Delong Holdings

[portuser]

Weijian wrote:

"hi portuser,
Thanks for your reply. I took a look at AEM AR16 (pg41) and the dividends are flowing out from the "group level" under retained earnings. Unfortunately, i can't find any equity changes for the "company level".
For example for China Sunsine in AR16, 33mil flowed out from "retained profits" under group level (pg 48) and the same amount is paid out from "retained profits" under the company level (pg 74) - So it is obvious that dividends are paid out from the holding company in Singapore (for China Sunsine case).

For AEM case, would it be actually a subsidiary paying out the dividend? (just making a guess). Wondering any VB (account trained) able to explain how AEM has a "workaround" on SG Company Act 403? If there are "workarounds", then Delong would be able to execute the "workaround" (if it is applicable in its case) to pay a dividend IF it wants to. 

AEM AR16: http://infopub.sgx.com/FileOpen/AEM%20AR...eID=446578
China Sunsine AR16: http://www.chinasunsine.com/en/wp-conten...Report.pdf"


For AEM, change in equity at the company level can be found in page 10 of the results announcement:
http://infopub.sgx.com/FileOpen/Results-4Q2016.ashx?App=Announcement&FileID=440574
 
It is not clear why the same was not shown in AEM annual report.

China Sunsine Chemical Holdings Ltd, the listco incorporated in Singapore, has no operating business. 

The listco receives dividends from its operating subsidiary in China, Shandong Sunsine Chemical  Company Ltd, to pay for its office expenses in Singapore as well as dividends to shareholders of China Sunsine Chemical.

[weijian]

hi specuvestor/portuser,
Thanks for the clarifications and the link. It looks very clear now.

[portuser]

Page 509 to 515 of "Walter Woon on Company Law" contain interesting discussions on various aspects of dividend declaration. The editor of the book was Professor Tan Cheng Han, Senior Counsel. 

Page 514 and 515 set out the effect of improper declaration of dividend. 

It is interesting to note that "if it is discovered that a dividend has been declared illegally, the board may apply to court to have the declaration set aside. It is not permissible for the company to decalre a unilateral moratorium."

Also, "a director who allows a dividend to be paid when there are no profits commits a breach of his duty by misapplying the comany's funds.  Such a director may be made liable to replace the money paid out. A director or manager who wilfully pays or permits a dividend to be paid in breach of s 403(1) is liable to creditors of the company for the amount of the debts of company to the extent that the dividend exceeded the available profit."

Dividend declaration ought to be taken seriously by directors as it entails personal liability. Company secretary is on hand to provide advice to directors when the board meets. 

[specuvestor]

^^ the penalties are actually stated in S403 of the Act. I'm not sure it's the role of the company secretary to advise on dividend payment.

"1C) Any gains derived by the company from the sale or disposal of treasury shares shall not be payable as dividends to the shareholders of the company.
[21/2005]
(2) Every director or chief executive officer of a company who wilfully pays or permits to be paid any dividend in contravention of this section —
(a)
shall, without prejudice to any other liability, be guilty of an offence and shall be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 12 months; and
(b)
shall also be liable to the creditors of the company for the amount of the debts due by the company to them respectively to the extent by which the dividends so paid have exceeded the profits and such amount may be recovered by the creditors or the liquidator suing on behalf of the creditors.
[15/84; 21/2005]
[Act 36 of 2014 wef 03/01/2016]
(3) If the whole amount is recovered from one director or chief executive officer he may recover contribution against any other person liable who has directed or consented to such payment."

No retained earnings to pay dividends? Do a capital reduction. S i2i did that. Global Testing did that. K1 Ventures did that. Fu Yu did that etc.

Ultimately, it really depends on whether the company wishes to pay out cash to shareholders. There are many ways to do it. No retained earnings should not be the reason for not giving out a dividend.

Capital reduction needs to satisfy the court that a reduced capital will not impair the business as an on-going entity. It's not that straight forward.

[portuser]

Based on Wikipedia: 

The company secretary is responsible for the efficient administration of acompany, particularly with regard to ensuring compliance with statutory and regulatory requirements and for ensuring that decisions of the board of directors are implemented. Despite the name, the role is not clerical or secretarial.

[specuvestor]

^^ Yes it is mainly for administration or implementation, including the members' roll and corp actions. For regulatory issues, they will liaise with lawyers rather than advise, is what I understand. Once it is advised, they like compliance department, will ensure compliance.

But I don't think they will advise things like "what is the definition of profit" Compliance and legal opinions are different thing and it is segregated as such in the real corp world. Even Trustees don't advise.

[portuser]

Based on the following, company secretary has to be knowledgeable for the advisory and fiduciary roles. 

https://singaporelegaladvice.com/law-art...secretary/

Advisory Role
Company secretaries are also relied on for their advice, given their extensive knowledge of legal and compliance frameworks coupled with the internal governance of the company. They are often communicating with directors and shareholders, providing them with key information about the company to formulate strategies or to complement the decision-making process. Company secretaries will also be able to identify any non-compliance with certain company policies, and helping directors to make the necessary changes. Their advice will ensure the company is constantly in line with legal and compliance frameworks in Singapore.

Fiduciary Role
Perhaps the less well-known, but equally important role of a company secretary is his/her fiduciary role to the company. Company secretaries have a fiduciary role to always act in the best interests of the company in good faith, and to avoid or disclose any potential conflicts of interest that could arise. Just as any other members of the company, company secretaries are subject to the Companies Act as well as the Company Constitution of the respective company.

Importance of Company Secretaries
Given the numerous roles that company secretaries undertake in your company, finding a competent and trustworthy corporate secretarial firm is definitely an important process that should not be taken lightly.
The responsibilities and roles that company secretaries play are important with regard to legal compliance because a failure to perform these duties adequately can have many severe consequences for you and your company. Many of the compliance and reporting requirements are stipulated by law, and a failure to adhere to them is equivalent to breaking the law. Mistakes made in this field can be costly, with penalties such as fines, imprisonment and the removal of a director or company secretary from his/her appointment.

[specuvestor]

The context you are quoting above is that some companies appoint legal firms as Company Secretaries. It is not mandatory

[portuser]

In what context you made the point that company secretary is "mainly for administration or implementation, including the members' roll and corp actions."?

Thank you.

[specuvestor]

In the context that corporate service provider like Boardroom can be the company secretary

Just google it. This is one example: http://www.acrafile.com/Singapore-Corpor...vices.aspx

Legal advice itself probably cost more than $288