Interim Dividend Research Articles

GUGATAN ACTIO PAULIANA TERHADAP DIREKSI DAN KOMISARIS ATAS PENOLAKAN PENGEMBALIAN DIVIDEN INTERIM PEMEGANG SAHAM PERSEROAN TERBATAS

Distribution of interim dividends distributed before the end of the financial year by the Director with the approval of the Commissioner. This distribution can be made if the company's finances are in a profitable condition based on the year-end audit carried out by a Public Accountant. Companies that experience losses in their reports at the end of the year, shareholders are obliged to return interim dividends based on Law Number: 40 of 2007 concerning Limited Liability Companies. Likewise, companies experiencing bankruptcy based on Law Number: 37 of 2004 concerning Bankruptcy and Postponement of Debt Payment Obligations. The curator in bankruptcy based on Auctio Pauliana with other claims can request the return of the company's interim dividends in the Commercial Court. However, the Curator can only ask for responsibility for the return of interim dividends to the Director and Commissioner jointly and severally. The obligation of the Directors, whose authority has been taken over by the Curator, is to sue the shareholders in the District Court based on Law Number: 40 of 2007 concerning Limited Liability Companies. The problem is, cases in District Court are complicated cases, not simple cases. This research uses normative juridical methods. In the discussion, the Director whose authority has been taken over by the Curator, if the shareholders reject the return of the interim dividend, will file a lawsuit in the District Court. However, a case at the District Court will take a long time, therefore the dividend return case must be submitted to the Commercial Court. In conclusion, to make it easier for the Director to file a lawsuit for the return of interim shareholder dividends in the Commercial Court, the Curator will provide a power of attorney and the case for the return of interim dividends will be made simple.

Договори M&A: досвід правового регулювання в Європейському Союзі та Швейцарії

The article is devoted to researching of European Union and Swiss peculiarities of M&A transactions legal regulation. As a result the most progressive development vectors of both legislations were highlighted and proposals for improvement of existing national legislative provisions were outlined. It is accented that Ukraine is taking coherent steps in direction of national corporate legislation adoption to EU standards. Particularly, the newest Law of Ukraine «On Joint Stock Companies» in part that regulates reorganization process duplicates provisions of Directive (EU) 1132/2017. It was found that mentioned Law of Ukraine contains the article, which prohibits to apply rules stipulated by it for termination of legal entities through their reorganization during the procedure of insolvency (bancruptcy procedure). Such prohibition has established a legal vacuum in case of necessity to apply an enterprise restructuring in a rehabilitation procedure. The Code of Ukraine on Bankruptcy Procedures does not include a special order for legal entity termination during bancruptcy procedures, so a legislator has deprived a debtor an effective method of it’s solvence restoring and put a creditor under the risk of a duty non-repayment. To overcome the mentioned legislative disadvantage advise to amend the art. 114 of Law of Ukraine «On Joint Stock Companies». The authors have analized a Swiss corporate reform. The changes include implementation of interim dividends, payment of which is based on interim balance sheet; legal fixation of «capital band» institute – in accordance with such rules the general meeting of shareholders can authorise the board to increase or decrease the share capital within a certain range; and cancelation of acquisition in kind norms. It was constituted that all mentioned amendments are aimed to provide M&A participants with instruments of transactions stucturing, hostile takeovers opposition and take into consideration M&A market trends. The authors have concluded that Ukrainian legislator has a necessity to turn to the Swiss experience for more effective consideration of the latest M&A market trends during a lawmaking process.

Interim Share Dividend Distribution in the Indonesia Limited Company Law No. 40 of 2007 in Perspective Utilitarianism Theory and Hierarchy Theory

Based on Article 72 of the Indonesia Limited Company Law, companies are allowed to distribute dividends before the company closes the annual book and the General Meeting of Shareholders (GMS) by giving temporary dividends (interim). In this case, if the company suffers a loss at the closing of the annual book according to the Indonesia Limited Company Law, the shareholders must return the dividends they have received. If the shareholders do not return it, the directors and commissioners must be joint responsibility to cover company losses. Based on these reasons, the researcher examined the useful aspects of the interim dividend arrangement in Article 72 of the Indonesia Limited Company Law based on Jeremy Bentham's Utilitarianism theory and found the form of norms regarding the return of interim dividends in Indonesian legislation using Hans Kallsen's Hierarchy theory. This research is a normative study with a conceptual approach. The results of the study suggest that; Article 72 paragraphs 1 to 4 of the Indonesia Limited Company Law can benefit the public because Bentham places benefits on individual happiness on a materialistic basis and practical social goals that can balance various interests. However, paragraphs 5 and 6 discussing the return of interim dividends that have been distributed, if, at the end of the closing of the book the company suffers a loss, in terms of the principle of benefit, Bentham does not provide benefits because it cannot provide a happiness effect for many people. The form of regulation on the distribution and return of interim share dividends in Indonesia is Statutes and Bylaws (C & B). C & B are a creative dimension in the form of living law or actions taken by the community. In terms of civil law, C & B has the same position as the law but cannot apply to the public.

PROGRESIFITAS HUKUM PENGEMBALIAN DEVIDEN SAHAM INTERIM PERSEROAN TERBATAS PADA UUPT NO.40 TAHUN 2007

AbstractProgressive law must place the law in a very close position with the law's community or stakeholders. This position is called responsive, progressive law and is always associated with stakeholders' reality and needs to create justice and happiness as law aspired itself. Also, progressive law emphasizes social integration to overcome public moral insularity.Starting from the viewpoint of progressive law, the author looks at the laws and regulations that discuss the return of interim dividends as stated in the Limited Liability Company Law No. 40 of 2007, article 72, article 72 states that companies allow rules related to dividend distribution in a temporary (interim) way. The article is then interpreted as that if the company has positive profits, the company is allowed to distribute dividends before the company closes the book at the end of the year, provided that the board of directors officially announces the distribution with the approval of the GMS that the positive profits obtained by the company before closing the book will come as dividends interim. As a result, the company competes to distribute interim dividends to increase and show its credibility to investors. It was recorded on the Indonesian stock exchange (IDX) that in September 2020, 73 companies distributed interim dividends.However, article 72 paragraph 5 of the Limited Liability Company Law No. 40 of 2007 explains that if after the company distributes interim dividends to shareholders and at the end of the closing of the annual book the company suffers a loss, the shareholders must return the dividends they have received. If the shareholder does not return it, the directors and commissioners are jointly responsible for covering the company's losses.This viewpoint is the basis for finding the location of the value and form of legal progressivity regarding the mechanism of interim share dividends in limited liability companies as stated in UUPT No.40 of 2007 Article 72 using a normative research method with a conceptual approach.

Payment of (Extraordinary) Dividends: What if the Company Law Rules are Breached?

This article on payment of dividends focuses on situations where the company law rules on this subject are breached. The reason for this is that, in practice, lawyers, auditors, and others dealing with company law sometimes encounter situations where a company has paid dividends to its shareholders, but the company law rules on payment of dividends are breached. This is especially true with regard to extraordinary dividends, which is why the article focuses on such dividends. However, situations do occur where a company has paid ordinary dividends to its shareholders, but the company law rules on payment of such dividends are breached. Drawing on the Consolidated Company Law Directive (CCLD), the article starts by discussing the requirements for paying dividends. Next, still drawing on CCLD, it discusses the consequences of paying dividends if these requirements are not met. Finally, it explores the differences between CCLD and the European Model Companies Act (EMCA) with regard to payment of dividends. The article points to a number of ways in which the CCLD provisions on payment of dividends could be improved. Such improvements are necessary in order to maintain the important balance between creditor and shareholder protection. Company Law, Consolidated Company Law Directive (CCLD), European Model Companies Act (EMCA), Dividends, Extraordinary Dividends, Interim Dividends.

Transforming Georgia’s regulations on Shareholders’ right to interim dividend Confronting the European Company Law

Abstract The article provides a critical legal analysis of Georgia’s regulations on the interim dividend payment and highlights the necessity of proper amendments to comply with European company law. Since having an EU-Georgia Association Agreement signed, the dynamic process of Europeanization has put various legislative changes on the agenda, which also regard shareholders’ proprietary rights. This article briefly gives a novel insight into the distribution of interim dividends from a comparative point of view. It suggests the possibly scrutinized coverage of the legal preconditions along with liability consequences for the interim dividend declaration from the perspective of both shareholders and joint stock companies in Georgia. The article emphasizes the structure of the corporation, which naturally bedrocks the potential conflict of interests between the shareholders and creditors. The topic also endorses questioning Georgia’s rules on capital maintenance in relation to the interim dividend distribution. Hence, the study reveals prevailing regulatory lapses and makes pertinent recommendations on the alignment of the financial interests of those mentioned. Last but not least, the article exposes how directors on the credible basis of their fiduciary duties are assigned to divert assets of the corporation since their rationality in decision-making is expected to meet the best interests of the company.

Stock market reaction to cash dividends: evidence from the Nigerian stock market

PurposeVery little is known about the effect of dividend announcements on stock prices in Nigeria, despite the country’s unique institutional environment. The purpose of this paper is, therefore, to provide empirical evidence on this issue by investigating the stock price reaction to cash dividends by companies listed on the Nigerian Stock Exchange.Design/methodology/approachStandard event study methodology, using the market model, is employed to determine the abnormal returns surrounding the cash dividend announcement date. Abnormal returns are also calculated employing the market-adjusted return model as a robustness check and to test the sensitivity of the results to β estimation. The authors also examine the interaction between cash dividends and earnings by estimating a regression model where announcement abnormal returns are a function of both dividend changes and earnings changes relative to stock price.FindingsThe study find support for the signaling hypothesis: dividend increases are associated with positive stock price reaction, while dividend decreases are associated with negative stock price reaction. Companies that do not change their dividends experience insignificant positive abnormal returns. The results also suggest that both dividends and earnings are informative, but dividends contain information beyond that contained in earnings.Research limitations/implicationsThe sample for the study includes only cash dividend announcements occurring without other corporate events (such as interim dividends, stock splits, stock dividends, and mergers and acquisitions) during the event study period. The small firm-year observations may limit the validity of generalizations from these conclusions.Practical implicationsThe findings are useful to researchers, practitioners and investors interested in companies listed on the Nigerian stock market for their proper strategic decision making. In particular, the results can be used to encourage transparency and good governance practices in the Nigerian stock market.Originality/valueThis paper adds to the very limited research on the stock market reaction to cash dividend announcements in Nigeria; it is the first of its kind employing a unique cash dividends data.

The timing of dividend declarations based on a forthcoming change in dividend tax regime

Background: The anticipated change in tax regime in South Africa during 2012 provided the opportunity to investigate the role of taxes in affecting corporate payout behaviour.Aim: The aim of this study was to investigate whether dividend declarations were accelerated or postponed during 2012 for a sample of companies listed in South Africa based on the financial years 2009 to 2015.Methods: Firstly, a mixed model analysis of variance was employed to investigate the trend in mean days-to-declaration of final and interim dividends and whether the days-to-declaration of dividends in 2012 differed significantly from other years. Secondly, an investigation at individual company level was performed to gain an insight into the timing of declarations before and after 1 April 2012, the non-declaration of dividends during 2012 and special dividends during 2012.Results: For final dividends findings do not suggest an acceleration or postponement during the 2012 financial years of companies selected. For interim dividends, a significant increase in the days-to-declaration during 2012 was noted (indicative of a postponement during 2012). An investigation at individual company level of interim dividend declarations before and after 1 April 2012 furthermore supports a tax explanation for the postponement noted during 2012. Non-declarations of dividends and special dividends during 2012 were not noted as being utilised for the postponement or acceleration of dividends during 2012. The findings of this study contribute to dividend policy literature by providing empirical evidence that the timing of interim dividend declarations was adjusted in the year of an anticipated tax reform.

Impact of Interim Dividend Announcements on Banking Stock Prices in India

This study examined the stock market reaction to interim dividend announcements by Indian public sector banks in the year 2014. The year 2014 was the Indian parliamentary election year; there were a lot of expectations about dividends by the investing community. Not disappointing the investors, 22 of the 28 public sector banks declared interim dividends. This study analyzed the semi-strong efficiency of the Indian stock market with respect to interim dividend announcements by the banking companies in the year 2014. The methodology used for the study was market model event study. The results indicated that there were significant positive abnormal returns in some banking stocks prior to such announcements, signifying the investors were expecting such news and ,therefore, there was upward movement of stock prices. On the actual day of interim dividend announcement, 10 banks reacted positively on the announcement day, and 12 banks reacted negatively to the news.

EXERCISING AND PROTECTION OF SHAREHOLDERS’ RIGHTS TO RESEIVE DIVIDENDS, COMPARATIVELY LEGAL ASPECTS

In comparison with current national legislation, EU legislation and legislation of its individual member states established a number of features of realization and protection of shareholders’ rights to participate in the distribution of profits of the company. Unlike to the art. 31 of the Law of Ukraine «On Joint Stock Companies», in which a ban on dividends is set only if such conditions are encountered at the time of making decision to pay and its implementation, the Second Directive 77/91 / EEC foresees such ban even if some negative effects may occur in the future. In particular, in accordance with part 1 of art. 15 Second Directive dividend payment is not made if the net assets of the companydue to the such payment may become less than the authorized capital increased by the reserves that the law or statute prohibits to distribute. The second EU directive sets the maximum amount of dividends to shareholders: no more than the sum of the results of the last completed financial year increased by the amount of undistributed income, as well as the amount of deduction from available for this purpose reserves and reduced by the amount deferred (uncoated) losses, as well as amounts that are entered in the reserve fund in accordance with the law or statute. The legislation of Ukraine does not provide the upper limit of the size of the dividends that may be paid to shareholders. The right to distribution of assets the company under the laws of the EU, except the right to choose areas of using profit and the right to receive dividends, includes another subjective right - the right to receive the interest accrued on the shares. Ukrainian legislation does not establish the possibility of calculation and payment of interest on the shares. Unlike the law of our countryEU law provides for the payment of interim dividends. The Law of Ukraine «On Joint Stock Companies» does not establish a right to interim dividend. By the EU legislation established a special way to protect the right to receive dividend payments in case of violation of legal limits set for it. In particular, the shareholders who received dividends contrary to established legal limits, the court can be obliged to return the amount of dividends received improperly. The Law of Ukraine «On Joint Stock Companies» (art. 31) does not establish the legal consequences of dividend payment due to the failure limits that are set for it. At the national law systems of some EU countries (Greece, Germany, Portugal, Finland, Switzerland, Sweden, etc.) established the right of shareholders to mandatory payment of dividends regardless of whether the decision of the supreme governing body of the company. The legislation of Ukraine provides such right only to holders of preferred shares. Holders of ordinary shares may exercise the right to receive dividends only if the general meeting of shareholders make the decision on their payment.

Dividend reductions, the timing of dividend payments and information content

Australian companies pay dividends semi-annually with smaller “interim” payments and larger “final” payments. Interim dividends are declared and paid within a less full information environment than final dividends. We analyze the interactions between the timing of dividends and their information content, controlling for share repurchase and tax effects. Dividend reductions that are not associated with share repurchases are statistically significantly related to future abnormal earnings and provide strong support for the information content of dividend reductions. The percentage of dividend reduction is stronger for interim than for final dividend reductions. The market reaction is negatively related to the reduction in imputation tax credit and reacts more aggressively and negatively to interim as compared to final dividend reductions.

Dividend Reductions, The Imputation Tax System and Information Content

Australian companies pay dividends semi-annually with smaller “interim” payments and larger “final” payments. Interim dividends are declared and paid within a less full information environment than final dividends. We analyze the interactions between the timing of dividends and their information content, controlling for share repurchase and tax effects. Dividend reductions that are not associated with share repurchases are statistically significantly related to future abnormal earnings and provide strong support for the information content of dividend reductions. The percentage of dividend reduction is stronger for interim than for final dividend reductions. The market reaction is negatively related to the reduction in imputation tax credit and reacts more aggressively and negatively to interim as compared to final dividend reductions.

Can Italian Company Law Regulate Takeover Defences Better than a Non-Frustration Prohibition Rule?

This paper is my London School of Economics and Political Science - LLM Dissertation. In this essay, I will seek to ascertain to what extent adopting an optional non-frustration prohibition rule would effectively be useful in terms of protecting Italian listed corporations against hostile takeovers. In particular, I will seek to verify whether general company law rules may be deployed to replicate the same effect of a non-frustration prohibition, empowering bid-friendly shareholders of the target company to impede the incumbent directors from enacting takeover defences. The structure of my analysis heavily relies on the model devised by D. Kershaw in “The illusion of importance: reconsidering the UK’s takeover defence prohibition.” As Kershaw observes, the general company law rules governing, inter alia, the calling of a shareholder meeting, the appointment and removal of directors, the possibility for the shareholder body to instruct directors, the issuance of new shares etc would leave directors very little scope for efficiently deploying takeover defences without obtaining the prior approval on the part of the shareholder body. Would this position change under the Italian jurisdiction? Notably, the Law Decree n. 1/2003(hereinafter the “Decree” or “”the Reform”) has radically reformed the Italian company law, accomplishing what has been unanimously defined by the literature as a substantial shift of decision-making power from the shareholder body to the board of directors.Ventoruzzo argues that “...under Italian law, notwithstanding the fact that the 2003 reform entrusted directors with much more significant power...the shareholders’ meeting still retains significant powers on deciding or authorising most corporate actions that might be used as defences in a hostile takeover context...” In this essay, however, I will seek to assess the strength of Venturozzo’s thesis against the background of the same sets of company law rules analysed by Kershaw from the perspective of the UK jurisdiction. I will therefore look at the Italian company law rules concerning i) the possibility for shareholders to instruct directors ii) the removal and appointment of directors iii) the exclusion of pre-emption rights vi) the issuance of equity and debt securities iii) interim dividends distribution.For the sake of simplicity, however, my analysis will not cover the whole arsenal of takeover defences examined by Kershaw but it will be limited to poison pills and restructuring defences, and it will be based on the assumption that the target company has either maintained a traditional board model or adopted a one-tier model of corporate governance. The analysis will show that the width of the powers of bid-friendly shareholders to “impede” directors from deploying board-controlled defences is uneven, varying depending on the type of defence deployed.Broadly, the distribution of decision-making powers between the shareholder body and directors, along with the rules concerning the calling of a meeting, would allow directors significant scope for efficiently deploying poison pills. Within the context of restructuring defences, however, the position appears to change: if using an equity-restructuring defence, incumbent directors may be subject to an intense constraint constituted by the high majorities required for the issuance of new shares; if using a debt-restructuring defence, however, the scope for impeding a takeover seems broader, especially if the defence rests more on a debt-securities issuance than on an interim dividends distribution.

Joint effects of interim dividend and earnings announcements in Greece

PurposeThe purpose of this paper is to empirically investigate stock price and trading volume reactions to simultaneous interim dividend and earnings announcements by the Greek firms listed on the Athens stock exchange (ASE).Design/methodology/approachClassical event study methodology was employed to examine the share price and trading volume reaction to interim dividends and earnings announcements.FindingsResults confirm the signaling hypothesis which predicts positive market reaction to the joint dividend and earnings announcements. However, the magnitude of the price reaction initiated by the final dividend announcement seems to be higher than the one by the interim dividend announcement.Research limitations/implicationsThe observations are not many, although the whole population was included, since there are no data available prior to 1998.Practical implicationsThe findings are useful to researchers, practitioners and investors who have an interest in firms listed on the ASE for their proper strategic decision making.Originality/valueFor the first time, the stock price and trading volume behaviour of firms listed on the ASE around contemporaneous dividend and earnings announcement dates is examined.

Corporate Compliance with Non-Mandatory Statements of Best Practice: The Case of the ASB Statement on Interim Reports

ABSTRACT This paper contributes to our understanding of compliance with non-mandatory statements of best practice. Specifically, we examine the efficacy of agency-related mechanisms on the degree of disclosure compliance with the ASB Statement on interim reports. Using data drawn from a sample of 259 UK companies listed on the London Stock Exchange, we show that although overall disclosure compliance is high (74.5% of the items of information being disclosed), companies do not fully comply with the ASB Statement on interim reports. We employ an ordinary least square (OLS) regression model to establish whether selected company-specific and corporate governance characteristics (proxying for agency-related mechanisms) are related to the degree of disclosure compliance. Our results indicate that multiple listing, company size, interim dividend and new share issuance are positively associated with the degree of compliance. We also find that the degree of disclosure compliance is positively associated with auditor involvement, audit committee independence and audit committee financial expertise. These results have important implications for policy because they suggest that whilst agency-related mechanisms may motivate compliance with best practice non-mandatory statements, full compliance may be unattainable without regulations.

UK interim and final dividend reductions: a note on price reaction

Price reactions to interim and final dividend reductions are found to be significantly negative and stronger for interim dividend reductions. Although the market reacted negatively around final dividend reduction announcements it bounced back to its prior level within one month of the announcements. The magnitude of price reactions to dividend reductions is found to be statistically related to the size of the dividend reduction, the post-announcement effect from day 2 to day 20, the pre-announcement effect from day −20 to day −2, the gearing ratio and the dummy variable interim versus final dividend reduction.

Analysis of price reactions to interim dividend reductions — a note

Price reactions to interim dividend reductions are empirically analysed. Initial interim dividend reductions lead to a more strongly negative price reaction than for interim dividend reductions following an earlier final dividend reduction. When the subsequent interim dividend reduction is reduced proportionately more than the preceding final dividend reduction, the price reaction is stronger than when the proportionate reduction is less. The magnitude of price reactions to interim dividend reductions is found to be statistically significantly related to the size of the dividend reduction, the gearing ratio, the industrial classification, the incidence of a prior dividend cut and the actual change in interim earnings.

Stock Return Volatility and Dividend Announcements

This paper is based on models presented in Kim and Verrecchia (1991a, 1991b) relating to share price volatility and the quality of announcements. It investigates the differences in informational quality between dividend cuts and dividend rises, and between interim and final dividend announcements. The results indicate that when dividends are cut, the interim announcement is perceived as being more significant than the final, whereas the reverse is true when dividends are increased. Implied standard deviations suggest that volatility is expected to peak on the day of final announcements. A peak is also expected after interim announcements of a cut in dividend, but not after announcements of an increase.

Dividend Reductions and Interim Effect: UK Evidence

Short-term price reactions to dividend reductions of UK firms that did not reduce their dividends in the previous three-year period are studied. Price reactions to interim and final dividend reductions are found to be significantly negative and stronger for interim dividend reductions. Though market reacted negatively around final dividend reduction announcements it bounced back to its prior level within one month of announcements. The magnitude of price reactions to dividend reductions is found to be statistically related to the size of the dividend reduction, the post-announcement effect from day 2 to day 20, the gearing ratio and dummy variable interim versus final dividend reduction. Interim dividend reductions were found to have incremental information about future annual earnings changes. No incremental information content was found for the final dividend reductions; however, they have information content when included as the only independent variable.

Interim dividend cuts and omissions in the UK

AbstractUK firms that cut or omit interim dividends during the period 1986–1993 are studied. Price reactions to cuts and omissions were found to be significantly negative and stronger for initial reductions. Future earnings variables were found to be predictable from interim dividend reductions. Gearing, company size and interim earnings change variables were found to have explanatory power for the decision to determine whether to cut or omit an interim dividend.