IWI IKA - supporting iwi fisheries

AHC Dividend to MIO

 

How much dividend should an AHC pay?

Deciding the appropriate level of dividend that an AHC should pay its MIO is not an easy decision. What is appropriate depends on the needs and strategic aspirations of each AHC and MIO. Below are our thoughts to help you make a decision on what is right for your Iwi. A decision should be made following discussions between AHC directors and MIO representatives.

  • Remember...where an AHC pays a dividend, that dividend can only be paid to the MIO. Dividends must not be paid to any other entity.
  • New Zealand companies historically pay one of the highest dividends in the world.
  • A company must be able to meet the solvency test before paying a dividend.
  • AFL must pay no less than 40% of its annual net profit as a dividend to its income shareholders.
  • In setting a dividend policy it is good practice for AHC directors to consult with their MIO representatives as to the MIOs needs and expectations.
  • The dividend can be a percentage of the gross or net profit, or can be a set amount based on agreed financial milestones.
  • Your dividend policy should align with your cashflow needs as well as your strategic goals.
  • Most New Zealand companies have a dividend policy.
  • It is possible to pay a nil dividend for a set term if, for example, the AHC wants to use 100% of its net profit to fund a new investment opportunity.
  • You should review your policy at least once every 3 years or following major financial changes.

Sample AHC dividend policy (Word - 30KB)