9.4737% Dividend Distribution of Api Power Company Limited Canceled

The dividend proposal of Api Power Company Limited (API) has been canceled by the Electricity Regulatory Commission (ERC).

The 4th meeting of the board of directors held on Bhadra 07 has proposed a 9.4737% dividend for the fiscal year 2080/81. A 9% bonus shares and 0.4737% cash dividend (including tax) were proposed. The paid-up capital of the company is Rs. 578.65 crores.

The 107th meeting of the board of directors held on Ashwin 10 has decided to cancel the proposed dividend of API. According to a notice from the Nepal Stock Exchange (NEPSE), the aforementioned dividend proposal, which required approval from the Electricity Regulatory Commission, was not accepted and has consequently been canceled.

Api Power Company Limited has issued a clarification in line with Sub-section (2) of Section 108 of the Companies Act, 2063. The company confirmed that its financial statements for the fiscal year 2080/81 have been prepared by Nepal Financial Reporting Standards (NFRS), accurately reflecting its financial status. The auditing process was conducted based on the relevant accounting standards mandated by the authorized bodies.

In compliance with NFRS 9, the company's investments in shares of various entities have been recorded at market value using the Fair Value through Profit and Loss (FVTPL) approach. Market value fluctuations have been documented in the profit and loss statement, with necessary provisions made for deferred tax liabilities associated with these gains or losses. The profit calculated under NFRS 9 is categorized as regular profit and is not a result of asset revaluation.

According to Section 56 of the Companies Act, the company is authorized to alter its share capital. However, Sub-section (10) of this section prohibits increasing share capital or issuing bonus shares based on asset revaluation. Nepal Accounting Standard (NAS) 16 regulates the revaluation of property, plant, and equipment, necessitating that any revaluation surplus be recorded in a distinct revaluation reserve, rather than in the profit and loss statement. This approach is consistent with the provisions outlined in Sub-section (10) of Section 56 of the Companies Act.

Consequently, classifying the profit derived under NFRS 9 as revaluation profit is deemed incorrect, as it contradicts the principles and regulations of existing laws and accounting standards.

Additionally, the company has communicated with the Electricity Regulatory Commission, submitting the required documentation and plans to engage in further discussions to secure approval for the proposed dividend.

The LTP of API closed at Rs 284.10.