NLMK announced a record quarterly dividend on the back of strong financial results in the first quarter. 2021

Payment of dividends is a simple operation, but due to changed laws, new nuances of this procedure have appeared.

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When deciding to pay dividends, some shares are paid first; the forms of payment of dividends and the taxation of payments also differ. This raises the question of the procedure for paying interim dividends.

What you need to know

Dividends are the funds that each shareholder who invested in the shares of a particular company receives. Making a profit is the task of creation and operation of every organization. And if the organization is profitable, then the owners of such an organization have the right to receive a share of its income - dividends.

The amount of profit in the form of dividends is divided among the participants according to the part of their participation in the capital of the organization. The issue of payment of dividends is important for shareholders and for legal entities. persons Therefore, taxation of dividends remains topical.

Dividends also include profits received from sources outside Russia, which are classified as dividends according to the laws of foreign countries.

Thus, for tax purposes, a dividend includes not only payments to the organization’s shareholders, but also payments from net income in favor of the shareholders of LLCs, partnerships, that is, other types of commercial companies.

Shareholders of the company can apply for interim payments - at the end of 3 months of reporting time, after six or nine months, or based on the results of the reporting period. The resolution on the distribution of dividends to the company's shareholders is adopted by the meeting of founders.

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Basic Concepts

Interim dividends are material compensation to participants of a legal entity based on interim information on the amount of profit for a specified period of time in the reporting year. Splitting progress payments may include, but does not guarantee, final settlement.

The term "dividends" is not generally used for LLCs. In relation to organizations with this type of business, the term “redistribution of profits” is used. The source of dividends is the company's net income after withholding taxes.

Net income is calculated according to data taken from accounting. The amounts of interim compensation are prescribed in the resolution of the meeting of founders or the resolution of the single founder on the redistribution of profits.

Resolution on the issuance of dividends for 3 months, 6 or 9 months. accepted at the end of the relevant reporting time.

Dividends are attributed to Russian companies and individuals. persons – tax residents of the Russian Federation. Legal persons who work under the simplified system are subject to income tax. Phys. individuals remit the tax and do not have to pay mandatory insurance premiums.

The right to issue dividends based on the results of 3, 6, 9 months. Either year is recorded in the Federal Law dated December 26, 1995, No. 208 “On Joint-Stock Companies.” The resolution on the transfer of dividends, which determines the amount and form of compensation, is adopted at the meeting of shareholders.

The amount of transfers cannot be greater than the amount recommended by the board of shareholders. The calculation time is 60 days after the adoption and approval of the resolution. If this time is not specified in the resolution, it becomes equal to 60 days. An organization cannot give priority in the payment period to certain types of shareholders.

Transfers must be made simultaneously for all types of holders of shares of the established type. A limited liability company can claim to pay dividends once every 3 months, every six or 12 months. This is explained in Art. 28 Federal Federal Law dated February 8, 1998, number 14 “On joint stock companies with limited liability.”

The total amount of interim payments cannot be more than the organization’s net profit based on the results of the year. According to tax organizations, the resulting difference must be included in the income of company participants and taxed at a rate of 13%.

If the enrollment time has ended, but the shareholders have not received the funds, the founders can, within 3 years after the end of the payment period, contact the organization with a request to receive their share. The time can be extended to 5 years if this is provided for by the organization's charter.

Company dividends for the last 10 years

For clarity, I will look at the table on dividend payments over the previous 10 years to NLMK shareholders.

Payment of interim dividends in 2021

According to general rules, the time for issuing dividends cannot be more than 60 days from the date of adoption and signing of the relevant resolution. Profits are redistributed according to their shares of participants invested in the initial capital.

The charter may prescribe a procedure for paying dividends, which does not depend on the part of the participant.

These rules are prescribed in the constituent document during the process of creating a company, or by making changes after opening. Now it is necessary to reflect in the charter the list of participants and the size of their parts. The payment of interim dividends in 2021 is redistributed disproportionately to the shares in the initial capital.

Data on shareholders and payment amounts can be fixed in the agreement on the establishment or in the resolution on the division of income itself. Profit can be gained in financial or in kind form. The law does not provide for an indispensable definition in the charter of the payment option.

The form of payment for profits may be specified in the resolution. If there is no money, the organization can pay dividends in the form of property. It should be noted that this option is not advisable, because payment of profit in material form will entail payment of income tax.

Property to pay for dividends must be provided at a value no less than the market value. The tax in such a situation is established based on the price of the property including VAT.

If the company fails to withhold and remit tax on designated property. The participant and the tax office must be notified of this within a month. The time for payment of dividends by legal entities is established by the organization's charter or resolution of shareholders.

The time for material compensation cannot be more than 60 days after the adoption and signing of the resolution.

If the charter or resolution does not say anything about time, then this time will be equal to 60 days after the adoption of the resolution. If during this time the participant has not received the funds, he is given 3 years from the expiration of this time to submit a request to the company for compensation of the share of income.

In a company of shareholders, interim payment of dividends is divided according to the benefits of shares specified in the protocol and has a stipulated schedule:

• First, the profits go to the holders of preferred shares in turn.
• After this, a full or partial transfer of the debt of the cumulative shares is made.
• Next, payments occur for securities with a statutory income amount.
• After them, profits on shares without a certain amount of income are transferred.
• Regular shares are considered last.

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Warning about Forex and BO

Expert opinion

Anna Ovchinnikova

Private investor, entrepreneur and founder of the portal fonda.pro

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When participating in Forex or playing binary options, a person faces high risks. The activities of organizations are not regulated by law. If Forex is a foreign exchange market without legal regulators, then binary options are actually roulette with a high chance of losing.

To eliminate problems and receive dividends from investing, I recommend contacting professional brokers licensed to participate in trading on stock exchanges.

Taxation

The transfer of income to the organization can be done either in full or in part. Regardless of this, the organization posts the process with the obligatory withholding of tax.

This is determined by the fact that the organization is an entity that carries out the work of collecting and transferring money, and must transfer tax deductions to the treasury.

A tax rate of 13 percent is withheld from the amount of transferred payments from Russian companies. For residents, the tax rate will be 15 percent.

At the end of the reporting period, a 2-NDFL report is submitted to the authorities, in which withheld payments must be included. Typically, the submission time is before April 1, following the reporting time.

Commentary "Opening Research"

Alexey Pavlov, PhD, chief analyst at Otkritie Broker for the Russian market:

“In general, as in the case of Severstal and MMK, which reported earlier, NLMK in January-March 2021 also rewrote the record for ruble EBITDA against the backdrop of favorable conditions on the steel market. At the same time, unlike the competitors mentioned above, the quarterly dividend announced by NLMK also became a record in history. In total, it is planned to allocate 133% of FCF to pay shareholders based on the results of the first quarter. We also note that by now prices for rolled steel in the second quarter are even higher, which means that the financial results of Russian steelmakers in April-June may again update record values.”

View the results of competitors who previously reported for the same period:

Severstal earned record EBITDA in the first quarter of 2021

Rising steel prices allowed MMK to earn money in the first quarter. 2021 record EBITDA in rubles

Stock dynamics

NLMK shares as of 14:40 Moscow time added 1.7% to RUB 272.88. At the same time, the Moscow Exchange index grew by 0.9%, and the Metals and Mining industry index by 1.6%. Therefore, the paper looked better than the market. NLMK closed the TOP-8 in terms of trading volume among all shares of the Moscow Exchange with an indicator of 1.95 billion rubles.

During the trading session, a peak of 273.7 rubles was formed. This is a new all-time high since listing in 2006. Shares have been rising in price for 13 months in a row. This is the longest series. The previous record longest streak of continuous growth (9 months) was in 2009. Since the beginning of April, NLMK shares have risen in price by 13%. If the month ended today, it would be the best month since November 2016, when shares rose 15%.

According to the technical indicator RSI (period 14 days), overbought is observed. The overbought condition is comparable in duration to the pattern observed in August 2021, as well as November 2021. This hints at the risk of a short-term correction.

There are 5 “buy” recommendations for NLMK securities, 0 “sell” recommendations, 1 “hold” recommendation, according to data in the Bloomberg terminal. The 12-month consensus target is RUB 166.27, which implies a potential reduction of 39% from the current price.