The company has a dividend policy and communicates it to shareholders19.



MR 704(24) and CR 704(23) requires that in the event that the Board decides not to declare or recommend a dividend, the company must expressly disclose the reason(s) for the decision together with the announcement of the financial statements for the full financial year.

A. Explanation

This Provision provides that a company should have, and should disclose, a dividend policy.

As investors, shareholders want to see returns on their investments. For many, dividends are a key part of these returns.

In addition, knowing what type and level of dividends they could expect in the future may affect how investors plan their cash flow and view the value of the company. In turn, this influences their investment decisions.

However, companies may be reluctant to have, or to disclose, a dividend policy as they do not want to set expectations they may be unable to meet. Instead, they want to have the flexibility to declare dividends based on the actual performance of the company, and the circumstances of the day.

That said, a clear dividend policy could help stabilise the company’s share price. It could also ensure that the commercial interests of investors attracted to invest, or who have already invested, in the company are aligned with the dividend policy.

MR 704(24) and CR 704(23) require the company to announce any dividends recommended or declared, and if any dividends vary materially from the previous corresponding period, to state the reasons for the variation. If no dividend is declared, this must be announced together with the reasons for the decision.

Where a company has the profits and cash flow to declare dividends but chooses not to, it could, for instance, indicate that the funds are needed to reinvest in the growth of the company, and to indicate which areas such investments are likely to be in.


B. Practice Guidance


C. Related Rules and Regulations
  • MR 704(24) and CR 704(23).
  • MR Appendix 7.2 and CR Appendix 7C.


D. CG Guides
  • Board Guide 7.2: Shareholders [Stakeholder Engagement].


E. Related Articles
  • Nil.




eGuide to CG Code
Definition of Corporate Governance
History and Structure of the Code
Role of the Board
Role of the Chair
Focus on Long Term and Sustainability
Revised Code Structure and Approach
Mandatory Principles
Provisions and Variations
Thoughtful and Meaningful Application
Board Matters
Principle 1
Provision 1.1
Provision 1.2
Provision 1.3
Provision 1.4
Provision 1.5
Provision 1.6
Provision 1.7
Principle 2
Provision 2.1
Provision 2.2
Provision 2.3
Provision 2.4
Provision 2.5
Principle 3
Provision 3.1
Provision 3.2
Provision 3.3
Principle 4
Provision 4.1
Provision 4.2
Provision 4.3
Provision 4.4
Provision 4.5
Principle 5
Provision 5.1
Provision 5.2
Provision 5.3
Remuneration Matters
Principle 6
Provision 6.1
Provision 6.2
Provision 6.3
Provision 6.4
Principle 7
Provision 7.1
Provision 7.2
Provision 7.3
Principle 8
Provision 8.1
Provision 8.2
Provision 8.3
Accountability and Audit
Principle 9
Provision 9.1
Provision 9.2
Principle 10
Provision 10.1
Provision 10.2
Provision 10.3
Provision 10.4
Provision 10.5
Shareholder Rights and Responsibilities
Principle 11
Provision 11.1
Provision 11.2
Provision 11.3
Provision 11.4
Provision 11.5
Provision 11.6
Principle 12
Provision 12.1
Provision 12.2
Provision 12.3
Managing Stakeholder Relationships
Principle 13
Provision 13.1
Provision 13.2
Provision 13.3
Practice Guidance
Board Roles and Director Duties
Board Composition and Guidance
Chairman and CEO
Board Membership
Board Performance
Procedures for Developing Remuneration Policies
Level and Mix of Remuneration
Disclosure on Remuneration
Risk Management and Internal Controls
Audit Committee
Shareholder Rights and Engagement
Engagement with Shareholders
Managing Stakeholder Relationships
eGuide Glossary

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