The DP is intended for long-term use. However, economic realities may necessitate its modification before the expiration of the established term.
The introduction of all sorts of adjustments is dictated by the need to increase the economic efficiency of the company and create the most attractive conditions for investors. The result of the transformations is an updated procedure for paying dividends. The corresponding changes are made to the approved regulation on dividend policy.
This description of the moj database stages is approximate. Other conditions that are difficult to record in corporate documents may also have an impact. For Russian enterprises, for example, political and related economic conditions of activity have changed dramatically, which could not be foreseen in advance. Each company forms a dividend policy based on internal and external conditions of activity.
Factors Affecting Dividend Amount
In addition to those stated, several other conditions deserve attention, which are taken into account when determining the ratio of the reinvested portion of profit and the portion of profit that is directed towards dividends.
Legal acts
This refers to legal acts establishing the mechanism for dividend payments.
The main one is the federal law "On Joint Stock Companies". In accordance with it, the company's charter is adopted, which is its fundamental internal legal act.
For an enterprise in which the Russian Federation or its constituent entities are a shareholder, the government may establish additional requirements regulating issues of dividend payment.
Legal acts of the Russian Federation
Availability of financial resources to pay dividends
Here it is important to understand whether the company has the financial resources with which to fulfill its obligations to pay dividends.
In the absence of such funds, these amounts can be issued in shares of corresponding value. In the 1990s, payment in products, i.e. in kind, was common practice. Today, such a move would cause an immediate collapse of the company's reputation.
If it is impossible to fulfill the obligations assumed to pay dividends, the company would rather reduce their amount than postpone them to another period.
Many companies have done this amid falling revenues caused by restrictions due to the coronavirus pandemic.
In turn, for example, the company "Obuv Rossii" received a record amount of profit in 2019 - 1.7 billion rubles. However, the payment of dividends this year was postponed, which happened for the first time since the placement of shares on the stock exchange in 2017. Previously, 20% of net profit was spent on these purposes.
The transfer of payments was due to the reduction of the company's points of sale, so it became necessary to direct income to maintaining financial stability and overcoming the crisis.
Reporting period Dividend amount per share Percentage of net profit
2017 2.32 R 20%
2018 2.36 R 20%
2019 Not paid 0
Investment program of the enterprise
This refers to the company’s participation in investment projects, their financial turnover, and the volume of resources required to replenish the company’s fixed assets.
The production activity of a company is determined by the main material resources at its disposal. These include administrative and production buildings, machine tools, and rolling stock used in transportation. The quantity and quality of manufactured products depend on them.
Maintaining them in working condition requires repairs, routine maintenance, and, as they wear out or new production processes are introduced, replacement of these assets with new ones. Timely modernization of fixed assets is a necessary condition for the growth of economic indicators and maintaining market share.
Thus, the company "RusHydro" plans to spend 111.3 billion rubles on repairs and renewal of the electric grid infrastructure. Consequently, this amount cannot be spent on the formation of a dividend fund.