Royalty payments by some listed companies exceed 20% of profits
[hfe_template id='11223']
[ad_1]
Mumbai : Listed companies paid royalty to related parties in excess of 20% of their net profits on one out of four occasions, flagging the need for change in norms, a study published by the Securities and Exchange Board of India (Sebi) Thursday showed. “The data suggests that though the royalty payments made by companies are reasonably within the stipulated threshold, such payments are unjustifiably high in terms of their profitability,” Sebi said. “While the necessity of royalty payment to be considered as an expenditure from the perspective of business growth is acknowledged, such payments when viewed through the profitability lens reveal too pressing an issue to be overlooked,” it said. In one out of two occasions that listed companies paid such levels of royalty, they did not pay dividends, or paid more royalty to related parties than dividend paid to other shareholders. The study asked whether companies that skip dividend payments bu...