DNB’s rate on the date of issuance. Dividends will be credited automatically to the VPS registered shareholders’ NOK accounts, or in lieu of such registered NOK account, by check, without the need for shareholders to present documentation proving their ownership of the Shares.