Note F: Shareholders’ equity

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% 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 2020 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.

During 2020, 9,331,481 common shares repurchased in 2019 and 2020 were cancelled (2019: 28,433,528 common shares). We held 695,776 common shares to be cancelled at year-end 2020 (year-end 2019: 3,165,967).

Of the shareholders’ equity of €5.7 billion, an amount of €5.4 billion (2019: €6.0 billion) was unrestricted and available for distribution – subject to the relevant provisions of our Articles of Association and Dutch law.

At year-end 2020, legal reserves include the €163 million reserve relating to earnings retained by subsidiaries, associates and joint ventures after the year 1983, to the extent that there are limitations for AkzoNobel to arrange profit distributions; and the €83 million reserve for capitalized development costs.

Unrestricted reserves at year-end

In € millions

2019

2020

Shareholders’ equity at year-end

6,350

5,746

Subscribed share capital

(100)

(95)

Subsidiaries’ restrictions to transfer funds

(145)

(163)

Reserve for development costs

(66)

(83)

Unrestricted reserves

6,039

5,405

Dividend

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

In 2020, an interim dividend of €0.43 (2019: €0.41) per common share was paid. We propose a 2020 final dividend of €1.52 (2019: €1.49) per common share, which would equal a total 2020 dividend of €1.95 (2019: €1.90).

On October 23, 2019, an €500 million share buyback program was announced, for which 0.4 million common shares were acquired in 2019. The plan was completed in April 2020, by acquiring a further 6.2 million shares in 2020.

On October 21, 2020, a new €300 million share buyback program was announced, which is to be completed in the first half of 2021. During 2020, 0.7 million common shares were repurchased under this program, that have not yet been cancelled.