Title :

Dividend Distribution Policy

Content :

Dividend Distribution Policy

(Adopted in accordance with the Oman Commercial Companies Law – Royal Decree 18/2019 and Financial Services Authority Regulations, including latest updates)

The policy was approved by Ubar Hotels & Resorts SAOG (“the Company”), board of directors on its meeting held on 16 February 2026

1. Purpose and Scope

This Dividend Distribution Policy establishes the principles, procedures, and regulatory framework governing the declaration and payment of dividends by the company. The policy aims to ensure full compliance with the Oman Commercial Companies Law (CCL), Financial Services Authority (FSA) regulations, Muscat Stock Exchange (MSX) disclosure requirements, and the Corporate Governance Code applicable to Public Joint Stock Companies (SAOG).

The policy balances shareholder returns expectations with financial stability, liquidity preservation, debt obligations, and long-term strategic growth.

2. Legal and Regulatory Framework

This policy is adopted in accordance with:

2.1 Oman Commercial Companies Law – Royal Decree 18/2019

Dividend distribution shall comply with the following key provisions:

• Article 129: Profit distribution must be approved by the Ordinary General Meeting based on audited financial statements.
• Article 130: Dividends shall not be distributed where such distribution may affect the Company’s ability to meet its financial obligations or where losses exist.
• Article 131: Dividends may be declared only from realized net profits after required deductions.
• Article 132: At least 10% of annual net profit shall be transferred to a statutory reserve until it reaches one-third of the paid-up capital.
• Article 133: The Company may create optional reserves upon shareholder approval.

2.2 Financial Services Authority (FSA) Regulations – Latest Updates

In line with recent regulatory developments:

• FSA Directive 42/2025 requires all public joint stock companies to reduce the dividend transfer period from 15 days to no more than seven working days from the AGM, Board resolution, or record date.
• Companies must disclose the expected dividend transfer date and ensure payments are routed through Muscat Clearing & Depository within regulatory timelines.
• The directive reflects the FSA’s objective to enhance investor protection and improve market efficiency.

The Company shall comply with all disclosure, settlement, and reporting obligations issued by the FSA and Muscat Stock Exchange, including disclosing this policy on the company’s official website and the MSX website.

3. Guiding Principles

Dividend decisions shall be guided by:

• Preservation of operational liquidity.
• Long-term shareholder value creation.
• Compliance with statutory reserves and financial covenants.
• Consideration of the cyclical nature of the tourism and hospitality sector in Oman.
• Alignment with expansion strategy and debt restructuring commitments.

Dividend distribution is not guaranteed annually and remains subject to financial performance and regulatory compliance; the company would annually make disclosure whether it would distribute a dividend or otherwise.

4. Eligibility for Dividend Declaration

Dividends may be proposed only when:

• The Company reports realized net profits supported by audited financial statements.
• Legal reserves have been appropriated in accordance with Article 132 of the CCL until such legal reserve amounts to at least one third of the company’s share capital.
• The Company maintains adequate working capital and operational liquidity.
• Distribution does not breach banking covenants or restructuring agreements.
• Statutory liabilities and regulatory obligations are adequately addressed.

5. Legal Reserve and Optional Reserves

Pursuant to Article 132 of the Commercial Companies Law:

• A minimum of 10% of annual net profit shall be transferred to the legal reserve until it equals one-third of paid-up capital.
• Optional reserves may be created under Article 133 to support expansion, asset replacement, or operational contingencies.
• The company may distribute dividend form the optional reserve if approved by the company board of directors and the ordinary general meeting.

6. Dividend Forms

Subject to regulatory approval, the Company may distribute dividends through:

• Cash dividends.
• Bonus shares or capitalization issues.
• Interim dividends where it is permitted by applicable regulations and the company’s financial  situation.

7. Approval and Governance Process

The dividend approval process shall include:

1. Management prepares financial analysis and cash-flow assessment based on the company’s audit statement acounts.
2. The Board evaluates liquidity, capital commitments, and regulatory compliance.
3. The Board recommends a dividend distribution to the Ordinary General Meeting.
4. Final approval rests with shareholders as required under Article 129 of the CCL, which states that Annual or interim distribution of dividends shall be effected by a resolution of the ordinary general meeting based on the latest audited financial statements.

Part of the net profits may, with the approval of the ordinary general meeting, be converted to shares to be allotted to the shareholders, and as a consequence of such conversion, the share capital shall be increased by the value of such shares.

8. Restrictions and Prudential Considerations

Dividend distribution may be restricted or deferred under the following circumstances:

• Financial restructuring or refinancing negotiations.
• Significant capital expenditure or expansion commitments.
• Adverse market conditions affecting hospitality demand.
• Liquidity constraints impacting statutory or operational obligations.
• Any regulatory directive issued by the Financial Services Authority.

9. Disclosure and Payment Timelines

In accordance with recent FSA directives:

• Dividend disclosures must include eligibility dates and payment timelines.
• Approved cash dividends must be transferred within seven working days from the approval date.

·                     The disclosure would include a clear declaration date, ex-dividend date, record date, and payment date

 

• The Company shall ensure compliance with Muscat Clearing & Depository procedures and MSX disclosure standards.

10. Strategic Considerations for the Hospitality Sector

Given the cyclical and seasonal nature of the tourism industry in Oman, dividend decisions shall consider:

• Seasonal occupancy fluctuations.
• Cash-flow variability during low tourism periods.
• Operational sustainability of existing and future hotel assets.
• Protection of long-term shareholder value.

11. Policy Review

This policy shall be reviewed periodically by the Board to ensure alignment with:

• Amendments to the Commercial Companies Law.
• New FSA directives or corporate governance updates.
• Changes in the Company’s financial strategy.

 

12. Contact Information

 

For inquiries related to dividends, please contact the Financial Controller at his email id: [email protected]