Unilever to lose London listing?

[absolutezero]

Unilever says place in FTSE 100 Index still to be determined

So: Should removal from the index mandate disposal of a HYP share?

No. Blindly following rules leads to CLLN situations!

Unilever. Big company. (3rd biggest in the UK listings). Solid finances. Good dividend. Retains a London listing but maybe not in the 100.
So why dump?

[Gengulphus]

Anyone have any info on the situation with Dutch witholding taxes?

I thought they were low (15%), but have heard rumours of changes (to 0%).

An extract from the RNS linked to in the OP:

"Unilever N.V. dividends are currently subject to Dutch dividend withholding tax at a rate of 15%. The Dutch government has announced that the Dutch dividend withholding tax will be abolished from 1 January 2020. Following simplification of the corporate structure and until such abolition, shareholders in the new Unilever holding company will be able to receive distributions in the form of a capital repayment for Dutch tax purposes which will be paid without Dutch dividend withholding tax."

So yes, the Dutch withholding tax is currently 15%, and yes, there are proposals to reduce it to 0%. Whether one regards 15% as "low" is clearly a matter of opinion - I do, but I've seen enough complaints on these boards about the UK's 7.5% basic-rate Income Tax on dividend income to be quite certain that that opinion is not universally shared!

And Unilever are also planning to make shareholder payments be capital distributions from the time that they change the corporate structure, at which point they intend to exchange people's shareholdings in the UK company Unilever plc to the same numbers of shares in the new holding company (called "New N.V." in the RNS, though that's clearly just a placeholder for whatever new name they eventually settle on), until the time that the Dutch withholding tax is reduced to 0%.

Or to be precise, they intend to make shareholders able to receive the payments as capital distributions for Dutch tax purposes. I can see at least two ways they might do that: they could just make the payments as capital distributions regardless, or they could offer shareholders the choice between dividends and capital distributions in basically the same way that B share schemes used to in the UK. (I should say that I'm not positively asserting that either of those would have the stated effect for Dutch tax purposes, just that it's plausible that they might. I know far too little about the Dutch tax system to be able to positively assert anything about it, other than that it used to cause my father a huge amount of hassle as a long-term ex-pat living in the Netherlands and that I've seen enough of that hassle to regard not being similarly subject to it as a (hopefully) easily-achieved and very desirable goal!)

The important point about that is that if they just make the payments as capital distributions regardless, I'm reasonably certain that the UK tax system will treat them as such and so take them into account for CGT but not Income Tax (along the same lines as it treats Rolls-Royce's shareholder payments). But if it offers shareholders a choice, I'm reasonably certain that the same tax law change that made B share schemes that offered such a choice between income and capital options ineffective will also apply to that choice, and the result would be that the UK tax system would treat the payments as dividends regardless of the shareholder's choice, and so take them into account for Income Tax but not CGT. I.e. the "for Dutch tax purposes" statement leaves it rather open whether the payments will be dividends or capital distributions for UK tax purposes.

I should add that I'm currently not concerned about that point. They've clearly made the top-level decision that they want to change the corporate structure, but equally clearly not settled on all the details of the change yet, as there are a lot of details missing from the RNS that would be needed to put it into effect - not just of UK taxation, but also things like the name of the new holding company, a proper timetable for the change, what shareholder meetings will be needed, etc. In short, this RNS is a statement of intention, not a precise proposal they can put to shareholders, and my point in posting this is not to encourage speculation about the tax treatment, but rather to say that the RNS does leave the tax treatment more open to question than a superficial reading might suggest, but speculating about the answer is premature at present.

Shareholders will get their say on the question: the RNS says that the process will involve a scheme of arrangement for Unilever plc (the UK part of the current structure), which will require a fully-detailed proposal to be put to shareholders and a 75% vote in favour to come into effect, and that it will be conditional on (among other things) "approvals of shareholders in current N.V. and PLC". It also does say:

"Further information will be provided in the shareholder communication which will be circulated in the months leading up to the extraordinary general meetings to be convened to approve the corporate structure change. Proposals are expected to be placed before shareholders around the end of Q3 with implementation anticipated towards the end of 2018."

So I'm expecting somewhere around 5-6 months of uncertainty about exactly what is being proposed before the company publishes a detailed proposal and calls the extraordinary general meetings, and have no intention of spending much of those months on baseless speculations about what those proposals might turn out to be! About the only actions shareholders can take now are (a) share purchases or sales if they feel that what's already known about the proposals make Unilever shares sufficiently attractive or unattractive to justify them; (b) communicating with the company's investor relations people if they want the company to be aware of their feelings about the idea. (Not that it's reasonable to expect any significant amount of attention to be paid to any single small investor's feelings, but there is some hope of a quick "small investors were M% in favour of the proposal, N% against it, with the remaining (100-M-N)% having mixed views that cannot be clearly identified as either in favour or against" summary getting to the directors.)

One final point on the Dutch taxation that doesn't fit in neatly anywhere above: the fact that the Dutch government intends to scrap dividend withholding tax is no guarantee that they will actually end up doing so, and even in the likely event that they do, it's no guarantee that a future Dutch government won't re-impose it! Of course, tax increases on dividends are an unavoidable risk, but at present I'm only at risk from ones imposed by the UK government; if these changes go through, I'll probably be at risk from ones imposed by either government...

Gengulphus

[Gengulphus]

Unilever CEO on radio 4 just now saying Dutch withholding tax also zero. Anyway they will still be London listed so won't be an issue.

That definitely doesn't follow: RDSA shares are London listed but Dutch withholding tax is an issue for them. The reason is that withholding taxes are collected from the company at the point of payment, so depend on the tax residence of the company, not of the shareholder, nor on where the company is listed.

Gengulphus

[Gengulphus]

Just heard the BBC Radio 2 news announcement "Unilever say this decision is not related to Brexit" which immediately makes just about everybody think "really?"

It's a shame that the BBC couldn't either not make the comment, or else put it into proper context (as in likely reasons include cost savings and greater protection from hostile bids) rather than just put a "Brexit" tag on it.

That would be a shame if the BBC had said "This decision is not related to Brexit". But what you quote the BBC as saying is "Unilever say this decision is not related to Brexit". Either Unilever did say that (they didn't in the RNS, but might have e.g. in an associated news conference or interview), in which case not reporting it would be a failure by the BBC to do their job - basically, suppressing news that will clearly be regarded as significant by many people (whatever you and I might think of it). Or Unilever didn't say it, in which case reporting it would be such a failure - basically, manufacturing fake news.

Gengulphus

[Raptor]

Moderator Message:
Merged the 2 Unilever threads. Raptor.

[idpickering]

This from TMF may be of interest;

Will Unilever plc’s move to the Netherlands affect shareholders?

https://www.fool.co.uk/investing/2018/0 ... reholders/

[idpickering]

Moderator Message:
Merged the 2 Unilever threads. Raptor.

Fair enough Raptor, thank you.

Ian.

[Breelander]

Anyone have any info on the situation with Dutch witholding taxes?

I thought they were low (15%), but have heard rumours of changes (to 0%).

An extract from the RNS linked to in the OP...
...So yes, the Dutch withholding tax is currently 15%, and yes, there are proposals to reduce it to 0%...

...And Unilever are also planning to make shareholder payments be capital distributions from the time that they change the corporate structure, at which point they intend to exchange people's shareholdings in the UK company Unilever plc to the same numbers of shares in the new holding company (called "New N.V." in the RNS, though that's clearly just a placeholder for whatever new name they eventually settle on), until the time that the Dutch withholding tax is reduced to 0%.

Or to be precise, they intend to make shareholders able to receive the payments as capital distributions for Dutch tax purposes...

Gengulphus

As always, a comprehensive reading and explanation of the RNS. Thank you.

One other statement I spotted in the RNS may not be directly relevant to Horsey's question, but I don't think it has been mentioned yet in this thread.

Arrangements will be made to ensure that those UK shareholders who prefer to receive dividends in pounds sterling can continue to do so. Holders of US listed shares will continue to receive dividends in US dollars.

[moorfield]

Unilever says place in FTSE 100 Index still to be determined

So: Should removal from the index mandate disposal of a HYP share?

So why dump?

Because index tracker funds will be ...

... so I imagine many here now have a window of opportunity to crystallise a tidy capital gain and buy a much better yield than 3.3% ish elsewhere.

[kempiejon]

... so I imagine many here now have a window of opportunity to crystallise a tidy capital gain and buy a much better yield than 3.3% ish elsewhere.

Or hold onto a very large cap share that has delivered inflation beating increases for many years. I'm keeping mine.

[GeoffF100]

Unilever says place in FTSE 100 Index still to be determined

So: Should removal from the index mandate disposal of a HYP share?

So why dump?

Because index tracker funds will be ...

... so I imagine many here now have a window of opportunity to crystallise a tidy capital gain and buy a much better yield than 3.3% ish elsewhere.

Unilever will disappear from the FTSE 100, but will appear in the AEX. Global and European trackers will continue to hold Unilever, as before.

[absolutezero]

Unilever says place in FTSE 100 Index still to be determined

So: Should removal from the index mandate disposal of a HYP share?

So why dump?

Because index tracker funds will be ...

... so I imagine many here now have a window of opportunity to crystallise a tidy capital gain and buy a much better yield than 3.3% ish elsewhere.

I hadn't thought of that..
But HYP is all about income, innit?

[moorfield]

... so I imagine many here now have a window of opportunity to crystallise a tidy capital gain and buy a much better yield than 3.3% ish elsewhere.

Or hold onto a very large cap share that has delivered inflation beating increases for many years. I'm keeping mine.

As has (my benchmark) City of London IT, currently yielding nearly 1% more. I'm not sure I like the uncertainty of this ULVR move, and may rotate out to CTY tbh.

[vrdiver]

Just heard the BBC Radio 2 news announcement "Unilever say this decision is not related to Brexit" which immediately makes just about everybody think "really?"

It's a shame that the BBC couldn't either not make the comment, or else put it into proper context (as in likely reasons include cost savings and greater protection from hostile bids) rather than just put a "Brexit" tag on it.

That would be a shame if the BBC had said "This decision is not related to Brexit". But what you quote the BBC as saying is "Unilever say this decision is not related to Brexit". Either Unilever did say that (they didn't in the RNS, but might have e.g. in an associated news conference or interview), in which case not reporting it would be a failure by the BBC to do their job - basically, suppressing news that will clearly be regarded as significant by many people (whatever you and I might think of it). Or Unilever didn't say it, in which case reporting it would be such a failure - basically, manufacturing fake news.

Gengulphus

Fair point! I just checked the BBC news web page* for the story and it states:

The company said the decision over its HQ was "not about Brexit".

What it doesn't state is the context of this statement, but the accompanying video clip starts with Unilever CEO Paul Polman appearing to reply to a question (which we cannot hear because the video has been cut to start at the answer). To me, the reporting of the answer to a question (which we are not party to) is deliberate editing and selective news, which may gain viewers but doesn't help us to understand the true story.

VRD

* http://www.bbc.co.uk/news/business-43410155

[tjh290633]

So we have shares in Unilever plc and will get shares in the new Unilever NV in exchange. The combined ULVR will be over twice the size, have a London listing and will pay dividends in GBP to UK holders.

The market cap will be higher, the value of shares held in the UK will be virtually unchanged and two of the three divisions will have HQ in the UK. I fail to see what all the concern is about.

TJH

[tjh290633]

Fair point! I just checked the BBC news web page* for the story and it states:

The company said the decision over its HQ was "not about Brexit".

What it doesn't state is the context of this statement, but the accompanying video clip starts with Unilever CEO Paul Polman appearing to reply to a question (which we cannot hear because the video has been cut to start at the answer). To me, the reporting of the answer to a question (which we are not party to) is deliberate editing and selective news, which may gain viewers but doesn't help us to understand the true story.

VRD

* http://www.bbc.co.uk/news/business-43410155

I have checked the RNS, https://www.investegate.co.uk/unilever- ... 00077793H/ and the word Brexit does not occur. Neither do the words "European Union", so whatever the BBC said, they did not get it from the official documents.

TJH

[absolutezero]

Fair point! I just checked the BBC news web page* for the story and it states:

The company said the decision over its HQ was "not about Brexit".

What it doesn't state is the context of this statement, but the accompanying video clip starts with Unilever CEO Paul Polman appearing to reply to a question (which we cannot hear because the video has been cut to start at the answer). To me, the reporting of the answer to a question (which we are not party to) is deliberate editing and selective news, which may gain viewers but doesn't help us to understand the true story.

VRD

* http://www.bbc.co.uk/news/business-43410155

I have checked the RNS, https://www.investegate.co.uk/unilever- ... 00077793H/ and the word Brexit does not occur. Neither do the words "European Union", so whatever the BBC said, they did not get it from the official documents.

TJH

The BBC has its own agenda.
As a news organisation it is dreadful.
If you must watch a TV news bulletin I find ITV news to be the least biased.

[PinkDalek]

Fair point! I just checked the BBC news web page* for the story and it states:
What it doesn't state is the context of this statement, but the accompanying video clip starts with Unilever CEO Paul Polman appearing to reply to a question (which we cannot hear because the video has been cut to start at the answer). To me, the reporting of the answer to a question (which we are not party to) is deliberate editing and selective news, which may gain viewers but doesn't help us to understand the true story.

VRD

* http://www.bbc.co.uk/news/business-43410155

I have checked the RNS, https://www.investegate.co.uk/unilever- ... 00077793H/ and the word Brexit does not occur. Neither do the words "European Union", so whatever the BBC said, they did not get it from the official documents.

TJH

The BBC has its own agenda.
As a news organisation it is dreadful.
If you must watch a TV news bulletin I find ITV news to be the least biased.

How about Reuters?:

https://uk.reuters.com/article/us-unile ... KKCN1GR0PT

[Horsey]

Gengulphus, many thanks!

I currently reside in Germany, so yes, 15% witholding taxes are to me indeed low! (Here I am stung for ~26%!)

[absolutezero]

I have checked the RNS, https://www.investegate.co.uk/unilever- ... 00077793H/ and the word Brexit does not occur. Neither do the words "European Union", so whatever the BBC said, they did not get it from the official documents.

TJH

The BBC has its own agenda.
As a news organisation it is dreadful.
If you must watch a TV news bulletin I find ITV news to be the least biased.

How about Reuters?:

https://uk.reuters.com/article/us-unile ... KKCN1GR0PT

Generally yes. The wire agencies such as Reuters and the Associated Press are fairly unbiased.
Just not the BBC or to some extent, Sky News.