Notes to the Financial Statements - Cahaya Mata Sarawak Bhd

150
Notes to the Financial Statements
For the fi nancial year ended 31 December 2011
37. Retained earnings
Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance
with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to
deduct tax on dividend paid, credited or distributed to its shareholders, and such dividends will be exempted
from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six
years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders
under limited circumstances. Companies also have an irrevocable option to disregard the 108 balance and
opt to pay dividends under the single tier system. The change in the tax legislation also provides for the 108
balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.
The Company did not elect for the irrevocable option to disregard the 108 balance. Accordingly, during
the transitional period, the Company may utilise the credit in the 108 balance as at 31 December 2007 to
distribute cash dividend payments to ordinary shareholdings as defi ned under the Finance Act 2007.
The Company has tax exempt profi ts available for distribution of approximately RM104 million (2010: RM104
million) as at 31 December 2011, subject to agreement of the Inland Revenue Board.
As at 31 December 2011, the Company has suffi cient credit in the 108 balance to pay franked dividends out
of its entire retained earnings.
38. Employee benefi ts
Employees’ share option scheme
The Company implemented an ESOS which came into effect on 23 June 2010. The ESOS is governed by the
bylaws which were approved by the shareholders on 27 May 2010.
The salient features of the ESOS are as follows:
(a) the total number of new shares which may be made available under the scheme shall not exceed ten
percent (10%) of the total issued and paid-up share capital of the Company at any point of time during
the existence of the ESOS;
(b) eligible persons are confi rmed employees including full-time executive directors of the Group;
(c) the aggregate number of new shares to be offered to selected employees in accordance with the ESOS
shall be determined at the discretion of the ESOS Committee. No option shall be granted for less than
100 shares;
(d) the option price may be at a discount of not more than ten percent (10%) from the fi ve (5) days
weighted average market price of the underlying shares preceding the date of offer or at par value of
the ordinary shares of the Company, whichever is higher;
(e) the ESOS shall be in force for a period of fi ve (5) years and extendable to ten (10) years from the date
of the fi rst offer;
(f) the ESOS Committee may, at its discretion, at any time before and after an option is granted, limit the
maximum number or percentage of exercisable options within the option period; and
(g) the exercise of the options is subjected to vesting conditions being met by respective grantees. These
vesting conditions may be affected by, inter-alia, performance targets being achieved before the
options can be exercised. The vesting conditions, if any, shall be determined by the ESOS Committee
whose decision shall be fi nal and binding.
Cahya Mata Sarawak Berhad