Our Board of Directors may recommend annual dividends subject to the approval of our shareholders at its annual general meetings. From time to time, our Board of Directors may declare interim dividends. We have a policy to pay dividends at the rate of not less than 50.0% of our consolidated net profits after deducting any reserve funds as required by law or as we may establish where appropriate. However, our dividend payment policy may be subject to changes, depending on our cash flows and our investment obligations, including any limitations under law and other necessity. For the payment of interim dividends, our Board of Directors may approve to pay the interim dividends from time to time when our Board of Directors views that we have sufficient net profits to do so.
Under the PLCA and our Articles of Association, we may not make any distribution of dividends other than out of our profit and we cannot pay dividends if we have accumulated losses, even if we record a positive net profit for that year. Furthermore, the PLCA and our Articles of Association state that a public company limited is required to reserve an amount equal to 5.0% of the annual net profit after deduction of the accumulated loss (if any) as legal reserve fund until such legal reserve fund is equal to not less than 10.0% of the registered capital. As of June 30, 2016, our legal reserve was less than 10.0% of our registered capital. In addition to the legal reserve fund, the board of directors may consider establishing other types of reserve funds as deemed appropriate.
Dividends in respect of our shares are subject to Thai income withholding tax at a rate of 10% when paid to either nonresident corporate investors or to nonresident individual investors. Cash dividends on our shares will be paid in the Thai Baht. As a result, the equivalent of any dividends in the U.S. dollar or other foreign currencies will be affected by changes in the exchange rate between the Thai Baht and the U.S. dollar or such other foreign currencies.
We are a holding company which does not operate any material businesses. Our main assets are investments in subsidiaries and joint ventures. Accordingly, our ability to pay dividends mainly depends on the operational results of, and payment of dividends by, our subsidiaries and joint ventures. Payment of dividends by our subsidiaries and joint ventures is subject to applicable laws in their respective jurisdictions. Payment of dividends by non-Thai subsidiaries and joint ventures may also be subject to expenses such as withholding taxes and foreign exchange charges.
Dividend Policies of Our Material Joint Ventures
BLCP has a policy to declare dividends to its shareholders on a semi-annual basis from its unrestricted earnings.
Hongsa has a policy to distribute dividends to its shareholders on a semi-annual basis from such percentage of profits lawfully available for distribution in the financial year, subject to applicable
laws, regulations and restrictions contained in agreements entered into by Hongsa.
Shanxi Lu Guang has a policy to declare dividends to its shareholders on annual basis from its
profit after taxes and statutory reserve.