Seplat issued a corporate disclosure today on the website of the NSE confirming that it will be paying its recently proposed dividend in dollars. It will be paying a final dividend of 9 US cents per share payable on the 10th of June 2015, if the shareholders of the company approves it.
Why pay dividends in dollars?
Most people will wonder why Seplat is paying dividend in dollars even though it is a company registered in Nigeria and doing business in Nigeria. The difference however is that Seplat’s functional currency is the US dollar. The functional currency is basically the official currency that a company uses to report in its financial statements. Companies typically report in a functional currency that represents a huge portion of their earnings source. For example, Dangote Cement chooses Naira as its functional currency because it earns most of its money in Naira. However, Seplat earns most of its money in dollars because it sells crude oil by exporting it and earning dollars.
Who can get dividends in dollars
According to Seplat, the dividend will only be paid to shareholders who have a Certificate of Capital Importation (CCI). A CCI is basically a document you obtain from the CBN as a proof that you imported dollars into Nigeria. CCI ensures that those who import dollars into Nigeria can also take their money out in dollars. As such, they have access to buy dollars from the CBN rather than from the parallel market when they want to take their money out.
So for shareholders of Seplat who have a CCI from investing in the Nigerian Stock Exchange, Seplat will pay them in US dollars. However, for shareholders who do not have a CCI they will get paid in Naira using the exchange rate applicable as at May 21 2015. For those who have CCI who prefer to have their shares in Naira, they can also be paid in naira but must notify Seplat not later than May 27, 2015. Seplat will also not pay part dividend in naira or dollar.
Get the press release here
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