NOTES TO FINANCIAL STATEMENT
Capital and reserves
The share capital of the company as per Articles of Association is AED 120,000,000 divided into 120,000,000 shares of AED 1 par value per share. As at 31 December 2020 and 31 December 2019, the Company has 118,780,500 shares outstanding and issued of AED 1 par value per share.
Tier 1 capital
On 14 January 2019, the Company’s Board of Directors approved the issuance of Tier 1 perpetual bonds non-convertible into shares amounting to AED 15,000,000 for the purpose of strengthening the Company’s capital adequacy and assets and to support its financial position to achieve the Company’s growth strategy and to be compatible with the instructions of the Insurance Authority.
In accordance with the UAE Federal Law No. (2) of 2015 concerning Commercial Companies and the Company’s Articles of Association, 10% of profit is to be transferred to non-distributable legal reserve until the balance of the legal reserve equals 50% of the Company’s paid up share capital. This reserve is not available for dividend distribution.
In accordance with Insurance Authority’s Board of Directors’ Decision No. 23, Article 34, an amount of AED 423,698 was transferred from retained earnings to reinsurance reserve. The reserve is not available for distribution, and will not be disposed of without prior approval from Insurance Authority.
On March 25, 2020, the Board of Directors declared dividends to shareholders at a rate of 4% of the share capital.