RHB Bank Bhd has proposed to undertake the establishment of a dividend reinvestment plan (DRP) that provides shareholders of the bank with an option to elect to reinvest, in whole or in part, their cash dividend declared by RHB Bank in new RHB Bank shares.
In a filing with Bursa Malaysia today, it said the proposed DRP would provide the company with flexibility in managing and strengthening its capital position as part of the company’s capital management strategy.
The reinvestment of dividend by the shareholders for DRP shares would also enlarge the share capital base of RHB Bank.
“The cash retained, which would otherwise be used for the payment of dividend, may be utilised for working capital, repay borrowings and/or other requirements of RHB Banking Group to be identified at the point when such funds are retained,” it said.
Besides, the proposed DRP would also allow shareholders to have the option of reinvesting further into RHB Bank and improve trading liquidity of RHB Bank.
Effects of the proposed DRP could not be determined at this juncture as it would depend on the quantum of the dividend to be announced by the board, the board’s decision of the proportion of the electable portion and the issue price, among others.
The establishment of the proposed DRP is subject to the approvals obtain by Bank Negara Malaysia, Bursa Malaysia, shareholders and other relevant authorities, if required. – Dec 17, 2020
