The detailed mechanism for the payment of dividends is not regulated by law, therefore companies that seek to comply with international standards consider it necessary to formalize the dividend policy in the form of internal regulations or policies. Such a document should be developed and approved by the company in order to facilitate the implementation of shareholders' rights to receive income from owning capital shares, to establish a clear and transparent system for determining, calculating and paying dividends.
The main structural parts of such a provision:
- general provisions, which determine the purpose and content of the dividend policy, the rights and obligations of the company to its shareholders (participants), the frequency of payment of dividends;
- the procedure for determining the amount of dividends, or their minimum amount;
- the procedure for making a decision on the payment of dividends;
- procedure for payment of dividends;
- the procedure for revising the current dividend policy (the procedure for making changes);
- the procedure for informing shareholders and investors about the dividend policy.
The main principles on which the company's dividend policy should be based are as follows:
- transparency (maximum possible disclosure of information about the company's activities, the formation of its profits and internal decision-making procedures, and the payment of dividends);
- timeliness (setting time limits when making dividend payments);
- reasonableness (payment of dividends should be made only in conditions of achievement of the results of the company's activity, the size of its profit, determined by the policy, and should take into account the plans for the further development of the enterprise, its investment program);
- fairness (ensuring equal rights of shareholders to receive information about decisions that are made, about payments, the amount and procedure for payment of dividends);
- consistency (strict adherence to procedures and principles of dividend policy);
- development (continuous improvement within the framework of improving corporate governance procedures and revising its provisions in connection with changes in the company's strategic goals);
- sustainability (the company's desire to ensure a stable level of dividend payments).