The Investment Association (IA) is urging listed companies to ‘improve the transparency of their approach to paying dividends’.
According to the IA, companies not seeking a shareholder vote on dividend payments ‘risk depriving shareholders of the opportunity to have a say on a matter that is pivotal to the organisation’s attractiveness to investors’.
The IA has called for firms to publish a ‘distribution policy’, outlining their approach to paying shareholders dividends. Such a policy will ‘provide shareholders with an opportunity to engage on companies’ approaches to paying dividends’, the Association stated.
Commenting on the matter, Business Minister Kelly Tolhurst said:
‘I thank the IA for this report, which shines a light on companies who are not giving their shareholders a say on dividends.
‘The government welcomes the further work being undertaken to encourage companies, as a minimum, to set out a distribution policy for shareholders. This type of policy makes sure shareholders have a clear basis for engaging with companies on their approach to dividends, investment and other uses of cash.
‘We are committed to ensuring the UK’s largest companies become even more transparent and accountable, which is why we have implemented reforms to upgrade our corporate governance and continue to seek further ways to ensure the UK remains the best place in the world to work, invest and do business.’
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.