Shareholders of OnTheMarket (OTM) have voted overwhelmingly to release some £40 million from the cancellation of the company’s regulated Share Premium Account to enable the money to be distributed as dividends ‘in the foreseeable future’.

The cash could also be used, subject to court approval on top of the shareholder vote, to buy back its own shares and ‘other corporate purposes’.

This money has built up because, where a company issues shares at a premium to the supposed value of those shares, whether for cash or otherwise, a sum equal to the value of the premiums must be transferred to the company’s share premium account.

In a letter to shareholders prior to the vote yesterday, it says: “The Board considers that the Resolution is in the best interests of the Company and Shareholders as a whole and is likely to promote the success of the Company”.

The reason given for the decision to release this money, given in the financial statement to investors, is that because as of 31^st January 2021, OTM had accumulated retained earnings on its profit and loss account of £1.6m.

Insufficient

“The Directors consider this to be insufficient to commence a progressive dividend policy in the foreseeable future,” the statement says.

An OTM spokesperson adds: “To confirm, in the general meeting that was held with shareholders, we received overwhelming support which facilitates flexibility to explore the potential to pay out dividends should the Board consider it appropriate in the future, and as a result of this support we will now be seeking court approval to confirm this can go ahead.”

The portal moved into profitability for the first time last year after reporting a £11.46 million loss in 2020, not helped by the decision to discount its fees for agents during the pandemic.

In 2018 the company raised £50 million through its AIM flotation, valuing it at £100 million.