Mining company Ferrexpo Plc with assets in Ukraine is addressing technical procedural issue related to the historic dividends of $288.966 million.

In fiscal year 2021, Ferrexpo's during the financial year 2021, the Board of Ferrexpo became aware of a technical issue in respect of the interim dividend of 39.6 US cents per Ordinary Share paid on August 26, 2021, according to a company statement on Tuesday.

"When this was identified, the Board decided to perform a thorough review of historic dividend payments and as a result identified a technical issue in respect of all or a portion of certain dividends paid in 2010 and 2011 (together with the 2021 interim dividend, the "Relevant Distributions"). The total value of the Relevant Distributions made otherwise than in accordance with the Companies Act 2006 is up to US$288,966,000," the company said in the statement.

However, it is explained that the Act provides that a public company may pay a dividend out of its distributable profits as shown in the last accounts circulated to members or, if interim accounts are used, those that have been filed at Companies House. The requirement for the relevant accounts to have been filed applies even if the company in question has sufficient distributable profits at the relevant time. In addition to having sufficient distributable profits, the Act provides that a public limited company may only pay a dividend: if at the time the dividend is paid the amount of its net assets is not less than the aggregate of its called-up share capital and undistributable reserves; and if, and to the extent that, the dividend does not reduce the amount of those net assets to less than the aggregate amount of its called-up share capital and undistributable reserves.

"Unfortunately, the company did not satisfy the procedural requirements of the Act before making the Relevant Distributions. Therefore, regrettably, the Relevant Distributions were made otherwise than in accordance with the Act," the company said in the statement.

The company has been advised that, as a consequence of the Relevant Distributions having been made otherwise than in accordance with the Act, it may have claims against past and present shareholders who were recipients of the Relevant Distributions and against persons who were directors of the company at the time of payment of the Relevant Distributions.

Therefore, as part of resolving this situation, it is therefore proposed that the company enter into deeds of release such that the company will be unable to make any claims against past and present shareholders of the company who were recipients of the Relevant Distributions; and the directors of the company and the former directors of the company in office at the time of any Relevant Distribution. This exemption from liability of shareholders and directors is proposed to be approved at the general meeting of shareholders scheduled for June 15, 2022 in order to bring the situation in line with the law.

At the same time, it is emphasized that the company's entry into the Directors' Deed of Release and the Shareholders' Deed of Release will not result in any decrease in the company's net assets or the level of its distributable reserves.

"The approach that the company is proposing by way of the Resolution is consistent with the approach taken by other UK incorporated companies whose shares are admitted to the FCA's Official List and to trading on the Main Market of the London Stock Exchange where similar issues have arisen in relation to corporate distributions made otherwise than in accordance with the Act," the company said.