Updated 14:29 IST, July 9th 2024
Nestle India shareholders approve continuation of royalty payments to parent company
During the AGM held on July 8, 2024, the members overwhelmingly approved the continuation of the general license fees (royalty) at the current rate.
FMCG major Nestle India announced that its shareholders have approved the continuation of royalty payments to its parent company, Société des Produits Nestlé S.A., at the existing rate of 4.5 per cent of net sales.
Previously, in May of this year, shareholders had rejected a proposal to increase the royalty payment by 0.15 per cent annually over the next five years, which would have raised the rate to 5.25 per cent of net sales. Following this, the board of directors met last month and decided to maintain the royalty rate at 4.5 per cent. This decision was then recommended for approval at the company’s annual general meeting (AGM).
During the AGM held on July 8, 2024, the members overwhelmingly approved the continuation of the general license fees (royalty) at the current rate. The resolution passed with 99.54 per cent of valid votes in favor and 0.46 per cent against, according to a regulatory filing by Nestle India.
Nestle India had sought the shareholders' approval to continue paying general license fees (royalty) at 4.5 per cent of net sales, net of taxes, for products sold to the licensor. This arrangement is in line with the terms and conditions of the existing General Licence Agreements (GLAs) and will be effective from July 8, 2024.
This decision ensures that the company will continue to operate under the existing financial agreements with its parent company, maintaining the status quo on royalty payments.
(With PTI inputs.)
Published 14:29 IST, July 9th 2024