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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.

(SG)

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