Illustration: Sarah Grillo/Axios

Aramco, Saudi Arabia's state-owned oil company, promised this week that it would set a dividend of at least $75 billion through 2024 — or, that non-government shareholders would receive at least $750 million in dividends for every 1% of the company that they own, from 2020 through 2024.

Why it matters: Because the Saudi royal family controls Aramco, it doesn't need the company to pay any dividends at all. If they need to extract money from Aramco, they can always raise the company's tax rate, or simply expropriate what they need.

  • Foreign shareholders could be stuck with worthless shares paying zero dividends.

Between the lines: In many ways the Aramco situation is similar to that of Fannie Mae and Freddie Mac. The U.S. government controls the agencies and their profits. Private shareholders, who own 20% of the equity in the companies, have received nothing from them for over a decade.

  • If the U.S. government allowed Fannie and Freddie to start paying a dividend, shares would rise. But so long as the government holds the reins, shareholders know that their cashflows can always revert to zero at any time.
  • The bull case for Aramco shares is that the Saudi government wants to see a multitrillion-dollar valuation for the company. If that fact ever changes, then it's hard to see foreign shareholders being able to extract much value.

Why you’ll hear about this again: Investing in autocracies is part of modern capitalism. In China, for instance, PayPal is buying Gopay, a local payments provider.

  • It's easy to see why PayPal wants exposure to the massive Chinese market — but at the same time the company knows there's always a risk of the government turning against it and nullifying the deal.
  • If that happens, PayPal has no real recourse. (It's not going to sue the Chinese government in Chinese courts.)

The bottom line: In countries with robust civil societies, shareholders have significant legally enforceable rights, and those rights underpin the value of their shares. In countries like China and Saudi Arabia, by contrast, foreign shareholders only win insofar as it behooves the local government to keep them happy.

Go deeper: Saudi Aramco revs up IPO sales pitch

Go deeper

Louisville police declare state of emergency as Breonna Taylor decision looms

A demonstrator holds up a sign of Breonna Taylor during a protest in Louisville, Kentucky. Photo: Brandon Bell/Getty Images

The Louisville police chief declared in a memo obtained by news outlets a "state of emergency" for the department on Monday to prepare for Kentucky Attorney General Daniel Cameron's expected announcement on the Breonna Taylor case.

Of note: Louisville has witnessed more than 115 days of protests over the police killing of Taylor, an unarmed Black woman, with calls for all the officers involved to be charged.

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 9 p.m. ET: 31,1833,800 — Total deaths: 962,793— Total recoveries: 21,348,410Map.
  2. U.S.: Total confirmed cases as of 9 p.m. ET: 6,833,800 — Total deaths: 199,818 — Total recoveries: 2,615,949 — Total tests: 95,841,281Map.
  3. Health: CDC says it mistakenly published guidance about COVID-19 spreading through air.
  4. Media: Conservative blogger who spread COVID-19 misinformation worked for Fauci's agency.
  5. Politics: House Democrats file legislation to fund government through Dec. 11.
  6. World: U.K. upgrades COVID alert level as Europe sees worrying rise in infections — "The Wake-Up Call" warns the West about the consequences of mishandling a pandemic.

Sen. Cory Gardner on vacant Supreme Court seat: "I will vote to confirm"

Photo: Alex Wong/Getty Images

Sen. Cory Gardner (R-Colo.) will vote to confirm President Trump's nominee to replace the late Ruth Bader Ginsburg, he announced in a statement Monday.

Why it matters: The development is a win for President Trump and Senate Majority Leader Mitch McConnell (R-Ky.). It should mean Republicans are all but assured to have enough support to hold hearings for Trump's potential nominee.

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