Dividend Distribution Policy
Under Article 110 of the Companies’ Law, a Shareholder is vested with all rights attached to Shares, which include in particular the right to receive a share in the dividends declared for distribution. The Board of Directors shall recommend declaring and paying any dividends before approval by the Shareholders at the meeting of the General Assembly. The Company is under no obligation to declare dividends and any decision to do so will depend on, amongst other things, the Company’s historic and anticipated earnings and cash flow, financing and capital requirements, market and general economic conditions, the Company’s Zakat position, and legal and regulatory considerations.
Dividend distribution is also subject to the restrictions set out in the Company’s Bylaws. Dividends shall be distributed in Saudi Riyals.
After deducting all general expenses and other costs, the Company’s annual net profits shall be allocated as follows:
(a) 10% of the net profit shall be set aside to form a statutory reserve and the Ordinary General Assembly may discontinue said deductions when the statutory reserve amounts to 30% of the Company’s share capital.
(b) The Ordinary General Assembly may, upon request of the Board of Directors, set aside a percentage of the annual net profits to form an additional reserve to be allocated towards one or more specific purposes.
(c) The Ordinary General Assembly may resolve to set aside other reserves, to the extent that doing so serves the interest of the Company or ensures the distribution of as stable a dividend as possible to shareholders. Said Assembly may also deduct from the net profits amounts for the establishment of social institutions for the Company’s employees or to help existing institutions.
(d) Out of the balance of the net profits, Shareholders shall be paid an initial payment amounting to 5% of the Company’s paid-up capital. (e) Without prejudice to the provisions of Article 21 hereof and Article 76 of the Companies’ Law shall, after the foregoing, no more than 5% of the remainder shall be allocated to remunerate the Directors, provided that the remuneration is commensurate with the respective number of sessions attended by each member.
(f) The remainder shall then be distributed to Shareholders as an additional share of profits, or deferred to the following years as approved by the General Assembly.
(g) The Board of Directors may resolve to distribute periodic dividends deducted from the annual profits specified in paragraph (4) of this Article.