The following article written by Alan Kohler that appeared in the Eureka Express is a great overview of changes to LICs.

We like this article, because he talks about companies like Clime Capital and why they are now more attractive to investors.

In recent years LICs have been licked. But with new rules and an improving dividend cycle, it is time to take a fresh look at listed investment companies.

As Scott Francis points out in this week’s Eureka Express, the legislation covering LICs has been changed to remove the requirement that they could only pay dividends directly out of profits. The changes mean more diversity, more opportunity and more flexibility for LICs, and in turn, investors.

“Under the new regulations, LIC dividends are now linked to solvency; in other words, they can operate under conventional dividend regulations.

“Geoff Wilson, the chairman of Wilson Asset Management, says the change is a breakthrough for the sector. “It creates a level playing field,” he says. “We have never had that before; it’s going to make a difference.

“Wilson says all LICs are now free to unleash sustainable and progressive dividend payment programs regardless of seasonal factors.

“Moreover, he estimates there is a massive $100 billion in franked dividends stored up in the local LIC sector, which will be progressively passed on to investors in the near future.”