15 answers

to the most frequent asked questions regarding 2020 profit allocation and declared dividends in the March 18, 2021 Annual General Meeting





































































1. What was the Shareholders General Assembly’s decision regarding 2020 dividend payment?

To preserve and strengthen the Bank’s equity capacity, the Annual General Meeting decided to capitalize one hundred percent (100%) of 2020 profits. The whole profit was allocated to occasional reserves. This reserve increased the legal reserve by 35% of the profit for the fiscal year 2020, following the Shareholders’ Meeting’s commitment last year.

In addition, dividends in shares were decreed by $ 321.03 COPper share, the increase in the shares’ nominal value by $ 10 COP, and a premium placement at $ 311.03 COP. This proposal does not imply a cash payment or increase in the number of issued shares. This measure applies to all shareholders.

Likewise, it was defined to increase the occasional reserve with the Retained Earnings made in 2020 for $18,129,596,855.79 COP.

2. Why don’t you pay dividends in cash?

The Shareholders General Assembly decided not to pay cash dividends to preserve and strengthen the Bank’s equity.

3. Why is there no payment on preferred shares?

There is payment on preferred shares at a higher level than the minimum established in the public offering. $ 321.03 COP per share is decreed compared to the minimum of $ 161.28 COP specified per year in the offering.

4. Why not pay dividends with new shares?

Because we seek to preserve our capital levels, and in the case of decreeing a shares payment, shareholders who disagree could choose to request payment in cash, which would affect our capital levels.

5. What was the procedure for the dividend distribution in shares?

By decision of the Assembly held on March 18, 2021, the Bank will pay dividends through a capitalization of equity reserves, increasing the nominal value of each share by $10 COP, from $170 COP to $180 COP, for which it decreed a dividend of $321.03 COP per share, generating a premium of $311.03 COP per share.

6. What is the shares placement premium?

The placement premium is the difference between the value approved as a share dividend and the increase in nominal value. The difference between the nominal value and the paid value by share is the placement premium, which is $311.03 COP.

7. What is the nominal value increase?

Each share has a minimum security value. This value can be changed with capitalizations that can come from shareholder contributions or reserves capitalization.

8. What are the taxation effects of the nominal value increment for shareholders required to file tax returns?

For shareholders that are not required to file tax returns, it does not have any taxation effects.

For the ones that do, this dividend value accounts in your tax returns as follows:

• An increase in the investment value, as a higher tax cost.
• A dividend income.
• A nontaxable income or occasional profit Art. 36-3.

9. What are the taxation effects of the nominal value increment for shareholders required to file accounting records?

This dividend value accounts in your tax returns as follows:

• An increase in the investment value, as a higher tax cost.
• A dividend income.
• A nontaxable income or occasional profit Art. 36-3.

10. What are the accounting effects of the nominal value increment for Colombia residentand non-resident entities?

According to the accounting record method, legal entities domiciled and non-domiciled in Colombia: Recognizes the dividend accounting income.

Dividends are recognized in advance by the equity method.

The cost method increases (adjusts) the value of the equity investment asset.

11. Does tax withholding apply?

This dividend payment is a nontaxable income. Therefore there is not tax withholding applicable.

12. How can I claim the 2020 dividend payment?

There is no cash or shares dividend payment. 2020 dividend is a capitalization that does not generate payment.

13. Does this profit allocation increase the shares held?

One of the forms of capitalization is the distribution of dividends in shares. The reserves capitalization available to the Assembly is used by increasing the nominal value of the subscribed and paid shares; therefore no new shares are issued.

14. How is the increase in nominal value certified?

The Bank provides to its shareholders a certificate of income and withholdings for dividend payments.

15. Is this dividend payment taxable?

In compliance with the Art. 36-3 of the Taxation Statute, this dividend payment is a nontaxable income nor occasional profit.

Davivienda