KUALA LUMPUR: it is up to a company's board of directors to decide if dividends are paid out, says Deputy Finance Minister Liew Chin Tong.
Addressing a proposal to mandate payouts for profitable companies, he said such decisions are based on a comprehensive assessment of cash requirements, investment commitments and market risks.
"Accounting profits and sound financial ratios reflect a company's current stability but distribution decisions must also take into account medium- and long-term commitments such as development expenditure, maintenance and working capital requirements," he said when winding up debates on the AG's Report Series 1/2026 in the Dewan Rakyat on Tuesday (Feb 24).
He said the Minister of Finance Inc's 2024 corporate governance and board guidelines provides the board the room to exercise appropriate commercial judgement without jeopardising the company's financial position, ensuring sustainability and competitiveness in line with corporate governance principles and the legal framework governing companies.
"Nevertheless, in view of the concerns raised regarding dividend payments, particularly in relation to transparency and consistency in the treatment of government-owned companies, the government is prepared to consider improvements to the existing guidelines to ensure a balance between fiscal discipline and the financial sustainability of government-owned companies," he said.
This is to ensure that the commercial autonomy granted to companies goes hand in hand with accountability to shareholders," he added.
The report released on Monday (Feb 23) revealed that a total of 13 companies under MOF Inc did not declare dividends for 2022 and 2023 despite recording profits.
The AG's Report said an audit was carried out on 13 companies that recorded profits in 2022 and 2023 and maintained current and solvency ratios of at least 1, yet failed to make payouts.
According to the AG's report, there is no regulation that compels government companies to pay dividends if they are profitable and solvent.
The bulk of the dividends to the Federal Government was contributed by Petronas, totalling RM50bil in 2022 and RM40bil in 2023.
However, Liew noted that several subsidiaries of government-owned companies including those under Petronas did not declare dividends due to considerations by the board including cash flow requirements, investment commitments, asset maintenance and capital strengthening,
"Although profits were recorded, priority was given to operational sustainability and reinvestment. At the same time, Petronas, through its holding company Petroliam Nasional Berhad, paid RM32bil in dividends to the government for the Financial Year 2024, demonstrating that the group's contribution is assessed comprehensively," he said.
For Cenviro Sdn Bhd and Cradle Fund Sdn Bhd (CFSB), the decision not to pay dividends was in line with their respective dividend policies and actual cash positions. Cenviro utilised profits and available cash for the redemption of Redeemable Convertible Preference Shares (RCPS) amounting to RM100mil and retained sufficient cash for operational needs and capital commitments."
CFSB faced operating cash flow constraints, reliance on grants and partially unrealised profits. Accordingly, no dividends were declared for 2022 and 2023 with Board approval and notification to the Finance Ministry in accordance with the 2024 MOF Inc's guidelines," he added.
He said the profits of IJN International Sdn. Bhd., were not as significant as the contribution of its principal subsidiary, Institut Jantung Negara Sdn. Bhd.
He said funds were also required for operational expansion and the company has taken note of the need to seek dividend exemption and will improve its policy.
"Meanwhile, Sirim Calibration Sdn Bhd and Sirim Academy Sdn Bhd deferred dividends during a phase of financial recovery and asset reinvestment. For the financial year 2023, Sirim Academy returned to stability and declared dividends with Board approval," he said.
