Introduction

The objective of the dividend policy is to state the policies that govern distribution of a portion of net earnings of the Company in an optimum manner which results in payment of dividends as well as retention of earnings for reinvestment with the objective of maximizing the wealth of the shareholders.

Policy

General Principles of the Company regarding distribution of dividend

(a) Company shall follow a stable dividend policy.

(b) Payment of dividend shall be recommended by the Board and shall be approved by shareholders. Dividend policy applies to both interim and final dividends.

(c) The existing equity shares along with the new equity shares that might be issued in future will rank equally (pari - passu) for any rights to dividends that may be declared and paid in respect of any financial year.

(d) Dividends can be paid either in the form of cash dividend or in the form Bonus shares or in the form of mandatory convertible bonds as appropriate.

(e) Dividend can be paid only from the free reserves of the Company. Legal reserves cannot be utilized for the purpose of dividend payments.

(f) Cash dividends can be paid only out of the Company’s internal cash accruals and cannot be paid from borrowed funds.

(g) Dividend shall be paid out of net profits of the Company for any financial year, subject to Company not having any carried forward losses at the end of such financial year and also subject to the free reserves of the Company do not reduce below zero after payment of such dividend.

(h) The Board shall consider following factors while recommending dividend payment for any financial year:

(i) Provisions of the Insurance Law and the Commercial Company’s law of the Sultanate of Oman.

(ii) Provisions of the Articles of Association of the Company; and
(iii) Covenants of the loan agreements entered or proposed to be entered by the Company.

(i) The Board may also consider following factors while recommending dividend payment for any financial year:

(i) Company’s business prospects.

(ii) Company’s financial performance.

(iii) Availability of free cash flows.

(iv) Company’s expansion plans; and

(v) Working capital requirements.

Criteria to be considered before recommending Dividend

Financial Criteria

• Financial performance of the Company for the year for which dividend is recommended.
• The financial statements pertaining to the financial year for which the Company is declaring a dividend should be free of any qualifications by the statutory auditors, which have an adverse bearing on the profit during that year. In case of any qualification to that effect, the net profit should be suitably adjusted while computing the dividend payout ratio.
• In case the profit for the relevant period includes any extra-ordinary profits/ income, the Board will use its discretion to decide prudent payout ratio.
• Solvency margin surplus must be maintained at least 35% of the required solvency.
• The dividend payout shall also consider the Solvency Position of the Company for the next financial year, as per the Business plan approved by the Board.
• Any future provision requirement, which may arise based on Accounting Standards, Regulatory changes to be considered.
• Any interim dividend paid.
• Tax implications if any on distribution of dividends.
• Corporate actions including mergers/demergers, acquisitions and additional investments including expansion plans and investment insubsidiaries/associates of the Company; and
• Such other factors and/or material events which the Company’s Board may consider.

External Factors

• Shareholder expectations; and
• Macro-economic environment.

Per Share Basis

The dividend will be declared on a per share basis only.

III. Conflict in Policy

In the event of a conflict between this policy and the extant regulations, the regulations shall prevail.

IV. Amendments / Modifications

To the extent any change/amendment is required in terms of any applicable law or change in regulations, the regulations would prevail over the policy and the provisions in the policy would be modified in due course to make it consistent with law. Such amended policy shall be placed before the Board for noting and necessary ratification.