Notice of Dividend Amount • Jul 1, 2022
Notice of Dividend Amount
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The definitions and interpretations commencing on page 8 of this circular have been used throughout the circular.
If you are in any doubt as to the action you should take, please consult your broker, banker, legal advisor, accountant, investment dealer, CSDP, CREST provider or other professional advisor immediately.
If you have disposed of all your shares in Industrials, then this circular should be handed to the purchaser of such shares or to the broker, banker, investment dealer, CSDP, CREST provider or other agent through whom the disposal was effected.
Industrials shareholders are referred to page 6 of this circular, which sets out the detailed action required of them in respect of the proposals set out in this circular.
Industrials has a primary listing on the LSE and a secondary listing on the Main Board of the JSE.
All times indicated are local times in the country to which they refer.
Industrials does not accept responsibility and will not be held liable for any failure on the part of the broker, banker, investment dealer, CSDP, CREST provider or other agent of a shareholder to notify such shareholder of the proposals set out in this circular.
(formerly Stenprop Limited) (Registered in Guernsey) (Registration number 64865) LSE ticker: MLI JSE share code: MLI ISIN: GG00BFWMR296
relating to:
• an election being offered to Industrials shareholders to receive either a cash dividend or a scrip dividend by way of an issue of new Industrials shares,
and enclosing:
• a scrip election form for use by certificated shareholders on the Guernsey share register wishing to receive the scrip dividend.
South African corporate adviser and JSE sponsor
This circular is available in English only. Electronic copies of this circular may be obtained from the Company Secretary by sending a request to [email protected]. Hard copies of this circular may be obtained during business hours from the registered address of the Company from Friday 1 July 2022 to Friday, 29 July 2022. It will also be available on the website of the Company (www.industrialsreit.com) as from Friday, 1 July 2022.
Industrials REIT Limited (Registration number 64865) Kingsway House Havilland Street St. Peter Port Guernsey, GY1 2QE
180 Great Portland Street London, W1W 5QZ
Sarah Bellilchi 180 Great Portland Street London, W1W 5QZ
Java Capital Trustees and Sponsors Proprietary Limited (Registration number 2006/005780/07) 6th Floor, 1 Park Lane Wierda Valley Sandton, 2196 (PO Box 522606, Saxonwold, 2132)
Java Capital Proprietary Limited (Registration number 2012/089864/07) 6th Floor, 1 Park Lane Wierda Valley Sandton, 2196 (PO Box 522606, Saxonwold, 2132)
Computershare Investor Services Proprietary Limited (Registration number 2004/003647/07) Rosebank Towers 15 Biermann Ave Rosebank, 2196
c/o Computershare Investor Services Proprietary Limited Private Bag X9000 Saxonwold, 2132 South Africa
Computershare Investor Services (Guernsey) Limited 1st Floor, Tudor House Le Bordage, St Peter Port Guernsey, GY1 1DB
02
| Page | |||
|---|---|---|---|
| Corporate information Inside front cover |
|||
| Important dates and times | |||
| Action required by shareholders | 6 | ||
| Definitions and interpretations | 8 | ||
| Circular to Industrials shareholders | |||
| 1. | Introduction | 10 | |
| 2. | Cash dividend | 10 | |
| 3. | Scrip dividend | 10 | |
| 4. | Rationale for the scrip dividend | 11 | |
| 5. | Share capital | 11 | |
| 6. | Tax implications | 11 | |
| 7. | Listing of new Industrials shares | 14 | |
| 8. | South African law and Guernsey law | 14 | |
| 9. | Exchange control regulations (for shareholders on the SA share register) | 15 |
The definitions and interpretations commencing on page 8 of this circular apply throughout this circular, including to this section (unless the context indicates a contrary intention).
| 2022 | |
|---|---|
| Date on which shareholders must be recorded on the SA share register to receive this circular | Friday, 24 June |
| Posting of the circular and announcement on SENS (declaration announcement) | Friday, 1 July |
| Announcement of scrip dividend reference price, Sterling to Rand conversion rates, cash payment applicable to fractional entitlement and whether the dividend will be paid as a PID, a non-PID or a mixture of the two released on SENS (finalisation announcement) before 11:00 (SAST) on |
Tuesday, 12 July |
| Last day to trade on the JSE in order to be eligible for the cash dividend or alternatively the scrip dividend | Tuesday, 19 July |
| Shares commence trading ex the cash dividend or scrip dividend on the JSE | Wednesday, 20 July |
| Record date for shareholders recorded on the SA share register | Friday, 22 July |
| Last day to elect to receive the scrip dividend instead of the cash dividend. Forms of election to reach the transfer secretaries by no later than 12:00 (SAST) on |
Friday, 29 July |
| Announcement on SENS of the amount of new Industrials shares issued | Thursday, 11 August |
| Dispatch of share certificates, payment of cash dividend, CSDP/broker accounts credited/updated | Friday, 12 August |
| Listing and trading of new shares on the JSE commences (see note 7) | Friday, 12 August |
Notes:
| 2022 | |
|---|---|
| Date on which shareholders must be recorded on the Guernsey share register to receive this circular | Friday, 24 June |
| Posting of the circular and announcement on RNS (declaration announcement) | Friday, 1 July |
| Announcement of scrip dividend reference price, Sterling to Rand conversion rates, cash payment applicable to fractional entitlement and whether the dividend will be paid as a PID, a non-PID or a mixture of the two |
|
| released via RNS (finalisation announcement) before 10:00 (BST) on | Tuesday, 12 July |
| Last day to trade on the LSE in order to be eligible for the cash dividend, or alternatively the scrip dividend | Wednesday, 20 July |
| Shares commence trading ex the cash dividend or scrip dividend on the LSE | Thursday, 21 July |
| Record date for shareholders recorded on the Guernsey share register | Friday, 22 July |
| Closing date for receipt of completed election forms/Dividend Election Input Message via CREST by no later than 17:00 (BST) on |
Friday, 29 July |
| Announcement via RNS of the amount of new Industrials shares issued | Thursday, 11 August |
| Payment of cash dividend, CREST accounts credited/updated | Friday, 12 August |
| Listing and trading of new shares on the LSE commences (see note 7) | Friday, 12 August |
The definitions and interpretations commencing on page 8 of this circular apply to this section.
The following information pertains to all of the Company's shareholders.
On Friday, 10 June 2022 it was announced that the board had approved an final dividend of 3.475 pence per share in respect of the 6 months ended 31 March 2022 and that the board intended to offer shareholders a cash dividend or an election to receive a scrip dividend by way of an issue of new Industrials shares (of the same class as existing shares) credited as fully paid up.
Should you wish to receive the cash dividend or should you take no action, regardless of being a certificated or dematerialised shareholder, you will, on Friday, 12 August 2022, receive the cash dividend. Shareholders who do not elect to receive the scrip dividend will, without any action on their part, be deemed to have chosen to receive the cash dividend. Dividend payments will be made in accordance with the payment instructions held.
Shareholders may elect the scrip dividend in respect of all or part of their Industrials shares.
Instructions for completing each election form and relevant return address are given on each election form.
All times indicated below are local times in the country to which they refer.
If you elect to receive the scrip dividend, please note the following action is required to be taken by you:
Dematerialised shareholders are required to notify their duly appointed CSDP, broker or custodian if they wish to receive the new Industrials shares pursuant to the scrip dividend in the manner and the time stipulated in the agreement governing the relationship between such shareholders and their CSDP, broker or custodian, failing which they will receive the cash dividend on Friday, 12 August 2022.
Dematerialised shareholders' CSDP/broker accounts will be credited and updated on Friday, 12 August 2022 with the new Industrials shares.
Certificated shareholders must complete the attached election form in accordance with the instructions contained in it and lodge it by post to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZZ United Kingdom so as to arrive by no later than 17:00 (BST) on Friday, 29 July 2022. Election forms received after this date and time will not be accepted. If it has not been received by then, you will receive the full amount of your dividend entitlement in cash in Sterling.
Shareholders who hold their shares in CREST can only elect to receive dividends in the form of new Industrials shares by use of the CREST Dividend Election Input Message.
A CREST Dividend Election Input Message must be received by 17:00 (BST) on Friday, 29 July 2022 in order to be effective.
Under the Uncertificated Securities Regulations 2009, if holdings of shares are held partly in certificated and partly in uncertificated form, the Company will treat such shareholdings as if they were separate shareholdings and a separate election form/CREST Dividend Election Input Message will need to be completed for each holding.
To the extent that a holding is wholly or partly in uncertificated form at the record date for the dividend, by submitting a CREST Dividend Election Input Message the relevant shareholder is deemed to authorise the Company to issue new Industrials shares in uncertificated form in respect of that holding.
Mandates other than CREST Dividend Election Input Messages, including paper election forms, will not be accepted in respect of shares held through CREST and will be ignored.
The CREST Dividend Election Input Message must contain the number of shares relating to the election. If the number of elected shares is zero or left blank, the election will be rejected. If the number is greater than the shares held by the relevant shareholder through CREST at the relevant record date, the election will be scaled back to the holding at the record date.
Once an election is made using the CREST Dividend Election Input Message system it cannot be amended. Therefore, if a shareholder wishes to change their CREST Dividend Election Input Message, such shareholder would need to cancel their previous election and submit a new election.
Uncertificated shareholders' CREST accounts will be credited and updated on or about Friday, 12 August 2022 with the new Industrials shares.
The CREST procedures require the use of the Dividend Election Input Message in accordance with the CREST Manual. The Dividend Election Input Message submitted must contain the number of ordinary shares on which the election is being made, whether this is all or part of your holding of ordinary shares at the Record Date.
The Dividend Election Input Message includes a number of fields which, for a valid election to be made, must be input correctly as indicated below:
The Company and/or the transfer secretaries or registrars (as relevant) reserve the right to treat as valid an election which is not complete in all respects.
Industrials does not accept responsibility and will not be held liable for any failure on the part of CSDP, CREST provider or any broker, banker or other agent of a shareholder to notify such shareholder of the proposals set out in this circular.
In this circular and the election forms attached to it, unless the context indicates a contrary intention, the words in the first column shall have the meanings assigned to them in the second column; the singular includes the plural and vice versa; an expression which denotes one gender includes the other gender; a natural person includes a juristic person and vice versa and cognate expressions shall bear corresponding meanings.
| "Articles of Incorporation" | the memorandum and articles of incorporation of the Company, dated 9 February 2022; |
|---|---|
| "BST" | British Summer Time; |
| "cash dividend" | the cash dividend of 3.475 pence per share payable to shareholders out of the Company's profits in accordance with their shareholding in the Company as at the record date, unless receipt of the scrip dividend has been elected; |
| "certificated shareholder" | Industrials shareholders holding certificated shares in the Company; |
| "certificated shares" | shares in respect of which physical share certificates have been or will be issued; |
| "circular" or "this circular" | this circular dated Friday, 1 July 2022, including the election form; |
| "common monetary area" | collectively, South Africa, the Republic of Namibia and the Kingdoms of Lesotho and Swaziland; |
| "Companies Law" | the Companies (Guernsey) Law, 2008 (as amended); |
| "CREST" | the computerised settlement system operated by Euroclear UK and Ireland Limited which facilitates the transfer of shares in uncertificated form; |
| "CREST Dividend Election Input Message" |
the procedure for shareholders registered on the Guernsey share register to elect to participate in the scrip dividend; |
| "CREST Manual" | the manual issued by Euroclear concerning the CREST system and available on the Euroclear website; |
| "CREST provider, broker or custodian" |
a person or company that enables shareholders to hold and transfer their securities in uncertificated form or to hold and transfer their securities in uncertificated form on their behalf; |
| "CSDP" | a Central Securities Depository Participant appointed by a shareholder for purposes of, and in regard to, dematerialisation and to hold and administer securities or an interest in securities on behalf of a shareholder in South Africa; |
| "dematerialise" or "dematerialisation" the process whereby physical share certificates are replaced with electronic records of ownership under CREST in respect of shares on the Guernsey share register or the process whereby certificated shares are converted to an electronic form as dematerialised shares under Strate and recorded in the sub-register of shareholders by the CSDP or broker in the case of shares on the SA share register; |
|
| "dematerialised shareholder" | an Industrials shareholder holding dematerialised shares; |
| "dematerialised shares" | Industrials shares which have been dematerialised and deposited in CREST or incorporated into the Strate system; |
| "directors" or "the board of directors" or "the board" |
the board of directors of Industrials; |
| "election form" | the election form enclosed with this circular to be completed by certificated shareholders on the Guernsey share register wishing to receive the scrip dividend; |
| "emigrant" | an emigrant from South Africa whose address is outside of the common monetary area; |
| "Euroclear" | Euroclear UK & Ireland Limited, a company incorporated under the laws of England and Wales and the operator of CREST; |
| "Exchange Control" | the Financial Surveillance Department of the South African Reserve Bank; |
| "FCA" | the Financial Conduct Authority in the United Kingdom and/or any successor or replacement body or bodies from time to time (including, for the avoidance of doubt, the Prudential Regulation Authority); |
| "Guernsey record date" | the date on which an Industrials shareholder on the Guernsey share register must be recorded in the register in order to participate in the cash dividend or the scrip dividend being the close of business on Friday, 22 July 2022; |
| "Guernsey registrars" | Computershare Investor Services (Guernsey) Limited (registration number 50855), a non-cellular company incorporated and registered in Guernsey and the Guernsey registrars to the Company, further details of which are set out in the "Corporate Information" section; |
| "Guernsey share register" | the register of shareholders maintained on behalf of the Company by the Guernsey registrars; |
| "Industrials" or "the Company" | Industrials REIT Limited (Registration number 64865), a company registered and incorporated in accordance with the laws of Guernsey; |
| "Industrials shareholders" or "shareholders" |
holders of Industrials shares; |
"Industrials shares" or "shares" ordinary shares with a par value of EUR0.000001258 in the share capital of the Company; "Java Capital" or "JSE sponsor" or "South African corporate advisor" collectively, Java Capital Proprietary Limited (Registration number 2012/089864/07), the South African corporate advisor and Java Capital Trustees and Sponsors (Proprietary) Limited (Registration number 2008/005780/07), the JSE sponsor, full details of which are set out in the "Corporate Information" section; "JSE" Johannesburg Stock Exchange, being the exchange operated by the JSE Limited (Registration number 2005/022939/06), a public company registered and incorporated in accordance with the laws of South Africa and licensed as an exchange under the Financial Markets Act of South Africa, 2012 (Act 19 of 2012), as amended; "JSE Listings Requirements" the Listings Requirements as published by the JSE, as amended from time to time; "last practical date" the last practical date prior to finalisation of this circular, being Thursday, 23 June 2022; "London Stock Exchange or LSE" London Stock Exchange plc; "new Industrials shares" or "scrip dividend shares" either: • new fully-paid ordinary Industrials shares to be issued; or • existing fully-paid ordinary Industrials shares to be transferred from the Company's treasury account, pursuant to the scrip dividend, as the context may require, dependant on whether the board elects to settle the scrip dividend through the issue of new shares or the transfer of already listed treasury shares; "non-resident" a person not ordinarily resident in South Africa; "pence" Great British pence; "PID" or "Property Income Distribution" a dividend payable which, in accordance with the UK legislation on UK-REITs, is subject to deduction of UK withholding tax unless exemptions apply; "Rand" or "R" or "ZAR" the South African Rand, the lawful currency of South Africa; "record date" the SA record date and/or the Guernsey record date as the context may indicate; "REIT" Real Estate Investment Trust; "RNS" Regulatory News Service of the LSE; "SA Exchange Control Regulations" the Exchange Control Regulations of South Africa issued under the Currency and Exchanges Act, 1933 (Act 9 of 1933), as amended; "SA record date" the date on which an Industrials shareholder on the SA share register must be recorded in the register in order to participate in the cash dividend or the scrip dividend being the close of business on Friday, 22 July 2022; "SA share register" the register of shareholders maintained on behalf of the Company in South Africa by Computershare Investor Services; "SA transfer secretaries" or "Computershare Investor Services" Computershare Investor Services Proprietary Limited (Registration number 2004/003647/07), a private company incorporated and registered in South Africa and the SA transfer secretaries to the Company, further details of which are set out in the "Corporate Information" section; "SAST" South African Standard Time; "scrip dividend" the issue of new Industrials shares to Industrials shareholders who have elected to receive the scrip dividend as determined in accordance with paragraph 3.1.2 below; "scrip dividend reference price" the average closing price of Industrials shares traded on the LSE over a period of five days (less the amount of the cash dividend), to be announced on Tuesday, 12 July 2022. For Industrials shares on the SA share register, the scrip dividend reference price will be converted to Rand at the Sterling exchange rate; "SENS" the Stock Exchange News Service, being the news service operated by the JSE; "South Africa" or "SA" the Republic of South Africa; "Sterling" or "£" Great British Pound, the lawful currency of the United Kingdom; "Sterling exchange rate" the Sterling to Rand conversion rate to be determined on Monday, 11 July 2022 and announced on Tuesday, 12 July 2022; "Strate" Strate Proprietary Limited (Registration number 1998/022242/07), a private company registered and incorporated in terms of the laws of South Africa, which is licensed to operate, in terms of the Financial Markets Act (Act 19 of 2012), as amended, and which is responsible for the
"transfer secretaries and/or registrars"
collectively, the SA transfer secretaries and the Guernsey registrars.
electronic settlement system of the JSE; and
Industrials REIT Limited (formerly Stenprop Limited) (Registered in Guernsey) (Registration number 64865) LSE ticker: MLI JSE share code: MLI ISIN: GG00BFWMR296
On Friday, 10 June 2022, it was announced that the board had approved and declared an final dividend of 3.475 pence per share in respect of the 6 months ended 31 March 2022. The board intends to offer shareholders a cash dividend or an election to receive a scrip dividend by way of an issue of new Industrials shares (of the same class as existing shares) credited as fully paid up.
A cash dividend will be paid to shareholders out of the Company's profits unless shareholders elect to receive a scrip dividend in respect of all or a part of their Industrials shareholding by way of an issue of new Industrials shares credited as fully paid up.
Shareholders of Industrials on the record date who elect to receive the scrip dividend instead of the cash dividend must ensure that their election forms are received by the relevant transfer secretaries or registrars in accordance with the salient dates and times mentioned in this circular.
If no shareholders were to elect to receive the scrip dividend, the value of the cash dividends will amount to £10,161,858.41. However, as noted in section 6.3 below, any part of the cash dividend that represents a PID may be paid by the Company subject to withholding tax at source.
The allocation of new Industrials shares will be such that shareholders who elect to receive the scrip dividend will not be allocated a fraction of a new Industrials share. Any entitlement to receive a fraction of a new Industrials share will be rounded down to the nearest whole number, with a cash payment ("cash payment") made to the relevant shareholder in respect of the fraction. The cash payment due to shareholders will be determined with reference to the scrip dividend reference price, which amount will be announced on Tuesday, 12 July 2022 before 10:00 (BST)/11:00 (SAST).
Should all shareholders elect to receive the scrip dividend, the maximum total number of new Industrials shares to be issued by Industrials will be calculated as £10,161,858.41 divided by the scrip dividend reference price. However, where shareholders elect to receive a scrip dividend in place of their entitlement to a PID cash dividend, as noted in section 6.3 below, the number of new Industrials shares to be issued by the Company may be reduced on account of withholding tax at source.
The rationale for the scrip dividend is to afford shareholders the opportunity to increase their shareholding in Industrials.
The share capital of the Company as at the last practical date is as follows:
| EUR | |
|---|---|
| Share capital | |
| Authorised 1,000,000,000 ordinary shares with a par value of EUR 0.000001258 each |
1,258 |
| Issued share capital 298,775,175 ordinary shares with a par value of EUR 0.000001258 each |
376 |
Industrials converted to a UK REIT on 1 May 2018. The Company may distribute dividends to shareholders either in the form of a PID or as an ordinary dividend ("non-PID"). Both the cash dividend and new Industrials shares received in lieu of a cash dividend under the scrip dividend may be paid as PID, a non-PID or a mixture of the two. The company will indicate whether the dividend will be paid as a PID, a non-PID or a mixture of the two along with the scrip reference price in a separate announcement to this circular on Tuesday, 12 July 2022.
The statements in this section relate only to certain limited aspects of the South African taxation treatment of distributions paid by the Company in the form of cash and/or new Industrials shares. Shareholders should note that the summary is a general guide to the material effects of the South African tax regime currently in place and is not exhaustive. Although this summary is believed to be correct at the time of preparation of this circular, the decision whether to participate in the scrip dividend, is the sole responsibility of each Industrials shareholder. Industrials shareholders are advised to consult their professional advisors regarding the tax consequences of the cash dividend and the scrip dividend or if they are in any doubt as to the appropriate action to take. This section does not constitute advice and applies only to South African tax resident shareholders who are the beneficial owners of the shares and relevant distributions and apply only in relation to shares that are listed on the JSE.
The receipt of the cash dividend or an election to receive the scrip dividend may have tax implications for shareholders.
The taxation of a cash dividend for South African tax purposes will depend on whether the cash dividend is a "foreign dividend" as defined in section 1 of the Income Tax Act, No. 58 of 1962 ("Income Tax Act"), which will, broadly speaking, be the case if the dividend is regarded as a "dividend or similar payment" in terms of the income tax laws of the UK on companies. On the basis that both the PID and non-PID cash dividends constitute a "dividend or similar payment" in terms of the UK law on the taxation of company income in respect of the Company, the PID and non-PID cash dividends are "foreign dividends" as defined in section 1 of the Income Tax Act.
For those South African resident shareholders receiving the cash dividend, such amount may be subject to South African dividends withholding tax at a rate of 20 per cent as South African dividends withholding tax applies to foreign dividends paid by a foreign company in respect of shares that are listed on the JSE, unless an exemption as set out in the Income Tax Act applies and provided the necessary declarations and undertakings are provided to the broker or central securities depository participant as contemplated in section 64H(2) of the Income Tax Act.
In this regard, South African resident shareholders who are companies or other tax-exempt shareholders (e.g. a pension fund or public benefit organisation) should qualify for an exemption from South African dividend withholding tax, subject to the
necessary declaration and undertaking being provided in order to ensure that no dividend withholding tax is withheld.
In respect of the non-PID cash dividend, South African resident shareholders who are individuals do not qualify for an exemption from South African dividend withholding tax and are therefore subject to withholding tax at a rate of 20 per cent. In respect of the PID cash dividend which attracts UK withholding tax, in terms of section 64N of the Income Tax Act, a rebate of the UK withholding tax must be deducted from the dividend withholding tax payable in South Africa. However, the rebate is limited to the UK withholding tax which may not be recovered from the UK. In terms of the agreement for the avoidance of double taxation between South Africa and the UK, the 20 per cent UK withholding tax in respect of the PID cash dividend may be reduced to 15 per cent, and South African residents may accordingly claim 5 per cent back from the UK revenue authorities. Accordingly, a rebate of 15 per cent UK withholding tax may be deducted in respect of the South African dividends tax payable by South African resident shareholders, resulting in a balance of 5 per cent South African dividends tax being payable. South African resident shareholders should be in contact with their brokers or CSDP in order to ensure that the reduced amount of dividends tax is withheld.
The receipt or accrual by South African resident shareholders (whether a company, individual or tax-exempt person) of the PID and non-PID cash dividend should be exempt from South African income tax on the basis that it constitutes a foreign dividend received by or accrued to that shareholder in respect of a share listed on the JSE that does not consist of a distribution in specie.
The receipt of new Industrials shares by South African resident shareholders should not be classified as a dividend or a foreign dividend for South African tax purposes and, accordingly, South African dividends withholding tax should not be levied on the new Industrials shares.
In terms of the agreement for the avoidance of double taxation between South Africa and the UK, the 20 per cent UK withholding tax in relation to PIDs paid by the Company in the form of new Industrials shares may be reduced to 15 per cent, and accordingly qualifying South African residents may claim 5 per cent back as a cash payment from the UK revenue authorities.
The receipt of new Industrials shares by South African resident shareholders should not be classified as a dividend or a foreign dividend for South African tax purposes. Scrip dividends are generally treated as not being included in the gross income of South African resident shareholders. However, the legislation in this regard is complex and its implementation is uncertain. Accordingly, shareholders should seek independent professional tax advice.
The expenditure actually incurred by the South African resident shareholders in respect of the acquisition of the new Industrials shares will be deemed to be nil in terms of the provisions of section 40C of the Income Tax Act.
The statements made in this section relate only to certain limited aspects of the UK taxation treatment of distributions paid by the Company in the form of cash and/or new Industrials shares to Shareholders resident in the UK that are holding their shares as an investment. Shareholders should note that the summary is a general guide to the material effects of the UK tax regime currently in force and current HM Revenue & Customs published practice and is not exhaustive. Although this summary is believed to be correct at the time of preparation of this circular, the decision whether to participate in the scrip dividend is the sole responsibility of each Industrials shareholder. Industrials shareholders are advised to consult their professional advisors regarding the tax consequences of the cash dividend and the scrip dividend or should they be in any doubt as to the appropriate action to take.
The statements made in this paragraph in relation to PIDs paid by the Company in the form of new Industrials shares relate only to certain limited aspects of the UK taxation treatment of such PIDs.
Where withholding tax does not apply, shareholders who receive a PID in the form of new Industrials shares pursuant to a scrip dividend election will be regarded as having received a PID equal to the cash amount of the dividend foregone by the shareholder in electing to receive the dividend in the form of shares. However, if the market value of the new Industrials shares on the date of first dealing in these shares differs from this cash amount by more than 15 per cent of the cash amount, then the amount of the PID regarded as received by the shareholder will be taken to be the market value of the Industrials shares on the date of first dealing in those shares.
Where withholding tax applies to a particular shareholder, a reduced number of new Industrials shares will be issued to reflect this withholding tax, and the cash equivalent will fall to be determined by grossing up the value of that reduced number of new Industrials shares at the scrip dividend reference price by reference to the withholding tax rate, currently 20 per cent. However, if the market value of the Industrials shares on the date of first dealing in these shares differs from the scrip dividend reference price by more than 15% of the scrip dividend reference price, then the amount of the PID regarded as received by the individual will be calculated by reference to the market value of the Industrials shares on the date of first dealing in those shares rather than
UK resident shareholders are taxed on PIDs as property letting income separate from any other property letting business. The gross amount of the PID is subject to tax with a credit for withholding tax deducted from the payment (see further below). HMRC tax returns contain a separate box and explanatory notes to enable individual tax payers to declare amounts received in the form of PIDs.
Subject to limited exceptions, Industrials is required to withhold tax at source from its PIDs at the UK basic rate of income tax, currently 20 per cent. Because of the withholding tax, a UK resident individual taxable at the Scottish starter rate of 19 per cent or the UK basic rate of 20 per cent will have no further tax to pay. By contrast, a UK resident individual not taxable at the Scottish rates, taxable at the UK higher rate of 40 per cent (or the additional rate of 45 per cent) will have a further 20 per cent (25 per cent if an additional rate tax payer) to pay. A UK resident individual taxable at Scottish rates, taxable at the Scottish intermediate rate of 21 per cent (or the higher rate of 41 per cent or the top rate of 46 per cent) will have a further 1 per cent (or 21 per cent if a higher rate tax payer or 26 per cent if a top rate tax payer) to pay. An individual, who does not pay tax perhaps because of personal allowances, or who pays Scottish starter rate tax at 19 per cent may reclaim any excess tax withheld in their tax return.
A shareholder who is an individual resident (for tax purposes) in the UK and who receives new Industrials shares in PID form pursuant to a scrip dividend election will be treated as having acquired those new Industrials shares for an amount equal to the cash equivalent for capital gains tax purposes.
Subject to certain exceptions, a PID will generally be treated in the hands of shareholders who are within the charge to corporation tax as profit of a UK property business (as defined in Part 4 of the Corporation Tax Act 2009). A PID is, together with any PIDs from any other UK-REIT, treated as a separate UK property business from any other UK property business (a "different UK property business") carried on by the relevant shareholder. This means that any surplus expenses from a shareholder's different UK property business cannot be off-set against a PID as part of a single calculation of the shareholder's UK property business profits.
The main rate of UK corporation tax on such profits is currently 19 per cent (but the Government has announced this will increase to 25% from 1 April 2023).
A registered pension scheme, or charity, resident (for tax purposes) in the UK should generally have no liability to UK tax in respect of a PID.
Individuals who are resident in the UK (for tax purposes) have a £2,000 dividend tax allowance (the "Allowance"). Dividend income received in excess of the Allowance will be taxed at 8.75 per cent for basic rate tax payers, 33.75 per cent for higher rate tax payers and 39.35 per cent for "additional" rate tax payers. In determining the relevant tax band for non-PID dividends, the total non-PID dividends for the tax year (including the part within the Allowance) will be treated as the highest part of the individual's total income for income tax purposes.
An individual resident in the UK receiving a non-PID dividend in the form of Industrials shares will be treated as receiving a non-PID of an amount equal to the cash amount of the dividend foregone by the individual in electing to receive the dividend in the form of shares for income tax purposes. However, if the market value of the Industrials shares on the date of first dealing in these shares differs from this cash amount by more than 15 per cent of the cash amount, then the amount of the non-PID regarded as received by the individual will be taken to be the market value of the Industrials shares. The consequences of the individual being taken to receive a non-PID are set out in "Individuals – cash dividend" above.
For capital gains tax purposes, such an individual will be treated as receiving new Industrials shares for an amount equal to this cash equivalent.
A company which is resident (for tax purposes) in the UK which receives a cash non-PID dividend will be treated as receiving a distribution in an amount equal to the cash non-PID dividend. There are a number of exemptions available to companies in relation to the receipt of such distributions and, in the usual case, one of these exemptions would generally apply. However, companies considering electing to receive a cash non-PID dividend are advised to confirm their position with their own advisers.
To the extent that a company which is resident (for tax purposes) in the UK receives new Industrials shares in place of the right to receive a cash non-PID dividend pursuant to the scrip dividend election, the issue of the new Industrials shares should be treated as not giving rise to any distribution for the purposes of corporation tax on income.
For the purposes of corporation tax on chargeable gains, such an issue should be treated as bonus issue for which there is no acquisition cost. Consequently, the calculation of any chargeable gain or allowable loss on a future disposal of, or of part of, that company's enlarged holding should fall to be made by reference to the base cost of the original holding only. Corporate shareholders should therefore note that there will be no addition to the base cost of the increased shareholding and, in particular, no addition to the base cost representing the cash equivalent.
Generally, a registered pension scheme, or charity, resident (for tax purposes) in the UK which receives a non-PID will not be subject to tax on receipt of the non-PID nor will it be entitled to a tax credit in respect of such dividend, whether in the form of cash or new Industrials shares. Accordingly, no payment in respect of such a tax credit can be claimed from HMRC. Registered pension schemes, or charities, resident (for tax purposes) in the UK should not generally be subject to UK taxation on any chargeable gain arising on a subsequent disposal of any new Industrials shares.
Subject to the exceptions discussed below or the possible application of a tax treaty, the Company will generally be required to withhold tax at source at the basic rate (currently 20 per cent) from its PIDs. This is the case whether PIDs are paid in cash or in the form of new Industrials shares pursuant to the scrip dividend. Where shareholders elect to receive the scrip dividend in lieu of PID cash dividends, those shareholders that are unable to receive PIDs gross will received new Industrials shares equal to 80 per cent of the cash equivalent of the PID. The cash equivalent of the remaining 20 per cent will be treated as tax withheld at source.
Under the UK-REIT rules, certain categories of shareholders are entitled to receive PIDs without withholding tax. Shareholders qualifying for gross payment are principally UK resident companies, UK public bodies, UK charities, UK pension funds and Managers of ISAs, PEPs and Child Trust Funds.
UK shareholders who qualify for gross payment are required to complete the relevant exemption declaration form, which form is available on Industrials' website and can also be obtained by contacting the Guernsey registrars or the Company Secretary.
Under current UK tax law, the Company will not be required to withhold tax at source from non-PIDs. This is the case whether the non-PID is paid in the form of new Industrials shares or in cash.
No stamp duty or stamp duty reserve tax is payable in respect of a cash dividend. No stamp duty or stamp duty reserve tax will generally be payable on the issue of new Industrials shares pursuant to the scrip dividend.
The receipt of the cash dividend or electing to receive the scrip dividend may have tax implications for shareholders who are resident in countries other than South Africa or the United Kingdom and such shareholders are advised to obtain appropriate advice from their professional advisors in this regard.
Application will be made to the JSE and the LSE to list the new Industrials shares issued in terms of the scrip dividend, with effect from the commencement of trading on Friday, 12 August 2022. This document does not constitute a prospectus as the exemptions in Rule 1.2.2R(4) and Rule 1.2.3R(5) of the FCA Prospectus Rules from the requirement to produce a prospectus apply.
All transactions arising from the provisions of this circular and the election form shall be governed by and be subject to the laws of Guernsey.
The following is intended only as a guide and is therefore not a comprehensive statement of the SA Exchange Control Regulations applicable to shareholders on the SA share register.
Industrials shareholders who are in any doubt as to the appropriate course of action to take should consult their professional advisors.
Any new Industrials shares issued in terms of the scrip dividend are not freely transferable from South Africa and must be dealt within the terms of the SA Exchange Control Regulations.
Shareholders who hold shares on the SA share register can only receive new Industrials shares on that register.
As the cash dividend will be paid out of the Company's profits, such dividends are freely transferable from South Africa.
The election of the cash dividend by emigrants must be made through an authorised dealer in foreign exchange controlling the shareholder's emigrant blocked assets.
All aspects relating to the SA Exchange Control Regulations will be managed by their CSDP or broker, as follows:
Ordinary shares issued will be credited to their CSDP or broker accounts and a "non-resident" annotation will appear in the CSDP or broker register.
Dividend payments will be credited directly to the bank accounts nominated for them by their CSDP or broker.
New Industrials shares issued, based on ordinary shares controlled in terms of the SA Exchange Control Regulations, will be credited to the emigrant blocked share accounts at the CSDP or broker controlling their blocked assets and a "non-resident" annotation will appear in the CSDP or broker register.
Signed by Paul Arenson on his own behalf and on behalf of all of the other directors of the Company on Friday, 24 June 2022, he being duly authorised in terms of a resolution passed on 8 June 2022.
24 June 2022
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