Shareholders of Anil Agarwal-led Vedanta will consider a proposal next month to transfer ₹12,587 crore from general reserves to retained earnings for further distribution as dividend to investors.
The promoters’ holding company, Vedanta Resources, will receive 70 per cent of the dividend to be distributed for meeting its debt obligations.
The transfer of the balance from the general reserve to the P&L account was made possible by changes introduced by the Companies Act, 2013. Earlier, companies had to transfer a certain percentage of profits to their general reserves before the declaration of dividends.
The extraordinary general meeting of Vedanta shareholders’ will be held on October 11 to approve the scheme between Vedanta and its shareholders as per the directions of the Mumbai Bench of the National Company Law Tribunal.
As per the stock exchange filing, Vedanta believes the funds represented by the general reserves are in excess of the company’s anticipated operational and business needs in the foreseeable future.
The company further states in the filing that the excess fund can be utilised to create further shareholders’ value in such manner as decided by the Board of the Company.