The minimum dividend bar for state-owned companies at 50% of the net profit, which is actually used by most of them, is now fixed “on paper” – this the Ministry of Finance has been striving for for many years. The order signed by Prime Minister Mikhail Mishustin also changes the procedure for calculating the dividend base, excluding from it the “not backed” items. The government expects that this will increase the transparency of dividend policy and payments to the budget. Experts consider the step reasonable, but note that the possibilities of an individual approach to determining the amount of dividends remain.
The government has normatively fixed the minimum dividend bar for state-owned companies at 50% of net profit – according to the order published yesterday, the new rules come into force on July 1 and relate to decisions on payment made after that date. According to the previous version of the document, state-owned companies must pay shareholders at least 25% of the profit, unless otherwise established by government acts, however, the de facto authorities insist on paying at least half – the Ministry of Finance takes this level into account when planning the budget. For this year, dividend receipts are provided in the amount of 442.1 billion rubles, and for 2022 – 754.3 billion rubles.
Many state-owned companies already adhere to the “50% principle” – as a rule, the Ministry of Finance negotiates with the rest, insisting on a unified approach. The idea of fixing the standard “on paper” has been discussed for a long time: such projects were being prepared in 2016 and 2018, but both were “frozen”, although the Ministry of Finance insisted that the norm be “at the instinct level of companies with state participation”.
Exceptions have been made for enterprises of the military-industrial complex – they will be able to pay less than 50% of the profit with reasonable investment costs associated with rearmament or the implementation of the state defense order.
The document also corrects the procedure for calculating the dividend base. As noted in the White House, until now dividends were determined taking into account the articles “not backed” by money – this approach is less and less common in world practice, so it was decided to abandon it. Now, when calculating the dividend base, income and expenses associated with the recognition of a loss from the depreciation of fixed assets and intangible assets, with their write-off (except for sale), with a change in the value of financial assets and exchange rate differences, will not be taken into account. The gains and losses attributed to the non-controlling interests of the subsidiaries will not be taken into account either. If the resulting amount exceeds the amount of net profit, then retained earnings are used to pay dividends.
The government expects the new approach to make treasury receipts predictable and dividend policy transparent. Finance Minister Anton Siluanov also noted that this will increase budget revenues and provide resources to meet national goals, as well as increase the investment attractiveness of Russian shares.
As the managing partner of Enterprise Legal Solutions Yuri Fedyukin notes, “the revaluation of assets, especially intangible ones, is a“ dark trick ”in accounting, which can easily add several tens of percent to net profit, or can reduce it by the same amount”, as well as asset write-off. “In this way, the government wants to make state-owned companies exemplary in terms of caring for the interests of shareholders,” he says. Natalya Safina, head of the Macroeconomic Analysis and Financial Markets Department of the CSR, calls the adjustment of the indicator for the results of “non-monetary” and irregular operations “a reasonable step in line with the best world standards” – it will ensure payments with real free cash flows. The order, she adds, retains the phrase “unless otherwise established by government acts”, which allows flexible approach to payments. So, in PJSC “Rosseti” “Kommersant” was informed that the issue of payment of dividends is regulated by a separate order of the government. Let us explain that it provides for a deduction on dividends of at least 50% of net profit, but after deducting non-cash income and expenses, financial support for subsidiaries and payment for technical connection – in reality, payments by Rosseti for 2020 amounted to 8% (see Kommersant dated May 27).