Note F: Shareholders’ equity

Subscribed share capital

The holders of common shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at the Annual General Meeting of shareholders. The holders of the priority shares are entitled to a dividend of 6% per share or the statutory interest in the Netherlands, whichever is lower, plus any accrued and unpaid dividends. They are entitled to 800 votes per share (in accordance with the 800 times higher nominal value per share) at the Annual General Meeting of shareholders. In addition, the holders of priority shares have the right to draw up binding lists of nominees for appointment to the Supervisory Board and the Board of Management; amendments to the Articles of Association are subject to the approval of the Meeting of Holders of Priority Shares.

Priority shares may only be transferred to a transferee designated by a Meeting of Holders of Priority Shares and against payment of the par value of the shares, plus interest at the rate of 6 percent per annum or the statutory interest in the Netherlands, whichever is lower, for the period between the beginning of the year and the date of transfer. There are no restrictions on voting rights of holders of common or priority shares. The Articles of Association set out procedures for exercising voting rights. The Annual General Meeting of shareholders has resolved in 2019 to authorize the Board of Management for a period of 18 months (i) to issue shares (or grant rights to shares) in the capital of the company up to a maximum of 10%, which in case of mergers or acquisitions can be increased by up to a maximum of 10%, of the total number of shares outstanding (and to restrict or exclude the pre-emptive rights to those shares) and (ii) to acquire shares in the capital of the company, provided that the shares that will at any time be held will not exceed 10% of the issued share capital. The issue or repurchase of shares requires the approval of the Supervisory Board.

Unrestricted reserves at year-end

In € millions

2018

2019

Shareholders’ equity at year-end

11,834

6,350

Subscribed share capital

(512)

(100)

Subsidiaries’ restrictions to transfer funds

(145)

(145)

Statutory reserve due to capital reduction

(61)

Reserve for development costs

(42)

(66)

Unrestricted reserves

11,074

6,039

We held 3,165,967 common shares at year-end 2019 (year-end 2018: nil), which will be cancelled in 2020.

Of the shareholders’ equity of €6.4 billion, an amount of €6.0 billion (2018: €11.1 billion) was unrestricted and available for distribution – subject to the relevant provisions of our Articles of Association and Dutch law.

At year-end 2019, legal reserves include the €145 million reserve relating to earnings retained by subsidiaries, associates and joint ventures after 1983, to the extent that there are limitations for AkzoNobel to arrange profit distributions; and the €66 million reserve for capitalized development costs.

Dividend

Our dividend policy is to pay a stable to rising dividend.

In 2019, an interim dividend of €0.41 (2018: €0.37) per common share was paid. We propose a 2019 final dividend of €1.49 (2018: €1.43) per common share, which would equal a total 2019 dividend of €1.90 (2018: €1.80).

In line with our announcement on April 19, 2017, we have returned the vast majority of the net proceeds from the separation of the Specialty Chemicals business to our shareholders. The Extraordinary General Meeting of November 13, 2018, approved to return an amount of €2.0 billion to shareholders by means of a capital repayment and share consolidation, which was executed in January 2019. A share consolidation ratio of 9:8 was applied.

We distributed €1.0 billion by means of a special cash dividend of €4.50 per common share (post consolidation) on February 25, 2019, in addition to the €1.0 billion special cash dividend already distributed in December 2017.

The share buyback program to repurchase common shares up to the value of €2.5 billion has been completed at the end of 2019, acquiring 31.2 million common shares, of which 28.4 million shares were cancelled.

On October 23, 2019, a new €500 million share buyback program was announced, of which 0.4 million shares were acquired in 2019.