Dividend policy

For today the problem of development of an optimal dividend policy is very relevant, because the companies due to the stabilization and improvement of their economic situation, there are more opportunities to pay, and the shareholders - more arguments to demand payment of dividends. There are two alternative ways of using net income: it is either reinvested or paid out to shareholders as dividends. It is on the choice of the relation of the two parts of the distributable net income is based process of forming the optimal dividend policy. The dividend policy is largely dependent on the capital structure and the value of shares of stock. A characteristic feature of Kazakhstani companies - large concentration of capital, and, until recently, the special problems with minority shareholders and did not arise and the basic principle of the dividend policy is to prefer investment dividends. The opposite is true in the U.S., where companies are forced by higher dividend payments to maintain its investment attractiveness, as it is the holders of small stakes are major shareholders. Recently, in order to attract foreign investors, a large number of Kazakhstani companies adhere to international standards of corporate governance, in which the fore the relationship with shareholders. Dividend policy in foreign practice plays an important role in corporate governance, since the version expectations of shareholders depends on the market value of the company. In Kazakhstan, at present, a large number of companies do not pay dividends on common shares. Ignoring payments on shares affects the attraction of portfolio investors, who are often interested in obtaining a stable predictable income. In this regard, for the companies placing the stock market equities should establish requirements for mandatory dividends on the stock. Every year, they should allocate a fixed share of the net profit to the fund dividend payments. Dividend payments may not be less than 20% of net profit. Similar practices exist in a number of Roman legal system, including Portugal, Chile, Greece, etc. The innovation will give the stock market stability, as well as generate an adequate pricing model for stocks, based on actual performance data.  In some cases, issuers may not be interested in the payment of dividends and in fact hide profits. We believe that the alternative would be the formation of the fund dividend payments by annual allocations of income, determined in accordance with the Tax Code of the Republic of Kazakhstan. The dividend policy of Kazakhstani companies is gradually approaching the standards that are accepted in the practice of Western public corporations. Currently, this trend is typical for a relatively small circle of Kazakhstani companies - the "blue chips" that pay dividends. But, in our opinion, with the further growth of the Kazakshtani economy and improving corporate governance, many joint-stock companies in Kazakhstan will start to pay attention to the payment of dividends and thereby increase its investment attractiveness.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conclusion

Dividend policy should be considered in light of the overall financial objectives of the company, which is to maximize shareholder wealth. This does not always mean a maximum payment of dividends, as it can be found more profitable use for dividends within the company. The dividend policy is important because it affects the capital structure and financing of the company, and in the case of joint stock companies, and valuable information. There are two points of view on the value of the dividend policy for the overall assessment of the company and the shareholder wealth maximization problems: one is that dividends do not play a role in the overall assessment of the company (the theory of the lack of importance), and the other states that dividends are important for the evaluation of the company (theory of significance). Arguments in favor of the importance of dividends to evaluate the company taken from the practice and confirmed all previous practical activity in the market. There are four main arguments: The information content of dividends, investors prefer current income, the quality of the income received in the form of dividends, and fluctuations in the market value of which is not related to the efficiency of the company. Against these arguments in favor of dividend payments is more favorable taxation of capital gains, but the difficulty of considering the tax is that the deciding factor will be the tax status of an individual shareholder, who will often be impossible to establish. If the dividend policy is a purely financial decision, the number of attractive investment projects available to the firm, will determine the level of payments. If within the company there are good investment opportunities, it should be analyzed corresponding prices of debt and retained earnings. If you are currently investment opportunities available, but they are possible in the future, it may be preferable to pay a dividend to shareholders to individually to find the best use of funds, and not to leave in the company of the excess funds in anticipation of future opportunities with an uncertain outcome. To declare a dividend, you need to have enough current or retained earnings to cover it, but for the payment of the dividend needed cash. Therefore, when deciding on the dividend policy should take into account the liquidity and the ability to obtain a loan. During periods of inflation, historical cost accounting overstates the company's operating profit. The payment of dividends from the profits of historical cost in a time like this will lead to the allocation of capital. According to the law dividends may only be paid out of current or retained earnings. They can not be paid if there is not enough income to cover them. Sometimes it can be set legal limits on the permissible level of increase dividends. Agreement for a loan may restrict or prohibit the payment of dividends during the period of their validity. If retained earnings decreased due to the high level of dividend payments, it may be necessary in the subsequent receipt of additional equity capital. This can lead to the erosion of control of the company by the shareholders. Experience has shown that firms always have a stable dividend streams, usually above listed on the market than firms with less stable flows. Dividends may be paid in the form of additional shares rather than cash, especially when there are problems with liquidity. The share split is also called preferential issue - it is the same as the dividend payment in shares, but it is usually done in addition to the payment of dividends in cash. Demand because of the greater availability of shares to investors increases. It is important in this process to determine the correct size of crushing. Revenues for the total number of shares after the split should not reduce shareholders' profits before share split, and is more desirable that there has been some increase in the income of the shareholders. The share split is used to support the stock price. In any case, the dividend policy of the company - it is an active way to impact on share prices. Therefore, the model of the dividend policy should be structured with reference to the stock price, the value of enterprises.

Experience has shown that the JSC with a stable dividend streams, usually above listed on the market than companies with less stable flows. The formation and implementation of the dividend policy is aimed at solving various tasks:

• the establishment of a definite relation between current consumption and future owners of the profits of its growth;
• maximization of shareholders' property;
• increase in the market value of the shares;
• stability of dividend payments;

Determine the most beneficial to all parties form of payment (cash, stocks, property company), and the periods and terms of payment of dividends. Kazakhstani JSC do not publish or not to develop its dividend policy. The reason for this can be either a lack of understanding of the importance of the publication, or lack of interest in attracting investors, or adequacy of other sources of funding. The quality of the developed dividend policies or their references in corporate documents remains low. Most likely, this is due to lack of understanding of the role of developers and content of the document.

 

 

 

 

References

[1] Chapter 1^st, Article 1^st, Paragraph 4^th of the Law about Joint-stock companies

[2] Balabanov I.T. Fundamentals of Financial Management. How to manage the capital? / / The Economist. 2009. Number three. Pp. 15-19.

[3] Belolipetskii V.G. Finance Companies / / The Economist. 2009. Number 5. 29 s.

[4] Financial Management: Theory and Practice / Ed. Stoyanova ES - M: Perspective, 2009

[5] Law about Jpint-stock companies

[6] Tax Code of the Republic of the Kazakhstan

[7] http://www.halyk-ipo.kz/ru

[8] http://www.kase.kz/

[9] http://www.kaztransoil.kz/ru

[10] http://www.kmgep.kz/rus/