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Tuesday, January 09, 2018

IOB Set off of Share Premium account against accumulated losses

IOB Set off of Share Premium account against accumulated losses..!

IOB Press Release

The IOB  proposes to utilise the balance in its Share Premium account as at 31.03.2017 of Rs. 7650.06 crore to set off its accumulated losses as at 31.03.2017 of Rs. 6978.94 crore so as to present a true and fair view of the financial position of the Bank. Necessary approvals have been obtained. 

The Bank is convening an Extraordinary General Meeting on 30.01.2018 for the purpose of obtaining the approval of the shareholders for the proposal, as good governance practice.

Salient features of the proposal :

·  Section 17(2) of The Banking Regulation Act, 1949 permits banks to appropriate any sum from the reserve fund or the share premium account
·         The proposed utilisation of Share Premium account to set off accumulated losses is a Balance Sheet neutral action :
-          Book value of shares will  remain unchanged
-          Net Worth will remain unchanged
-     The Bank’s equity capital structure and shareholding pattern will remain unchanged as no reduction in the paid-up share capital of the Bank  is contemplated in the proposal .
-   Capital adequacy ratios (CARs) will not be impacted thereby
·         The rights of shareholders are not prejudicially affected.
·         On the other hand, the Bank will be able to represent its true financial position which would benefit shareholders as their holding will yield better results and value and also enable the Bank to explore opportunities to the benefit of the shareholders of the Bank as per the applicable provisions, within a reasonable timeframe.

·         The proposal is not prejudicial to the interests of any of the shareholders whether minority or majority. This proposal will not pass on any liability to the shareholders nor would it take away any benefits that would otherwise accrue to shareholders.

·         The proposal does not involve any financial outlay / outgo for the Bank.

·         It does not affect the ordinary operations of the Bank or its ability to honour its commitments or to pay its debts in the ordinary course of business.

·         Reduction of Share Premium Account will not have any adverse impact on any of the Bank’s creditors/ stakeholders. They would in fact be generally benefitted as the proposal would help in presenting true and fair view of the financial position of the Bank. The proposal will help the Turnaround of the Bank which will be in the interest of the Bank’s stakeholders.

·         The proposal while reducing our accumulated losses, will also put the Bank in a better position to achieve its Turnaround Plans in a timebound manner.





IOB Set off of Share Premium account against accumulated losses Reviewed by S. Chitra on January 09, 2018 Rating: 5 IOB Set off of Share Premium account against accumulated losses..! IOB Press Release The IOB  proposes to utilise the balance in ...

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