JAKARTA - PT Ever Shine Tex Tbk (ESTI) is cancelling its dividend distribution previously approved by the shareholders due to a deficit in its retained earnings. In 2023, this issuer reported negative profit balance of USD 66.21 million

Erlien Lindawati, Director of ESTI, mentioned that the company did not realise the Article 71, paragraph 3, of Law No. 40 of 2007 that states dividends can only be distributed if a company has a positive profit balance.

“The cash dividend allocation is solely an act of good faith from the company to distribute 10% of its comprehensive earnings in 2023 to shareholders without neglecting the effect on its cash flow,” Lindawati clarified, as quoted last Wednesday (10/7).

In the Annual General Meeting of Shareholders on June 12, 2024, shareholders agreed upon cash dividend distribution of IDR 2.01 billion from its comprehensive profit in 2023 of IDR 20.09 billion or USD 1.30 million. Its retained earnings were at IDR 18.07 billion, and total equity clocked up to USD 15.81 million.

Nailin Ni’Mah, Director of Supervision of Issuer and Public Companies 2 of Financial Services Authority (OJK), then responded to ESTI’s plan of dividend distribution.

“In regard to things aforementioned, it is urged for you to comply with Article 71 of Law no. 40 of 2007,” Ni’mah said in the information disclosure.

For the record, Law No.40/2007 regulates the following:

Through Article 71, paragraph 1: the utilisation of net profit, including the amount set aside for reserves, as stated in Article 70 paragraph 1, shall be decided by AGMS.

Through Article 71, paragraph 2: the entire net profit, after deducting the reserves, as stated in Article 70 paragraph 1, shall be distributed to shareholders as dividend, unless decided otherwise in AGMS.

Lastly, though Article 71, paragraph 3: the dividend, as stated in Article 71 paragraph 2, may only be distributed should the company book positive profit balance. (LK/ZH)