Fuxing China Group Scrip Dividend Scheme: Comprehensive Investor Update

Key Points from the Scrip Dividend Scheme Statement

• Scrip Dividend Scheme Introduction: Fuxing China Group Limited (“the Company”) has launched a Scrip Dividend Scheme that allows shareholders to elect to receive new fully paid ordinary shares in place of cash dividends (interim, final, special, or otherwise). This is applicable after deduction of any required income tax. The scheme is optional and is not automatically applied to all dividends.
• Eligibility and Participation:
  • All shareholders (Members) are eligible except certain Overseas Members, depending on jurisdictional restrictions.
  • Shareholders can participate for part or all of their holdings for each qualifying dividend, or choose a permanent election for all future qualifying dividends. Permanent elections must be for all (not part) of the holdings covered by each Notice of Election.
  • Shareholders can cancel their permanent election at any time by providing a Notice of Cancellation.
• Director Discretion and Announcement:
  • The scheme will only apply to dividends if the Directors so determine for each particular dividend. If not applied, the dividend is paid in cash as usual.
  • The Company will announce the application (or non-application) of the scheme as soon as practicable after the Directors’ decision.
• Terms of Allotment:
  • New shares allotted under the scheme will rank pari passu with existing shares except for the right to the current qualifying dividend and any distributions declared prior to or concurrently with that dividend.
• Cost to Shareholders: Under current Bermuda and Singapore laws, there are no brokerage, stamp duty, or other transaction costs for shareholders taking up new shares via the scheme.
• How to Participate:
  • No action is required for shareholders wishing to receive dividends in cash.
  • Those wishing to receive new shares must complete and return the Notice of Election by the specified date.
• Overseas Members:
  • The scheme may not be offered to shareholders with addresses outside Singapore due to legal restrictions. Overseas Members wishing to participate must provide a Singapore address by a specified deadline.
  • The Company reserves the right to treat any Notice of Election from Overseas Members as invalid if it violates any laws.
• Calculation of New Share Entitlement:
  • The number of new shares allotted is based on the formula: N = (S x D) / V, where:
  • N = Number of new shares
  • S = Number of participating shares as at Record Date
  • D = Amount of qualifying dividend (after tax) per share
  • V = Issue price per new share, determined by the Directors, but not more than 10% discount to (and not exceeding) the average of last dealt prices during the specified period. The issue price cannot be below par value.
  • Fractional entitlements will be dealt with at the Directors’ discretion, which may include rounding or other methods.
• Listing and Quotation:
  • The Company will apply for listing and quotation of the new shares on the SGX-ST. In-principle approval does not indicate the merits of the Company or the scheme.
• Take-Over Code Implications:
  • Shareholders should be aware of Rule 14 of the Singapore Code on Take-overs and Mergers. If a shareholder (alone or with concert parties) crosses or increases their stake above 30%, or increases their holding by more than 1% within six months when already holding 30–50%, they may be required to make a mandatory offer for the company.
• Taxation:
  • The Company accepts no responsibility for taxation consequences. Generally, there is no change in Singapore tax liability or tax advantage by participating in the scheme, but shareholders should seek their own advice.
• Administrative Provisions:
  • The Directors have broad powers to administer, modify, or terminate the scheme and to resolve disputes or anomalies. Permanent elections continue unless cancelled by the shareholder.
  • The scheme is governed by Singapore law, and notices are in accordance with the Company’s bye-laws.
• Data Protection:
  • Personal data may be collected, used, or disclosed for the purposes of administering the scheme.
• Liability:
  • The Company and its agents are not liable for any loss or delay associated with the scheme.

Investor Insights and Price-Sensitive Considerations

• Potential Share Dilution: The issuance of new shares in lieu of cash dividends can result in dilution for existing shareholders who do not elect to participate. This could affect the share price, especially if a significant proportion of shareholders opt for new shares.
• Director Discretion and Dividend Policy: The Directors’ sole discretion to determine whether the scheme applies to any dividend introduces some uncertainty regarding future dividend policy and capital structure.
• Take-over Thresholds: Investors who participate heavily in the scheme should monitor their ownership levels, as crossing certain thresholds could trigger a mandatory offer requirement, potentially impacting control and share price.
• Odd Lots and Liquidity: Shareholders may receive odd lots of shares. While these are fully tradeable, they may be less liquid, which could influence trading decisions.
• Regulatory and Jurisdictional Risks: Overseas shareholders may be excluded, and changes in law or regulation could affect participation or the operation of the scheme.
• Taxation: Tax treatment is not altered by participation, but individual circumstances may vary. Any changes in tax law could impact future elections.

Action Points for Shareholders

• Review your current shareholding and consider whether to elect for new shares or retain cash dividends.
• Monitor any announcements by the Company regarding the application of the Scrip Dividend Scheme to upcoming dividends.
• Overseas shareholders should ensure their address is updated to a Singapore address if they wish to participate.
• Consider potential dilution and impact on ownership, particularly for significant shareholders.
• Consult professional advisers regarding tax and regulatory implications, especially if your aggregate shareholding approaches take-over thresholds.

Contact for Enquiries

For further information, shareholders may contact:
Boardroom Corporate & Advisory Services Pte. Ltd.
1 Harbourfront Avenue, Keppel Bay Tower, #14-07, Singapore 098632

Disclaimer

This article is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. Investors should consult their professional advisers regarding the legal, tax, and financial implications of participation in the Scrip Dividend Scheme. The information is based on the latest available documentation and may be subject to change. The Company disclaims any responsibility for any losses incurred from relying on this information.

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