Agricultural firm Kakuzi PLC has become the first firm listed on the Nairobi bourse to announce it will pay dividend ahead of annual general meetings (AGM) that have been postponed in the wake of coronavirus.
The firm has brought forward the day it will pay a dividend to May 18 from the initial date of July 15 with the AGM set for June 9.
With the AGMs uncertain following restrictions on mass gatherings for fear of coronavirus infections, Kakuzi has opted to pay dividends without receiving approval at the shareholder meeting.
This is in line with the advice from the Capital Markets Authority (CMA), which on April 3 allowed firms to pay dividends without approval from shareholders.
Kakuzi chairman Graham McLean said the dividend payouts will be made earlier because the AGMs are uncertain.
“However, given the uncertainty the Covid-19 pandemics is creating, the board has no guarantee the AGM of the company will be held on the said date,” a statement read.
“As a result, the directors having complied with the company’s dividend policies and procuring all internal approvals, have decided to authorise payment of the recommended first and final dividend for 2019 of Sh14 per share.”
The agricultural firm said the decision to pay the dividends will be ratified when AGMs resume. It becomes the first firm to take advantage of the regulatory exemption.
Acting CMA chief executive Wycliffe Shamiah said the dividends would be paid subjects to the Nairobi Securities Exchange-listed company’s internal policies and approvals.
The regulator had frozen AGMs in line with the State directive that prohibits mass gatherings like meetings, weddings and funerals to contain the spread of the coronavirus.
The dividend payments are key to putting money in the pockets of small shareholders who require cash to meet personal expenses that ultimately boost demand in an economy where workers have complained of reduced cash flow.
Section 310 of the Companies Act 2015 provides that a public company is statutorily compelled to hold an AGM within six months from its financial year-end.
This means that firms whose financial year ends in December have until the end of June to hold the shareholder meetings.
But traditionally these firms host the meetings in April and May.