Canadian economic regulator to allow for exclusive dividends less than ‘exceptional circumstances’

TORONTO, Dec 14 (Reuters) – Canada’s economic regulator claimed on Monday it could allow for institutions to fork out exclusive non-recurring dividends underneath “exceptional circumstances”, even as it maintains a March moratorium on broader dividend raises and share buybacks.

The Place of work of the Superintendent of Financial Institutions believes there could be fantastic situations where a non-recurring payment of special, or irregular, dividends could be appropriate, it claimed in a assertion here on its world-wide-web web-site.

OSFI suspended listed here share buybacks and dividend boosts by Canadian banks and insurers in March as component of a raft of steps supposed to gird versus the economic influence of the coronavirus pandemic.

To qualify for exceptional circumstances, a firm’s cash and liquidity need to continue being sturdy next the payout, the particular dividend ought to be confined to a special business objective and not be distributed to a wide team of shareholders, the regulator mentioned.

“A funds dividend to popular shareholders does not surface to be on the table,” Countrywide Bank Fiscal Analyst Gabriel Dechaine wrote in a observe. “One chance that comes to brain is (mergers and acquisitions). In this sort of a scenario, extra cash domiciled in Canada could be shifted to a international subsidiary to aid an acquisition.”

Requests for the exception should be submitted at the very least 30 times before they are declared, and will be reviewed independently, OSFI claimed.

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

“There stays as well considerably uncertainty to adjust our expectation on typical dividends,” it stated. “While conditions appear steady now, the money impacts of the COVID-19 pandemic are nonetheless to be absolutely realised.” (Reporting By Nichola Saminather enhancing by Richard Pullin)