The dividend policy of Novatek is specified in the Company's Article of Incorporation, Article 23:
When allocating the profits for each fiscal year, the following order shall be followed:
- pay all taxes and dues;
- offset accumulated deficits;
- set aside 10 percent of earning as legal reserve, unless such legal reserve amounts to the total authorized capital of the Company;
- set aside special capital reserve in accordance with relevant laws or regulations;
- the remaining balance after the mentioned above payment to be made, combining with the undistributed earnings of the proceeding years may be retained or distributed as shareholders’ dividends after the approval of the shareholders’ meeting.
Since the Company is in a highly developing industry, the Company has to adapt its dividend policy to meet the Company’s long term development and capital requirement, along with the shareholders’ demand of cash. Therefore, the Company is allowed to distribute full amount of the profits of the fiscal year. The Board of Directors shall submit a distribution proposal for approval at the shareholder's meeting. Distribution of profits may be made by way of a cash dividend or stock dividend; provided, however, the ratio for cash dividend shall be not less than 50% of total distribution.