Listed company cancels dividend declaration

Overseas Realty (Ceylon) Plc (ORL) is a company established in 1980 by an expatriate, S.P. Tao to develop property for investment in Sri Lanka. It owns the World Trade Centre (WTC) and Havelock City. It has 20 major shareholders – foreign and local billionaire investors and institutions and about 3900 minority shareholders. Minority shareholders own about 43,000,000 shares which amount to about 5 per cent of the company’s holdings. For the year ending December 31, 2019, the board of directors declared a dividend announcing the date of AGM, XD date and the date of payment.

Due to the sudden outbreak of the COVID- 19 pandemic in early March 2020, the company postponed the date of the AGM, XD date and the date of payment of the dividend. Subsequently the board of directors at an online meeting with majority shareholders has cancelled the dividend declared and announced in two occasions.

While the major shareholders own around 95 per cent of the company’s assets, their decision to cancel the declaration made in two occasions may be legally binding but it is an ethically wrong decision. Major shareholders could afford to forgo the dividend, but not the minority shareholders. This is the first time in the known history of the Colombo stock market that a decision declared by a PLC with regard to the dividend has been nullified by the company’s majority shareholders. This attempt by the majority shareholders to deprive the minority shareholders of their legitimate dividend rights should be condemned outright.