Dividend payment in cash or shares

KPN offers shareholders a choice of dividend payment entirely in cash or entirely in ordinary shares. Payment in shares will be charged against the additional paid-in capital or, if wished, against the other reserves. In the Netherlands, payment in shares charged against the additional paid-in capital is exempt from dividend tax. Payment in shares charged against the other reserves will in principle be subject to 25% dividend tax over the par value of the payment.

Value of the dividend

The value of the dividend paid in shares will be 2% to 5% lower than the value of the cash dividend. The number of dividend rights entitling a shareholder to a new ordinary share will be fixed at a round figure based on the closing price of the KPN share on the Amsterdam Stock Exchange on May 23, 2001.

Schedule

KPN has set the following schedule.

May 1, 2001: Ex-dividend listing of the KPN share and starting date for stating preference for the 2000 final dividend payment options.

May 23, 2001: Final date of the option period for the final dividend (before close of trading on the Amsterdam Stock Exchange); fixing and announcement of the number of dividend rights.

May 26, 2001: Payment of dividend and commencement of share delivery in connection with stock dividend conversion.

Shareholders

During the option period, shareholders should inform the bank or stockbroker where their shares are deposited whether they wish to receive dividend payment in cash or shares. If no notice of this preference is given before the end of the option period, the bank or stockbroker will generally make a choice on the shareholder’s behalf. If no preference is indicated by the shareholder’s bank or stockbroker, the dividend payment will be made in cash after deduction of 25% dividend tax.

Exericise 16-1. Decide if these statements are true or false according to the text. Change any which are false.

1. Royal KPN N. V. (KPN) is a sole proprietorship.

2. The shareholders can only get their dividend in cash.

3. Payment in shares is subject to dividend tax.

4. You get more money if you choose payment in shares.

5. The dividend will be paid after all the shareholders decide on the payment scheme.

6. You have to inform your bank about the payment scheme you choose.

7. If you don’t choose any particular scheme, your payment will be made in cash and after that you’ll have to pay the taxes.

Exercise 16-2. Answer the questions.

1. In your opinion, what does The Board of Management of Royal KPN N. V. do?

2. What was the decision of the general meeting of shareholders held on April 27, 2001?

3. How can the shareholders get the dividend? Who chooses the form of payment?

4. What is the option period?

5. Will you get the dividend if you don’t choose any of the payment schemes offered?

Exercise 16-3. Translate the sentences into English paying attention to the words and phrases underlined.

1. Все местные газеты сообщат о дате собрания акционеров компании.

2. Бывают обыкновенные и привилегированные акции. Если вы владеете обыкновенными акциями какой-то компании, вы имеете право на часть капитала компании (активов за вычетом всех долгов и привилегированных акций) и ее прибыли после распределения среди владельцев облигаций и привилегированных акций.

3. Подлежат ли дивиденды налогообложению? Этот вопрос можно задать биржевому брокеру или менеджеру банка, которому вы доверили ваши акции.

4. Какова цена на акции компании N., зарегистрированная при закрытии биржи 26 июня?

5. Вы получите всю информацию через час после завершения торгов.

6. Финансовым экспертам и инвесторам больше нравятся ситуации, когда величина чистого дохода превосходит расходы на выплату дивидендов.

Exercise 16-4. In your own words.

1. What do you know about the work of a brokerage firm? Make a short report using the information you have or find some in the Internet.

2. What are the advantages and disadvantages of being a shareholder?

Check-yourself test.