Dividends - brazilian law & history
Calculation of adjusted net income
History of dividend payments
Dividend preferences
Under Brazilian corporate law, Aracruz is required to hold an annual shareholders' meeting by April 30 of each year. At that meeting, its financial statements for the previous year and the proposal for distribution of dividends are submitted for shareholder approval. Accordingly, dividends for each fiscal year ending December 31 may be declared by April 30 of the subsequent year. Dividends are to be paid within 60 days from the date declared, unless otherwise resolved at the annual shareholders' meeting at which they were declared. In any event, declared dividends must be paid before the following December 31. Dividends relating to prior years in excess of those required to be paid by law may be declared and paid at any time by decision of the board of directors. The board of directors may also elect to pay interim dividends either:
- based on Aracruz net income for any period within its fiscal year; or
- from Aracruz retained earnings or certain other revenue reserves established in prior years
The Class A and Class B Stock holders are entitled to receive dividends at least ten percent higher than the amount per share paid to holders of common stock. Notwithstanding, holders of Class A Stock are entitled to an annual preferential dividend equal to a minimum of 6% of the capital attributable to the Class A Stock. In the event dividends in excess of those paid to the holders of Class A Stock are distributed, holders of common stock and Class B Stock share ratably in such excess up to an amount equal to the Class A Stock preferential dividend. Any dividends thereafter remaining for distribution are shared ratably by all holders of Class A Stock, Class B Stock and common stock. Dividends declared by the Company are to be paid from annual adjusted net income.
Calculation of adjusted net income
Brazilian corporate law allows for three additional appropriations of net income, each of which must be approved by the holders of common stock. First, a portion of net income may be appropriated to a reserve for anticipated losses which are deemed probable in future years. Conversely, any amount so reserved in prior years must be returned to net income in the fiscal year in which the reason for such reserve ceases to exist or in which the loss takes place. Second, net income may be appropriated to an unrealized income reserve for future income to be realized from:
- inflationary income;
- increases in the net worth of affiliated companies; and
- income from term sales to be received in subsequent fiscal years.
Third, net income may be appropriated for discretionary purposes, ratified by the shareholders for business expansion and other capital projects, the amount of which is based on an approved capital budget presented by management. After completion of the projects, a company may elect to retain the appropriations until the stockholders vote to transfer all or a portion of the reserve to capital or to retained earnings, from which retained earnings a cash dividend may then be paid.
Brazilian legislation requires that the calculation of the amount of a company's net income available for dividend distributions to its shareholders be determined on the basis of financial statements prepared in accordance with Brazilian GAAP using the corporate law method. Such net income of a company may not be the same as that determined by the currency of constant purchasing power method.
The following table sets forth the dividends paid by holders of Aracruz capital stock since 2000. The exchange rates used to convert dividends in reais into U.S. dollars were the rates in effect on the related payment dates.
| Declaration date | Fiscal year of reference | Dividends and interest (1) | EX-DATE | Gross amount (R$ thousand) | Gross amount per ADR (US$) | Initial payment date |
| Jun.20, 2008 | 2008(*) | Interest (1) | Jun. 06, 2008 | 85.000 | 0,54 | Jul. 23, 2008 |
| Apr.30, 2008 | 2007 | Dividends | May. 05,2008 | 200.000 | 1,19 | May. 05, 2008 |
| Mar.18, 2008 | 2008(*) | Interest(1) | Mar. 26, 2008 | 70.000 | 0,41 | Apr.04, 2008 |
| Dec. 21, 2007 | 2007(*) | Interest(1) | Dec. 27, 2007 | 78.900 | 0,44 | Jan.16, 2008 |
| Sept. 18, 2007 | 2007 | Interest(1) | Sept. 26, 2007 | 76.000 | 0,44 | Oct. 17, 2007 |
| Jun.19, 2007 | 2007 | Interest(1) | Jun. 27, 2007 | 77.000 | 0,41 | Jul.18, 2007 |
| Apr.24, 2007 | 2006 | Dividends | Apr. 25, 2007 | 167.000 | 0,83 | May.16, 2007 |
| Mar.21, 2007 | 2007 | Interest(1) | Mar. 28, 2007 | 67.000 | 0,33 | Apr.24, 2007 |
| Dec.22, 2006 | 2006(*) | Interest(1) | Dec. 27, 2006 | 75.000 | 0,35 | Jan.11, 2007 |
| Set. 19, 2006 | 2006(*) | Interest(1) | Set. 27, 2006 | 80.000 | 0,38 | Oct. 17, 2006 |
| Jun. 20, 2006 | 2006(*) | Interest(1) | Jun. 28, 2006 | 74.000 | 0,33 | Jul. 20, 2006 |
| April 28, 2006 | 2005 | Dividends | May. 03, 2006 | 150.000 | 0,72 | May 11, 2006 |
| Mar. 23, 2005 | 2006(*) | Interest(1) | Mar. 30, 2006 | 89,000 | 0,42 | Apr. 20, 2006 |
| Dec.20, 2005 | 2005(*) | Interest(1) | Dec.28, 2005 | 168,800 | 0.72 | Jan.13, 2006 |
| Jun.20, 2005 | 2005(*) | Interest(1) | Jun. 28, 2005 | 28,000 | 0.12 | Jul.13, 2005 |
| May 19, 2005 | 2005(*) | Interest(1) | May. 25, 2005 | 42,900 | 0.18 | Jun.13, 2005 |
| Apr.29, 2005 | 2004 | Dividends | May. 02, 2005 | 150,000 | 0.60 | May 9, 2005 |
| Apr.19, 2005 | 2005(*) | Interest(1) | Apr. 27, 2005 | 81,000 | 0.32 | May 13, 2005 |
| Dec.21, 2004 | 2004 (*) | Interest(1) | Dec. 29, 2004 | 28,500 | 0.11 | Jan.11, 2005 |
| Nov.16, 2004 | 2004 (*) | Interest(1) | Nov. 23, 2004 | 32,000 | 0.12 | Dec.10, 2004 |
| Oct.19, 2004 | 2004 (*) | Interest(1) | Oct.27, 2004 | 198,000 | 0.70 | Nov.11, 2004 |
| Apr.29, 2004 | 2003 | Dividends | Apr. 30, 2004 | 360,000 | 1.24 | May14, 2004 |
| Apr.29, 2003 | 2002 | Dividends | May. 07, 2003 | 315,000 | 1.09 | May 15, 2003 |
| Apr.30, 2002 | 2001 | Dividends | May. 02, 2002 | 180,000 | 0.77 | May13, 2002 |
| Mar.30, 2001 | 2000 | Dividends | Apr. 02, 2001 | 136,878 | 0.64 | Apr.12, 2001 |
(1) Interest on Stockholders' Equity
(*) advance of dividends
The Class A and Class B Stock holders are entitled to receive dividends at least ten percent higher than the amount per share paid to holders of common stock. Notwithstanding, holders of Class A Stock are entitled to an annual preferential dividend equal to a minimum of 6% of the capital attributable to the Class A Stock. In the event dividends in excess of those paid to the holders of Class A Stock are distributed, holders of common stock and Class B Stock share ratably in such excess up to an amount equal to the Class A Stock preferential dividend. Any dividends thereafter remaining for distribution are shared ratably by all holders of Class A Stock, Class B Stock and common stock. Dividends declared by the Company are to be paid from annual adjusted net income..
In the event dividends are not paid for three consecutive years, holders of all classes of preferred shares, including Class A and Class B Stock, will be entitled to voting rights.
Last update on October 15, 2007.
