Dividends are income payable to shareholders from Companies that are making profits and decide to pay a dividend back to its shareholders.
Dividends are optional and not guaranteed, usually paid half-yearly, known as 'Interim' and 'Final' Dividends.
They can be declared as either Cash or Scrip Dividends.
A Scrip Dividend is an allotment of more shares in the Company using cash.
Corporate Actions are defined as events bringing material change to the basis of a share. Basically this means the way the share is set-up is changing.
There are two types of dividend:
Final Dividend: The dividend paid by a Company at the end of its financial year. These are not guaranteed.
Interim Dividend: The dividend paid by a Company halfway through its financial year. These are not guaranteed.
If you hold the shares at home in the form of a paper Certificate you will receive a cheque through the post and a Tax Voucher for your records and declaration as Income on your Tax return.
If you hold the shares with us you will automatically be credited the cash by the Registrar direct to your account here with us. We will not send you a Tax Voucher each time you receive a dividend to your account, but we will issue you with a Consolidated Tax Voucher each April for the previous Tax Year (6th April - 5th April) so that you can declare the Income on your Tax return annually.
To be entitled to receive the dividend, you must be a shareholder as at the close of business the day before the 'Ex-Date'.
The Ex-Date for dividends is usually set two working days before the Record Date.
If you accept an offer we may be able to stop the action if it has not been actioned by us. If it has been actioned you will be unable to withdraw your acceptance.
(Except in the case of takeovers where, if certain conditions are met during the takeover timetable, withdrawal can be possible).
The full name for an 'Ex-Date' is the 'Effective Date'. Corporate Actions, excepting Takeovers, have an 'Ex-Date'.
This is announced by the Stock Exchange setting the date for entitlements (i.e. ensuring you take part) to a Corporate Action. The owner of a share on the 'Ex Date' is the person entitled to the offer.
Buying the stock on this date or after means you are not entitled and if you sell on or before this date, you do not retain the entitlement to the offer.
If your holding under the Corporate Actions does not split exactly into whole shares you will be left with a portion of the new ordinary share.
As you cannot hold fractions of shares, the company will aggregate your portions with other shareholders and sell as a block.
The proceeds from the sale is then split between the shareholders in proportion to your fractions.
Yes. If you hold the shares with us we will issue you with a Consolidated Tax Voucher each year for the previous Tax Year (6th April - 5th April) so that you can declare the Income on your Tax return annually.
The 10% dividend tax credit on UK dividends ceased on 6 April 2016. Previously, this was considered to be sufficient tax charge for a basic rate taxpayer, who had no further tax to pay. Higher and additional rate taxpayers declared their dividend income to HMRC and were subject to additional tax charges.
Instead, a Dividend Allowance has been introduced, allowing individuals to earn £5,000 of dividend income free of tax. (The Government has announced that this amount will be reducing to £2,000 from April 2018).
Dividends received in excess of the £5,000 allowance will be subject to income tax, dependent on the individual's personal tax status.
This measure will have no impact on tax-efficient products such as ISAs and SIPPs, which continue to earn dividends with no further tax charges, outside of the new dividend allowance.
For more information, please refer to the government website.
Nil Paid Shares are issued to existing shareholders when a company conducts a Rights Issue to raise funds by issuing more shares.
As an existing shareholder the company issues you a right to purchase the new shares before anyone else, normally at a price lower than the current market price - your Nil Paid shares.
Only holders of the Ordinary Shares on a certain date, the Ex Date are entitled to Nil Paid shares.
Under the Rights Issue you are advised how many new shares you can buy and the cost to exercise the Right.
Open Offers are used by companies to raise funds. They also have a ratio and a cost to subscribe, very much like a Rights Issue.
A definition of an Open Offer is provided under the section 'Definitions'.
But basically the company asks existing Shareholders if they want to buy more shares in the company at a specified price.
If you do sell your original holding before you receive the new shares, and then you would like to sell the extra shares you would have to make a second sale.
Under a Rights Issue or an Open Offer the ratio of the action and the call cost is how you work out the cost of the action and what you will gain.
With a Rights Issue, if you held 1000 Barclay shares and the were offered a Rights Issue of 2 new shares for every 5 held at 40p, then you could apply for 400 new shares and the cost would be 40p per share - a cost of £160.
You pay for shares on the Call Date, which will be set in advance as part of the offer.
Yes, Nil Paid Shares can be bought as a security and normally cease being able to be bought and sold two days before the Call Date.
The onus will be upon you to inform the company of your intentions if you purchase nil-paid rights.
If we do not receive valid instructions from yourself, the nil-paid rights may be allowed to lapse.
When a company divides its shares into a larger number of shares, it is called a Subdivision.
Companies use a Subdivision is to improve the liquidity of their share price if the price has become too high.
The more shares in issue the easier it for people to buy in smaller amounts creating liquidity in the share price.