Feb 15 2016, 03:10 PM
QUOTE(faradie @ Feb 10 2016, 01:45 AM)
In Malaysia, section 365 of the CA 1965 allows dividends to be paid from current profits. Hence to ensure a high dividend payout classifying its financial investments as AFS allows for current profits to be unaffected by unrealised losses as they pass through reserves. This leads us to the possible scenario of negative reserves but high dividend payout. Hence depositors will not get paid in full theoretically if they withdraw enmasse. I see 2 weaknesses in our system here:
1. The possible loophole of reclassification of financial assets to AFS whenever there are significant unrealised losses in order to ensure depositors are happy with the bonus
2. Our CA 365 on dividends is inadequate and needs to be reviewed as IFRS developments has now created a situation where key stakeholders are not adequately protected
What do you think?
Tabung Haji is not a company hence not bound by Companies Act. It is bound by its own Tabung Haji Act.1. The possible loophole of reclassification of financial assets to AFS whenever there are significant unrealised losses in order to ensure depositors are happy with the bonus
2. Our CA 365 on dividends is inadequate and needs to be reviewed as IFRS developments has now created a situation where key stakeholders are not adequately protected
What do you think?
However, yes the amendments in CA is really long due....
For example section 365 is as below, there is no mention on current (year) profit. Profit was not defined in Companies Act as such subject to a very wide interpretations...
365. (1) No dividend shall be payable to the shareholders of any
company except out of profits or pursuant to section 60.
This post has been edited by vergas: Feb 15 2016, 03:15 PM
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