Shareholders hail 50% profit dividend
Shareholders of companies have welcomed the government's budget
proposal to pay 50% profit as dividends after tax.
Any payment less than 33 1/3 per cent of the profit after tax would
be taxed statutorily.
Treasury Secretary, Dr. P. B. Jayasundera, was absolutely correct in
his views on the dividend pay out. It is a very welcome indication of
the implementation of an existing law because many decent, learned
shareholders have made futile representations to many Boards of
directors at numerous Annual General Meetings. The latter ignored all
codes of ethics and good conduct.
These directors who did not take any interest of the investing
community, were only interested in expanding their personal control of
companies and perks; non disclosure and dodging transparency is their
forte, said Past Chairman Ceylon National Chamber of Industries K. C.
Vignarajah.
He said there should be no deduction whatsoever in arriving at the
Dividend payout and tax related to this. The 'Proposed capital
expenditure' is the normal ruse and could very easily be handled in a
different manner.
With regard to the spurious argument of 'development and expansion'
being affected, an honest board of directors conscious of adhering to
good corporate governance and values would firstly pay out good
dividends and a judicious issue of bonus shares.
Thereafter, they would issue 'Rights shares' at reasonable values to
increase the cash flow. The fundamental logic is to pay the dividend and
bonus shares to recognise the merit, and the right, that the existing
shareholders who invested in the company are entitled to and thereafter
call for additional fresh capital.
If the shareholders and the public perceive the directors to be
honest, and fair, they would receive a tremendous response, he said.
It is not surprising that some Auditors have jumped into the fray,
enthusiastically taking the side of the directors, again exhibiting the
characteristics of being lapdogs of the directors, instead of being the
watchdogs of the members and of the public interest.
This is very unfortunate, as indeed the story of Enron and WorldCom,
is being enacted here. In those countries the errant Directors and
Auditors were given long jail terms, and one committed suicide out of
shame.
The leading icons of the private sector, former Chairman CCC and JKH
Ken Balendra, set a very high standard at JKH with great dividend
payouts and frequent Bonus issues. Charitha P. de Silva and Ratna
Sivaratnam successive Chairmen of Aitken Spence, brothers Mahendra and
Hemaka Amarasuriya Chairmen at Commercial Bank and Singer, brothers
Ajitha and Tilak de Zoysa at AMW group have all set very good standards
in this respect.
Who could ever say that these companies lacked development? On the
contrary, they led development with equity and fairness. They worked in
the belief of fairness to employees and shareholders being fundamental
to their own companies' development, and as necessary contributions to
society and the country.
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