Canadian economic regulator to enable special dividends under ‘exceptional circumstances’

TORONTO, Dec 14 (Reuters) – Canada’s financial regulator stated on Monday it could permit establishments to fork out distinctive non-recurring dividends less than “exceptional circumstances”, even as it maintains a March moratorium on broader dividend will increase and share buybacks.

The Place of work of the Superintendent of Monetary Institutions thinks there may well be remarkable conditions wherever a non-recurring payment of unique, or irregular, dividends might be appropriate, it said in a assertion in this article on its internet web-site.

OSFI suspended listed here share buybacks and dividend improves by Canadian banking institutions and insurers in March as aspect of a raft of measures supposed to gird towards the economic impact of the coronavirus pandemic.

To qualify for excellent conditions, a firm’s cash and liquidity must keep on being potent subsequent the payout, the unique dividend really should be limited to a unique business enterprise aim and not be distributed to a broad team of shareholders, the regulator explained.

“A cash dividend to typical shareholders does not seem to be on the desk,” Countrywide Bank Monetary Analyst Gabriel Dechaine wrote in a note. “One probability that comes to intellect is (mergers and acquisitions). In these a situation, excess money domiciled in Canada could be shifted to a foreign subsidiary to aid an acquisition.”

Requests for the exception ought to be submitted at least 30 times ahead of they are declared, and will be reviewed independently, OSFI mentioned.

OSFI said it has no programs to carry the broader freeze.

“There remains as well substantially uncertainty to transform our expectation on common dividends,” it mentioned. “While disorders appear to be secure now, the fiscal impacts of the COVID-19 pandemic are but to be entirely realised.” (Reporting By Nichola Saminather modifying by Richard Pullin)