Capitalisation Issue Q&As
What is the Capitalisation Issue?
It is called a Capitalisation Issue because we capitalise reserves and then distribute them in the form of new fully paid ordinary shares to each qualifying shareholder, in lieu of a cash dividend.
What is the timetable of events?
| Ordinary Shares - Capitalisation Issue timetable | |
|---|---|
| Ex-Date | 01/10/08 |
| Record Date | 03/10/08 |
| Shares issued and admitted to trading. CREST accounts credited | 06/10/08 |
| Latest date new certificates and statements issued by | 17/10/08 |
| Capitalisation Issue price | 232p |
I understand that you are not actually paying an interim dividend, but are making a 'bonus issue' of shares instead. Why?
The intention is that the company will issue shares out of capital in lieu of the 2008 interim dividend with the final 2008 dividend paid in cash. This means that HBOS can retain the funds it would otherwise have paid to shareholders for use within the business. A Capitalisation amount of £320m has been announced. This is the sum used to calculate the individual entitlements.
How do I calculate how many shares I will receive?
The number of new fully paid ordinary shares that shareholders will be allotted as a result of the Capitalisation Issue Shares will be based on three numbers:
1. The Capitalisation amount per ordinary share, which will be 6.07p, multiplied by
2. The number of ordinary shares held by that shareholder at the Record Date (3 Oct 2008), divided by
3. The Capitalisation Issue price (232p per HBOS share)
How was the Capitalisation Issue price of 232p per HBOS share calculated?
HBOS has agreed that the number of shares to be issued pursuant to the Capitalisation Issue being implemented in lieu of its 2008 interim dividend will be calculated on the basis of 232 pence per HBOS share, being the value per HBOS share implied by the terms of the acquisition of HBOS by Lloyds TSB Group plc.
Why hasn't the Capitalisation Issue price been calculated as set out in the Circular?
As part of the terms of the recommended acquisition of HBOS by Lloyds TSB, HBOS agreed to fix the capitalisation issue price at the per share value of the offer at announcement. In return, Lloyds TSB agreed that the issue of the capitalisation shares by HBOS would not result in an adjustment to the exchange ratio - the number of Lloyds TSB shares each HBOS shareholder receives for each HBOS share.
Otherwise, if the capitalisation issue price was calculated on the originally stated basis, this could have (if the price was lower than 232p) resulted in the issue of a significant number of new HBOS shares and, to avoid Lloyds TSB having to issue a significantly greater number of new Lloyds TSB shares to HBOS shareholders under the scheme, an adjustment to the exchange ratio would have been required by Lloyds TSB.
What happens if my entitlement is not to a whole number of shares?
Entitlements to Capitalisation Issue Shares will be rounded down to the nearest whole number of shares. No fraction of an ordinary share will be allotted.
Can I still choose to have the interim dividend in cash?
No, shareholders cannot choose to take cash.
Is it a scrip dividend?
No. A dividend is a distribution of income by a Company paid out of the Company's earnings. A scrip dividend typically arises where a company declares a dividend and the shareholder elects to receive the dividends in shares rather than in cash.
Isn't the Capitalisation Issue simply going to dilute my holding further?
The Capitalisation Issue is applied to all ordinary shares equally and should not affect the overall value of your shareholding, save that fractions of shares will not be issued.
What action do I need to take to receive my Capitalisation Issue Shares?
You do not need to take any further action to receive the shares. Qualifying shareholders on the share register as at 4.30pm on 3 October 2008 will receive the Capitalisation Issue Shares and either a certificate or a statement by 17 October 2008.
What happens if I sell my shares on 3 October?
If you sell or transfer some or all of your HBOS ordinary shares on or around the record date (3 October 2008), you should check with your bank or stockbroker if you are eligible to receive Capitalisation Issue Shares. It may be the purchaser or transferee who is actually entitled to receive the Capitalisation Issue Shares.
How soon will I be able to sell my Capitalisation Issue Shares?
The date of allotment is expected to be 6 October 2008, which is when the new shares are expected to begin trading. Certificates and/or statements will be despatched as soon as practicable following this.
As with the Rights Issue, are you going to offer a free dealing service through Halifax Share Dealing Limited to enable me to sell these shares free of charge?
There are no plans to offer a free dealing service to sell Capitalisation Issue Shares. If shareholders wish to dispose of their Capitalisation Issue Shares, they can be sold through their stockbroker in the usual manner.
I hold HBOS ordinary shares in the form of American Depository Receipts ("ADRs"). Will I receive Capitalisation Issue Shares and, if so, when?
Yes. The registered shareholders will receive the Capitalisation Issue Shares, and will then re-distribute them on a pro-rata basis amongst the underlying Receipt holders. Please note that the time it takes to be allotted your Capitalisation Issue Shares may differ slightly to the published timetable for this reason.
I hold HBOS ordinary shares in a nominee account. When will I receive Capitalisation Issue shares?
The registered shareholders will receive the Capitalisation Issue Shares, and will then re-distribute them on a pro-rata basis amongst the underlying Receipt holders. Please note that the time it takes to be allotted your Capitalisation Issue Shares may differ slightly to the published timetable for this reason.
I hold HBOS ordinary shares in an ISA. Will I receive Capitalisation Issue shares?
The registered shareholders will receive the Capitalisation Issue Shares, and will then re-distribute them on a pro-rata basis amongst the underlying Receipt holders. Please note that the time it takes to be allotted your Capitalisation Issue Shares may differ slightly to the published timetable for this reason.
Can these shares granted in lieu of the dividend payment be placed in an ISA?
Yes. The registered shareholders will receive the Capitalisation Issue Shares, and will then re-distribute them on a pro-rata basis amongst the underlying holders. Please note that the time it takes to be allotted your Capitalisation Issue Shares may differ for this reason. The Capitalisation Issue Shares should not affect your ISA subscription limits.
How will the Capitalisation Issue be treated for UK tax purposes?
The following should be read as a general guide only. For specific advice relating to your own circumstances, please contact an independent tax or financial adviser.
The Capitalisation Issue is a distribution of capital, and not of income. It will be treated as such, for example, by HMRC. Consequently, the Capitalisation Issue should not result in a charge to tax on income, and should not give rise to a charge to stamp duty or stamp duty reserve tax. Furthermore, the allotment of Capitalisation Issue Shares should not give rise to a charge to Capital Gains Tax (CGT), as the Capitalisation Issue should be treated as a result of a re-organisation of the Company's share capital.
The Capitalisation Issue Shares should be treated as the same asset, acquired at the same time and at the same price as your existing ordinary shares. If you choose to sell part or all of your Capitalisation Issue Shares after the Capitalisation Issue, it will be treated as a disposal for the purposes of Capital Gains Tax and may give rise to a CGT liability, depending upon your personal circumstances.
