Distribution of profit of financial institutions in 2019: regulator's recommendations
The Bank of Russia recommends that financial institutions hold annual general meetings to approve dividends for 2019 in late August — September 2020. It is further recommended that organisations that have already set the date for their annual general meetings before 30 June consider postponing it, says the information letter of the Bank of Russia.
The letter notes that financial institutions need to conduct an additional review of the feasibility of profit distribution in 2020 taking into account the current situation and financial stability indicators of the organisation in different scenarios. They should make a decision on profit distribution and dividend payments for 2019 only if they have an adequate capital cushion to continue their operations not only in the short but also medium term.
On 7 April, a federal law entered into force which provides for postponing the end-date for annual general meetings from 30 June to 30 September. Not only financial institutions but also any other issuers can postpone the date of their annual general meeting.
The decision on changing the date of the meeting must be made by the same body that made the original decision to convene it, and shareholders (participants) must be promptly notified to that effect.
By postponing the date of the annual general meeting, an organisation will have additional time to prepare for it, including to complete preparation and audit of its financial reporting in accordance with the IFRS, given the forced restrictive measures.