Doha, Qatar: Governor of Qatar Central Bank (QCB) and Chairman of the Board of Directors of Qatar Financial Markets Authority (QFMA) H E Sheikh Bandar bin Mohammed bin Saoud Al Thani and issued new rules for the dividend distribution in financial markets.
Such rules, which are being implemented for the first time, include substantial changes in the mechanisms of annual dividend distribution to shareholders in public shareholding companies listed on Qatar Stock Exchange (QSE) and include regulating the interim dividend distribution (quarterly, semi-annually) for companies wishing to do so.
Dr. Tamy bin Ahmad Al Binali, CEO of QFMA, announced that the new rules will be implemented as of 2024.
He said that under such rules, QSE listed public shareholding will be allowed for dividend distribution on an interim basis (three months or six months) or annually, as is currently in effect. These companies will also be required to distribute dividends within certain period, which shall not be exceeded.
In addition, Dr. Al Binali explained that public shareholding companies will no longer be the entity authorized to distribute dividends and bonus shares to shareholders, explaining that this responsibility will be assumed from now by Edaa, which will make dividend distribution to shareholders on behalf of the public shareholding companies.
Dr. Tamy bin Ahmad Al Binali spoke about the advantages and implications of the new rules, , which allows listed companies to distribute interim dividends that provide investors in the stock market with a periodic return (quarterly or annually) on the value of their investments instead of waiting for the annual one. It also contributes to reinjecting part or all the dividends into the market periodically during the financial year as well increasing activity in the market.
This also can help attracting a new category of investors to the stock market and enhancing investor confidence in the operational performance of listed companies, the strength of their financial position and their ability to generate real interim revenues and cash flows.
Dr. Al Binali pointed out that the interim dividend distribution enhances the expectations of investors in the markets regarding achieving good financial results at the end of the financial year.
Dr. Al Binali said that QFMA conducted a comprehensive study on the possibility of interim dividends distribution in the Qatari capital market, and surveyed, through a questionnaire, the consultations of all those concerned with the new rules, as it became clear that most investors and QFMA’s partners prefer the interim dividends distribution (quarterly or semi-annually) which guarantees them a quick cycle of income, provides them with an investment alternative to savings pools in banks, and attracts more of them towards investing in listed companies. This would reflect positively on increased activity in the financial markets and lead to an increase in the volume of liquidity therein.
Dr. Al Binali added that, according to these conditions, the company shall not oblige the shareholder to return the interim dividends distributed in accordance with these rules if the company achieves losses in subsequent financial periods during the year, and the external auditor’s report shall include a review of the interim financial statements (quarterly/semi-annually) , some data that includes the company’s achievement of real profits, the value of the net profits achieved after deducting reserves, the availability of sufficient liquidity to cover the distributions proposed by the Board of Directors, and the lack of impact of the proposed distributions on the company’s payment of its debts and obligations on the scheduled dates.
Dr. Al Binali affirmed that QFMA is making great efforts to work continuously to develop its legislation and regulations with the aim of providing an attractive legislative environment for investment in line with the best international and regional standards and practices.
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