Fuxing China Group Limited Proposes Scrip Dividend Scheme: Key Details for Investors

Introduction

Fuxing China Group Limited (“Fuxing” or the “Company”), a Bermuda-incorporated company, has announced a significant proposal likely to impact shareholders and potentially move the share price. The Board of Directors is seeking shareholder approval to adopt a Scrip Dividend Scheme, to be known as the “Fuxing Scrip Dividend Scheme”. This marks an important development in the Company’s capital management and dividend distribution policy.

Key Points of the Scrip Dividend Scheme

• Optional Share Dividend: If implemented, eligible shareholders will have the option to receive dividends in the form of fully paid new ordinary shares (“New Shares”) instead of cash. This applies to any “Qualifying Dividend”—including interim, final, special, or other dividends—as determined by the Board.
• Eligibility: Shareholders registered in the Company’s Register of Members or the Depository Register (as defined under Singapore law) will be eligible to participate. Overseas shareholders should take note of specific restrictions and are advised to review paragraph 4.4 of the Scheme Statement for important details.
• Shareholder Action: The Scrip Dividend Scheme and the issuance of New Shares are subject to shareholder approval at the upcoming Annual General Meeting (AGM). The Board will also seek approval for the allotment and issuance of New Shares under the Scheme.
• Regulatory Approval: The Company will be making the necessary applications for the listing and quotation of the New Shares to the Singapore Exchange Securities Trading Limited (SGX-ST). Any approval from SGX-ST should not be regarded as an endorsement of the merits of the Scheme or the Company.
• Announcement of Application: The Company will announce whether the Scrip Dividend Scheme will apply to any particular dividend promptly after a decision is taken, and in any event no later than the market day following the relevant record date.

Rationale and Implications for Shareholders

• Increased Flexibility for Investors: The Scrip Dividend Scheme provides shareholders with the choice to either receive cash dividends or reinvest their dividends in the Company by taking New Shares. This flexibility can help investors align dividend income with their investment objectives without incurring additional transaction costs such as brokerage fees, stamp duty, or other related charges.
• Potential for Enhanced Share Liquidity: Issuance of New Shares under the Scheme is expected to increase the liquidity of Fuxing shares in the market.
• Retention of Cash for Growth: By allowing shareholders to opt for New Shares instead of cash, the Company can conserve cash resources. These retained funds can be deployed for the growth and expansion of the Group, strengthening Fuxing’s working capital position and enhancing its financial flexibility.
• Potential for Share Capital Enlargement: The issue of New Shares in lieu of cash dividends will increase the share capital base, which may have implications for future earnings per share and shareholder value.

Important Considerations for Shareholders

• Shareholder Approval Required: Shareholders must approve both the adoption of the Scrip Dividend Scheme and the authority to allot and issue New Shares at the upcoming AGM. This is a critical step, and the outcome will directly affect the implementation of the Scheme.
• Price Sensitivity: The proposal to allow dividends to be paid in shares instead of cash, and the potential increase in the Company’s share capital, are price-sensitive matters. Shareholders and potential investors should monitor announcements around the AGM and any subsequent application of the Scheme to specific dividends.
• Restrictions for Overseas Shareholders: There are restrictions and additional considerations for shareholders with registered addresses outside Singapore. Such shareholders are urged to consult professional advisers and review the detailed Scheme Statement.
• Regulatory Compliance: The Scrip Dividend Scheme will be operated in accordance with the requirements of the Listing Manual and the Company’s Bye-laws.

Directors’ Responsibility Statement

The Directors of Fuxing China Group Limited have collectively and individually accepted responsibility for the accuracy and completeness of the information disclosed in the announcement. They confirm that, after making all reasonable enquiries, there are no material facts omitted that might mislead shareholders.

Enquiries

Shareholders with questions regarding the Scrip Dividend Scheme are encouraged to contact the Company’s Singapore Share Transfer Agent:

Boardroom Corporate & Advisory Services Pte. Ltd.
1 Harbourfront Avenue, Keppel Bay Tower, #14-07, Singapore 098632

Conclusion

The proposed adoption of the Fuxing Scrip Dividend Scheme is a significant corporate action that could impact shareholder value and the trading dynamics of the Company’s shares. Shareholders are advised to review the full details, participate in the upcoming AGM, and consider their options in consultation with professional advisers.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. Shareholders and investors should consult their professional advisers and refer to official company documents before making any investment decisions.

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