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Stock Commentary

BDO's 20% stock dividend approved by SEC

Merkado Barkada
BDO's 20% stock dividend approved by SEC

BDO [BDO 130.0 0.1%] [link] disclosed that on November 29, the SEC approved the company’s 20% stock dividend that was approved by shareholders back in April.

The stock dividend will be used to “fund” the increase in BDO’s authorized capital from P5.5 billion to P8.5 billion.

While the payment date is still listed as “TBD”, BDO updated the record date to be December 15, 2022.
 

MB BOTTOM-LINE

This is basically the CLI Maneuver (click here to read my interview with Grant Cheng, CFO of Cebu Landmasters, where we talk in detail about this kind of move), where a company uses its unrestricted retained earnings to satisfy the SEC requirement that at least 25% of an authorized capital stock increase is paid-for.

It’s a quick, cheap, and relatively easy way for a company to raise its authorized capital stock. It doesn’t really change anything for shareholders; sure, they get more shares, but their proportional holdings won’t change at all.

It’s like a small stock-split, but with the added bonus of allowing BDO to raise its authorized capital stock. 

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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

BDO UNIBANK INC.

PHILIPPINE STOCK EXCHANGE

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