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Firms applying for Danish state aid must promise not to pay dividends or make share buy-backs in 2020 and 2021. Companies would be allowed to pay dividends agai
by Saaster 6y ago
Firms applying for Danish state aid must promise not to pay dividends or make share buy-backs in 2020 and 2021. Companies would be allowed to pay dividends again if they pay back the aid.
This makes perfect sense, otherwise it's a textbook case of socializing the losses and privatizing the profit. Paying dividends (and stock buybacks) is a trade-off that companies make, that makes the company less resilient. Risk/reward needs to work in both ways, both in terms of gains as well as losses.
- rvnx 6y agoCan't say it better.
- smnrchrds 6y agoThank you for the explanation.
- bigfudge 6y agoI personally don't see why it's such a limited time frame.
- ed312 6y agoAgreed - repayment of the loan/bailout should be the contingency. Your business has wild post-COVID success? Great! Pay back your bailout and start issuing dividends! No moral hazard in returning capital in a successful business.