Rapid Fire
Revised Dividend Guidelines for CPSEs
- 30 Nov 2024
- 1 min read
Recently, the Department of Investment and Public Asset Management (DIPAM) has introduced revised guidelines for Central Public Sector Enterprises (CPSEs), mandating a minimum annual dividend payment of 30% of profit after tax (PAT) or 4% of net worth, whichever is higher.
- Earlier, the 2016 guidelines stipulated that dividend payments must be 30% of profit after tax (PAT) or 5% of net worth, whichever is greater.
- The guidelines also extend to CPSE subsidiaries where the parent central public sector enterprise holds over 51% stake.
- The guidelines allow CPSEs whose market price has been below book value for six months, with a net worth of at least Rs 3,000 crore, to consider share buybacks. Additionally, they can issue bonus shares when reserves exceed 20 times their paid-up equity.
- Share Buybacks is the reacquisition by a company of its own shares from the stock market.
- Bonus shares are additional shares granted to existing shareholders at no extra cost, based on the quantity of shares they currently hold.
- DIPAM manages Central Government investments, including disinvestment and equity sales in Central Public Sector Undertakings.
