SGC Energy Converts Capital Reserve to Retained Earnings to Secure Dividend Funds

[Asia Economy Reporter Oh Ju-yeon] SGC Energy (SGC Energy) will hold an extraordinary general meeting of shareholders on December 30 to resolve a 'reserve reduction and retained earnings conversion' to secure dividend resources.

SGC Energy announced on the 19th that in the first year after transitioning to a holding company system through a merger, it decided to hold an extraordinary general meeting within the year to proactively resolve the issue of insufficient retained earnings for adequate dividends, despite reserves being excessively recorded during the merger accounting process.

SGC Energy has stated that it will strive to enhance shareholder and corporate value through "continuous growth and change."

A company official said, "We are preparing the company's basic financial statements and will soon determine the exact scale of retained earnings conversion," adding, "Although the scale of dividend implementation and specific shareholder-friendly policies have not been finalized, we are comprehensively reviewing various shareholder-friendly policies."

Reserves consist of capital reserves such as share premium and capital reduction gains, and legal reserves which must be compulsorily set aside at 1/10 or more of dividend payments each fiscal period until they reach half of the capital stock. Within the range exceeding 1.5 times the capital stock, reserves can be converted into retained earnings by resolution of the general meeting of shareholders.

Reserves are statutory reserves that can be used for bonus shares or offsetting capital deficits but cannot be used for shareholder dividends. Retained earnings are voluntary reserves that cannot be used for bonus shares but can be used for shareholder dividends. Therefore, the conversion of reserves into retained earnings is generally interpreted as a preparatory step for shareholder dividends.

Meanwhile, SGC Energy, an energy company based on renewable energy, is a merged corporation of Gunjang Energy, Samkwang Glass, and the investment division of E-Tech Construction. The merger date was October 31, and the additional listing of new shares is scheduled for the 19th of this month.