Rosimushchestvo approves change to Transneft charter on ordinary, preferred dividends
MOSCOW. March 24 (Interfax) - Russian state property agency Rosimushchestvo approved a change to the Transneft charter concerning the size of ordinary and preferred dividends on March 22, Transneft said in a statement.
The change is as follows: "Upon the completion of the fiscal year, the annual general meeting of shareholders will make a decision on allocation of 10% of the company's net profit as dividends on preferred shares. The size of the dividend paid on each preferred share cannot be less than the size of the dividend paid on each ordinary share."
It was reported earlier that late last year the Transneft board of directors approved a dividend policy stipulating as a general rule the allocation of 25% of net profit as dividends for all types of shares. "The actual size of the dividends on ordinary and preferred shares will be determined by the board in accordance with Russian government directives," the company said.
Transneft did not previously have a dividend policy, other than the stipulation in the charter that at least 10% of earnings be paid as dividends on preferred shares.
It was also reported that a minority shareholder, Ilya Shcherbovich's UCP fund, had filed suit seeking to collect dividends for 2013 and 2015 it said were owing on its shares, arguing that the dividends paid on preferred shares could be no lower than those for ordinary shares. However, two lower courts ruled against UCP and it subsequently withdrew the lawsuit.
One source said the dividend change was approved in order to "equalize the dividend payments in connection with UCP's lawsuit concerning underpayment of dividends for 2013 given that a higher dividend was paid on ordinary shares."
"In addition, a host of owners of Transneft preferred shares and other interested parties appealed to Rosimushchestvo with a statement concerning the unequal dividend distributions for ordinary and preferred shares," the source said, adding that the current edition of the charter lacked a stipulation that dividends on preferred shares be no less than those on ordinary shares. "In order to resolve the differences, the appropriate government instruction was published," the source said.