Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
It has been called a special dividend rather than a return capital but based upon the information contained in the postings I did today I think it is a return of capital so not taxed as income in the hands of shareholders and so not subject to U.K. dividends tax.
I think the dividend dates means the record date, XD date and payment date rather then 1.80 pence paid via a number of dividends all within 90 days.
AGE
When a listing makes a dividend payment it’s very common for the SP fall by a similar amount. But is this a dividend or a return of capital ? Return of capital will be deducted from the Market Cap & again the SP should reduce to reflect this. I note from the RNS, ‘dividend dates’ which may imply that the amount involved will be divided into multiple payments. I’m surprised that the Market Cap did not increase more upon receipt of the payment. It will be interesting to see how this transpires.
You seem to think you are teaching us all something ………You aren’t.It will be what it will be.Sit and wait.You’ll just wear yourself and your keyboard out for nowt.
I’m done
MD
MD we need shareholders who own just 5% of AMC’s share capital can requisition a General Meeting.
This failure of the Board to communicate with shareholders is the reason I would vote against any RTO.
Members of the Board have not provided any emails addresses to allow shareholders to contact them if they have concerns and they fail to respond to messages sent to them via the AMC website!
When you ring the PR Company using the telephone line on the AMC website no one answers and there is no answer phone system!
AGE
The biggest single thing that I have learned after 13 plus years of being an AMCshareholder is that we are always kept in the dark as much as the bod possibly can.Also NOTHING is ever clear and concise and EVERYTHING IS ALWAYS late.The notion that we will be party to any detail of legal advise given would be a completely new concept if it were to happen.They will do whatever is best for themselves and use any means to create a cloak over the proceedings.
We’ll get whatever we get when it suits them.That is who they are and what they do.
MD
MD the dividend is definitely going to be paid as shareholders have approved the payment.
It is absolutely crucial that the Board provide us with the information that they have received from their lawyers and tax advisors re the U.K. treatment of the special dividend as I am sure shareholders whose total dividend received from AMC and other Companies which exceeds 2,000 pounds during 2023/2024 and who pay basic rate tax will not want to have to pay dividends tax at 8.75% and those on 40% pay dividends tax at 33.75% and at 45% pay dividends tax at 39.35%.
If you hold your shares in an ISA then there would be no tax to pay on dividends received.
This matter is urgent!
AGE
The corpus of my structure says there is no need to worry about money you haven’t got yet.This is AMC any damn thing could happen yet
MD
The problem we have in trying to come to a decision as to whether the special dividend is considered to be income in the hands of AMC's shareholders or whether it is a return of capital is that AMC are paying a special dividend that would be prohibited if it was a UK domiciled Company however it is a BVI domiciled Company hence there is no prohibition in paying a dividend out of share premium or share capital.
In HMRC v First Nationwide [2012] which concerned a Cayman Island Company the dividend was paid out of it's share premium account which is prohibited in the UK but the Judges decided the dividend was income in the hands of it's shareholders.
AMC's share premium account is 4.278m USD but accumulated losses are 39.467m USD so it is clear to see the special dividend is not being paid out of it's share premium account but it is coming out of it's share capital.
I think the key words in HMRC's guidance manual is:
The question is whether or not the ‘corpus of the asset’ is left intact after the distribution. If not, the receipt will be a capital receipt; if it is, the payment will be chargeable as income.
The Oxford dictionary definition of Corpus is "The main body or mass of a structure"
The special dividend is going to be in the region of £26m and the net assets shown in the last interim accounts are 36.993m USD and converting this into Sterling at an fx rate of 1.2335 gives a Sterling amount of 29.99m Pounds.
To my mind a special dividend payment of 26m Pounds out of net assets of 29.99m Pounds is not going to leave the Corpus in tact!
Based upon the fact the Corpus is not left intact then the payment of a special dividend has to be a return of capital.
QED
For those who are not conversant with Latin see the following:
Q.E.D. or QED is an initialism of the Latin phrase quod erat demonstrandum, meaning "which was to be demonstrated". Literally it states "what was to be shown"
Anyway let's see what the Board have to say about this issue!
AGE
The question is whether or not the ‘corpus of the asset’ is left intact after the distribution. If not, the receipt will be a capital receipt; if it is, the payment will be chargeable as income. The corpus is not disturbed by payment of a large dividend simply because it is large - see HMRC v First Nationwide [2012] EWCA Civ 278: Moses LJ said ‘ the reality was the distribution of share premium as dividends’ (this type of distribution is possible under Cayman Islands company law though it is not under UK law). But it will be disturbed by some form of capital reduction, as with the partial liquidation under Maryland law in Rae v Lazard. Another example of a dividend of capital nature is found in the trust-law case Sinclair v Lee [1993] Ch 497, where Nicholls VC held that shares distributed by way of dividend in specie as part of an indirect or ‘3-cornered’ demerger should be regarded as giving rise to a distribution of capital. The importance lies not in what is distributed (shares, in this case) but rather in the effect of that distribution on the distributing company, its ‘corpus’.
There is the following useful information on HMRC's website:
SAIM5210 - Dividends and other company distributions: foreign dividends
Dividends from non-UK resident companies
Dividends from non-UK resident companies are taxable under ITTOIA05/PART4/CHAPTER4. Before Tax Law Rewrite, the charge on foreign dividends was under Case IV or Case V of Schedule D.
The rewritten legislation largely integrates the charge on foreign dividends with the taxation of the equivalent income from a UK source. But there are some differences. The UK charge includes other distributions, as well as dividends. These may include amounts of a capital nature and can treat interest as a distribution in certain circumstances.
ITTOIA05/S402 thus charges dividends and does not include the wider definition of a distribution. However, if a non-UK resident company makes a distribution that is not a dividend it may be chargeable as interest, or as ‘income not otherwise charged’ taxed under the ‘sweep up’ (formerly Case VI) miscellaneous income provisions in ITTOIA05/PART5/CHAPTER8 S687 to S689. ITA07/S19 defines dividend income for the purposes of the tax rates applicable to savings and investment income as including a ‘relevant foreign distribution’. This is a distribution of a non-UK resident company which is not taxable as a non-UK resident company dividend under ITTOIA05/PART4/CHAPTER4, but would be taxable as a distribution from a UK resident company if the company were UK resident.
The tax charge
The charge to tax on foreign dividends is on the full amount of the dividends arising in the tax year - ITTOIA05/403. This is different from the paid basis that applies to dividends and other distributions from other UK companies. See SAIM5020.
The person liable is the person receiving or entitled to receive the dividends. See SAIM2400 for an explanation of ‘entitlement’.
Dividends of a capital nature
ITTOIA05/S402 (4) excludes ‘dividends of a capital nature’. This phrase was inserted on Tax Law Rewrite to reflect the decisions in CIR v Trustees of Joseph Reid (dec’d) (1949) 30TC431 and Rae v Lazard Investment Co Ltd (1963) 41TC1. Whether a dividend is income or capital in nature is determined by reference to the mechanism of distribution under the constitutive law of the territory where the company is incorporated or registered and its implications for the company making the distribution.
AGE
I agree with Ilovesushi's comments re the Board should have provided information as to whether the special dividend is subject to UK dividends tax or not when they asked for shareholders to approve the payment of a 1.8 pence dividend as this is crucial information that is needed for shareholders to have made an informed decision as to whether the payment of a special dividend is the most tax effective manner in which to return shareholder's money.
AGE
It takes time to decide the dates for the record date, XD date and payment date for the special dividend.
The Board have to ensure that they have a sufficient amount of Sterling to be able to pay for the special dividend as the consideration was paid in USD.
The time delay works in shareholders favour as if the Board do not include ant information in the next RNS as to whether the dividend is considered to be income in the hand of shareholders so subject to UK dividends tax for UK residents or whether it is a return of capital then we as a group have time to ask the Board to provide this information and if we find the special dividend is subject to UK dividends tax then we can requisition a General Meeting to cancel the payment of the dividend and for the payment to be structured so that it is a return of capital.
AGE
--------------------------------------------------------------------------------------------------------------------------------------------------------
Anyone else think no divi date announced is weird? Especially if the company has the cash.
All the right news coming out but apart from the usual BoD junk we've got nothing else apart from the 12th June to work to at the latest and close off a bad long term investment
Anyone else think no divi date announced is weird? Especially if the company has the cash.
All the right news coming out but apart from the usual BoD junk we've got nothing else apart from the 12th June to work to at the latest and close off a bad long term investment
Potatohead if you have held that long surely you sold some when the SP was 40plus?
http://www.citysolicitors.org.uk/storage/2013/06/20100122-Dividends-paid-following-reductions-of-capital-final.pdf
http://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm15440
Where payments are made following a reduction in share capital or share premium without passing through a reserve, the reduction will not form part of the realised profit of the company in company law terms and will not be treated as a CT distribution. Instead the payment will be treated as a repayment of share capital and may be a capital distribution within TCGA92/S122 - see CG57800 onwards for further guidance on capital distributions.
AGE
From a shareholders perspective it is extremely important to know as a definite if the special dividend is a return of capital or income in the hand of shareholder and subject to UK dividends tax.
The board should have provided information about this when they asked shareholders to vote for the special dividend. They should not have left this to shareholders to speculate on how the dividend is structured.
Poor old Kwasi he was a Kings Scholar!
AGE
3. What profits shown in the accounts are “available” to pay dividends?
The starting point for understanding whether a company has profits available to pay dividends will typically be its last annual accounts circulated to shareholders.
The balance sheet in those annual accounts will often show “retained earnings” or “profit and loss reserves”. However, for micro companies the balance sheet will simply show a figure for “capital and reserves”. It is important to determine what element of those reserves qualify as available to pay dividends.
In law, these are profits that meet a test of being “realised profits”. Profits from normal trading activity are typically (but not automatically) realised profits.
The face of the accounts may not distinguish between profit reserves that are realised or unrealised. For example, some companies have transactions that result in entries in reserves that are unrealised (such as revaluations of properties or certain intra-group transactions). Care is needed to make sure dividends are only made from realised profits.
Gazzleberry the answer is contained in the following link
http://www.icaew.com/technical/trust-and-ethics/company-law/paying-dividends-the-essentials
The key part is
2. Why is a dividend payment different from other types of payment?
A dividend is a distribution of post-tax profits of the company to its shareholders. It is payable to all shareholders (of the same class of share) in proportion to their shareholdings and in accordance with the company’s constitution (articles).
Have a look at AMC's balance sheet and you do not see any retained profits you only see accumulated losses.
A dividend is a distribution of post-tax profits of the company to its shareholders.
I cannot see any profits in AMC balance sheet so where is the special dividend being funded from?
AGE
Gazzleberry HMRC will naturally try to say that the special dividend is subject to U.K. dividends tax because it is called a special dividend and it is in their interests to say it is a dividend because they will receive more tax revenue.
The ultimate arbiters as to whether something is income in the hands of shareholders are judges as they make the decisions which form binding precedents.
Decisions in the First Tier Tribunal do not set binding precedents.
HMRC have taken lots of cases to tribunals because they do not agree with the manner in which a tax payer has treated something in their tax return and the judges have found in favour of the tax payer!
AGE
When the board clarifies how the special dividend has been structured, the shares will fly through 1.8 pence on the offer and then adjust with remaining cash in a shell company with RTO prospects in mind. Its 2.3 pence plus all the way. On x dividend, AMC will be valued at about or around .05 pence. Its a strong hold for me.
Ilovesushi I agree with your comments.
A normal dividend which is income in the hands of shareholders does not reduce the tax base cost of a share because it is being paid out of distributable reserves in other words retained profits shown in the balance sheet.
In AMC’s case it does not have any distributable reserves from a U.K. domiciled Company perspective as it only has retained losses however AMC is domiciled in the BVI and not the U.K. hence it is allowed to pay the special dividend out of its share capital as long as it meets the solvency requirements.
To me it is quite clear that if AMC had retained profits in excess of the total special dividend then it would have been income in the hands of shareholders as the dividend would be funded via the retained profits and so those AMC shareholders who are not holding their shares via an ISA would be subject to U.K. dividends tax .
AGE
"....a guy who was in my class at Eton...."
Not Kwasi Kwarteng by any chance?
TDT
What I mean is the special dividend is NOT subject to UK dividends tax.
The 1.8 pence tax is a free special dividend being return of Capital is going to reduce the tax base cost of the shares after dividend is paid.. e.g. If you paid 2 pence for the shares, then the adjusted cost for CGT purposes is 0.20 and not 2.0p
Well I am ready for my 1.8 pence and happy to get shares worth a minimum of 0.5 pence. I am expecting news next week of when I can get the payout. The company will shortly at the same time make it clear that this special dividend, is a return of capital and will not have to be declared profit for capital gains purposes. Its a win win. I am glad I was allowed to top up. Its like taking candy from a baby. Going to have shares in a cash shell to boot and the 1.8 per share. Happy Bunny. Update next week should clarify things.