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Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

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Wizard
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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167907

Postby Wizard » September 21st, 2018, 12:06 pm

Arborbridge wrote:Having been away a week, I've missed the essence of why this proposal is so troublesome to us. I can see people here want to vote against it, but I can't see any particular reason why. What's so bad about it, and why would it be deleterious to a UK holder?

OK, it'll drop from the FTSE100 - should I care if I can buy cheaper? It would subject to Dutch laws: should I care about that? I'm sure Dutch laws are quite civilised and even better in helping to prevent take-overs of a trophy company like this.
It will presumably make life simpler for the company if we shoot ourselves in the foot next year, so that seems positive too.

So, what's the fuss about? Pyad seems to have the clearest comment, and maybe I should take his interjection as crucial.

Arb.

The risk of a 15% tax charge if Dutch WHT is not removed?

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167911

Postby idpickering » September 21st, 2018, 12:23 pm

Wizard wrote:The risk of a 15% tax charge if Dutch WHT is not removed?


I suppose the fact that my Unilever shares are in my ISA doesn't make any difference to me being hit with the Dutch WHT?

Ian.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167912

Postby ayshfm1 » September 21st, 2018, 12:29 pm

You suppose right

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167915

Postby idpickering » September 21st, 2018, 12:43 pm

ayshfm1 wrote:You suppose right


Thank you. I wasn't 100% sure. Unilever account for 3% in capital value terms of my HYP, and less than that as an income provider.

Ian.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167916

Postby Alaric » September 21st, 2018, 12:57 pm

idpickering wrote:I suppose the fact that my Unilever shares are in my ISA doesn't make any difference to me being hit with the Dutch WHT?


Pensions have international mutual recognition, ISAs rather less so. It cannot be taken for granted that any distinction would be made as to whether an asset was inside or outside an ISA tax shelter. There's none in the USA for example as W8-BEN declarations get the tax reduced to 15% but aren't ISA conditional. SIPPs can get it reduced to zero provided the Broker has segregated all the pension accounts for which they have nominee holdings.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167917

Postby Gengulphus » September 21st, 2018, 12:59 pm

idpickering wrote:
Wizard wrote:The risk of a 15% tax charge if Dutch WHT is not removed?

I suppose the fact that my Unilever shares are in my ISA doesn't make any difference to me being hit with the Dutch WHT?

No difference at all. ISAs basically only protect you against UK Income Tax and CGT. Withholding taxes on foreign dividends are withheld (hence the name) from the dividend by the company and paid to the foreign government before any of it gets to the ISA manager. Getting it back is then a matter of getting an exemption from the withholding tax (before it's paid) or a refund of it (afterwards), which will basically depend on whether the foreign government has a tax treaty with the UK that recognises ISAs as tax shelters. AFAIAA no foreign government has such a tax treaty, so you're out of luck.

SIPPs are more likely to be effective, as some foreign countries (the US is an example, I'm told) do have a tax treaty with the UK that recognises pensions as tax shelters. I've no idea whether the Netherlands are among them, though.

Also, I will add "or the Dutch WHT is removed but is then reinstated by a subsequent Dutch government" to Wizard's answer.

Gengulphus

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167924

Postby idpickering » September 21st, 2018, 1:22 pm

Thanks guys. I must admit that I'm toying with switching my money held in Unilever over to Tate & Lyle instead?

Ian.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167928

Postby Dod101 » September 21st, 2018, 1:37 pm

Arborbridge wrote:So, what's the fuss about? Pyad seems to have the clearest comment, and maybe I should take his interjection as crucial.


Not sure what you mean by crucial but pyad is I think altogether too complacent. Given his following on this Board (deserved or otherwise) it is verging on the irresponsible.

The risk to a HYPer is if the Dutch Withholding Tax is not withdrawn on 1 January 2020. Unilever has said explicitly that it cannot guarantee to continue (beyond that date) with the measures it plans to put in place for ex PLC holders to make equivalent payments from capital in lieu of dividend payments and thus avoid DWT. That seems to me to be the main risk to HYPers or indeed any current PLC holder.

The other point to me is the removal of Unilever shares from the FTSE. Apart from upsetting the current shareholding structure, it will also leave the FTSE100 even more unbalanced than it currently is. Furthermore do we really want Unilever to be incorporated in that well known financial centre, Rotterdam, rather than London?

There is no upside for holders of PLC and only downside risks.

Dod

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167943

Postby Arborbridge » September 21st, 2018, 2:54 pm

Dod101 wrote:
Arborbridge wrote:So, what's the fuss about? Pyad seems to have the clearest comment, and maybe I should take his interjection as crucial.


Not sure what you mean by crucial but pyad is I think altogether too complacent. Given his following on this Board (deserved or otherwise) it is verging on the irresponsible.

The risk to a HYPer is if the Dutch Withholding Tax is not withdrawn on 1 January 2020. Unilever has said explicitly that it cannot guarantee to continue (beyond that date) with the measures it plans to put in place for ex PLC holders to make equivalent payments from capital in lieu of dividend payments and thus avoid DWT. That seems to me to be the main risk to HYPers or indeed any current PLC holder.

The other point to me is the removal of Unilever shares from the FTSE. Apart from upsetting the current shareholding structure, it will also leave the FTSE100 even more unbalanced than it currently is.Furthermore do we really want Unilever to be incorporated in that well known financial centre, Rotterdam, rather than London?

There is no upside for holders of PLC and only downside risks.

Dod


Thanks Dod. "Furthermore do we really want Unilever to be incorporated in that well known financial centre, Rotterdam, rather than London?"

Maybe not, but various things of this sort are happening all around us. Companies will defend themselves to ensure their prosperity, such as by opening up offices within the EU. It'll ensure their future business, but jobs will be lost in the UK. Some of the British have voted to leave Europe, but they have to put up with the consequences of doing so[Deleted].

As regards Pyad's comment, I meant it is crucial because it comes from the originator of HYP. I translate his remark as telling us we should simply let things work their way out as always and your HYP will survive and prosper. This is no more than his usual recipe of "letting well alone" and no more irresponsible. As some HYPers would say - just go back to sleep.

Arb.
Moderator Message:
Following a report I've deleted the jibe, which wasn't really necessary in order for the point to be made. Typo also corrected - Chris.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167951

Postby scrumpyjack » September 21st, 2018, 3:35 pm

Arborbridge wrote:
Dod101 wrote:
Arborbridge wrote:Companies will defend themselves to ensure their prosperity...

Arb.


Maybe I'm a cynic, but I think it is more "Directors ensuring their prosperity".

It's very tedious for directors if shareholders decide their business can be more profitably managed by someone else and have the cheek to accept a takeover. Much better for the directors to be unassailable in their sinecures, awarding themselves lovely large bonuses and protected by law from those nasty market forces.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167952

Postby Wizard » September 21st, 2018, 3:41 pm

ap8889 wrote:This is not about Brexit, it is about withholding tax, and a company that is so overmanned with high cost employees it is scared of being swallowed by vastly more efficient US competition. I believe Terry Smith indicated that Kraft-Heinz have way fewer employees and make greater sales per employee. They are the ones who knock. Rather than compete, Unilever plan to beat a retreat to Rotterdam. This crap deal for shareholders even eclipses their recent record dumbest deal, the blowing of a billion dollars on a second rate razor brand.

Not good enough. Vote against the Board.

If this were not the HYP Practical board one may think that suggests buying Kraft-Heinz (with its current higher yield) would be a better idea ;)
Maybe a thread comaparing the merits of the two on the High Yield Startegies and Shares board would be worthwhile.

Terry

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167954

Postby Arborbridge » September 21st, 2018, 3:42 pm

ap8889 wrote:This is not about Brexit, it is about withholding tax, and a company that is so overmanned with high cost employees it is scared of being swallowed by vastly more efficient US competition.


That seems all a bit muddled up.
Whether the company is overmanned or not is open to debate, but the point is that Brexit is now giving them a perfect excuse to shelter the company from take over by being within the Dutch legal framework - and who can blame them? So to a large extent, I've no doubt it is to do with our leaving the EU. Of course, it may well have happened anyway, but now seems a good opportunity while there's fog around.
There are huge differences in aethos between US and British/European ways of doing business, and it was pointed out at the time of the previous take over attempt that the US are interested in instant gratification rather than the future. HYPers prefer companies which build for the long run. Efficiency isn't everything: a belief only philistines hold.

Excuse my ignorance, but the witholding tax - isn't that a personal issue rather than a concern of the management? If my SIPP provider is anything to go by, the answer is "you're on your own". So apart from bitching PIs, why would ULVR be bothered?

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167956

Postby Arborbridge » September 21st, 2018, 3:49 pm

scrumpyjack wrote:
Arborbridge wrote:
Dod101 wrote:


Maybe I'm a cynic, but I think it is more "Directors ensuring their prosperity".

It's very tedious for directors if shareholders decide their business can be more profitably managed by someone else and have the cheek to accept a takeover. Much better for the directors to be unassailable in their sinecures, awarding themselves lovely large bonuses and protected by law from those nasty market forces.


I do agree, but they have a perfect rationalisation to justify their stance. They believe they are defending their company since they best know how to run it - their own riches are incidental!

Interestingly, of course, to read the various mentions of ULVR on here over many months, one might predict that HYPers would be queing up to defend the management's record. What other company has come in for some much effusive praise? Which other is almost certainly in the majority of HYPs? Which other brings forth comments such as "one to hold for ever"? Oh yes, we apparently think that the management is doing a brilliant job!

We might all vote against this and find the sting in the tail is that company is eventually lost to an American predator. What a waste that could be compared with the problems of witholding tax. You might win a battle but lose the war. An interesting balance to think about.

Arb.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167958

Postby Dod101 » September 21st, 2018, 3:54 pm

Unilever has made the Withholding tax a company concern because they know that without some protection from it the PLC holders would be most unlikely to back any merger. Turkeys do not normally vote for Christmas to use a hackneyed metaphor.

Dod

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167963

Postby scrumpyjack » September 21st, 2018, 4:09 pm

Also directors have a fiduciary duty not only to act in the interests of the company but also to act in shareholders, the owners, interests.

It is not in the interests of a substantial body of shareholders to incur the avoidable risk that their dividends may suffer a 15% withholding tax which will generally be irrecoverable.

Nor is in the interests of the fairly large number of shareholders whose holding is via an index fund and who will be forced to sell their shares.

This is mainly about the convenience of the directors.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167982

Postby idpickering » September 21st, 2018, 5:13 pm

I mentioned further up this thread that I was toying with swapping Unilever with Tate & Lyle, well this I did two hours ago. I can't be doing with uncertainty, and although I realise nothing is certain in investing, I can't see this Unilever deal doing much but causing more angst for UK holders of the shares, so no thanks, and goodbye Unilever. I might get some flak here, but peace of mind is important to me. It is a shame, as they were always a good mainstay in my HYP. But as a lower yielding share, and all this kerfuffle, I'm happier out of it. Good luck to those that are hanging in there.

Ian.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#167998

Postby Gengulphus » September 21st, 2018, 6:28 pm

Arborbridge wrote:That seems all a bit muddled up.
Whether the company is overmanned or not is open to debate, but the point is that Brexit is now giving them a perfect excuse to shelter the company from take over by being within the Dutch legal framework - and who can blame them?

I think I could - because anyone taking over the current dual-company structure would have to get it past both the UK takeover rules and the Dutch takeover rules - just as this unification has to be approved by both the shareholders of Unilever plc and the shareholders of Unilever NV.

So if protecting the company from takeover is their motivation for this, it seems decidedly wrongheaded to me. You don't make a door more secure by removing one of the two locks on it, even if it is the weaker lock...

Arborbridge wrote:Excuse my ignorance, but the witholding tax - isn't that a personal issue rather than a concern of the management? If my SIPP provider is anything to go by, the answer is "you're on your own". So apart from bitching PIs, why would ULVR be bothered?

That's a rather loaded question - it assumes that the only opposition they're facing is "bitching PIs"! And there is an answer that they should be bothered by bitching investors of any kind - as long as all they're doing is bitching. When it comes to voting, however, they should be concerned when there are enough investors voting against the unification proposal, because the unification simply won't happen without sufficient shareholders voting in its favour.

And as monabri wrote earlier in the thread:

monabri wrote:M&G are adding their support to the "no" vote.

"According to the newspaper ( The Times) , M&G - Unilever's thirteenth largest shareholder - came out against Unilever's plans to scrap its dual UK-Dutch structure, joining other investors who are against it such as Aviva Investors, Lindsell Train and Columbia Threadneedle. Together, the four shareholders own more than 5% of Unilever."

https://www.londonstockexchange.com/exc ... 40000.html

That doesn't necessarily mean the Unilever have a lot to worry about, but it's definitely have more than just "bitching PIs"!

Edit: And by the way, my SIPP manager emailed me today to say they'd set up a couple of corporate actions on their website to allow their Unilever shareholders to vote their shares at the Extraordinary General Meeting and the Court Meeting, and I've used them to do so. Not certain exactly what your "you're on your own" response was about, but if it was about voting (rather than for instance getting advice about the Dutch withholding tax issues), not all SIPP managers are like them...

Gengulphus

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168003

Postby Arborbridge » September 21st, 2018, 6:47 pm

Gengulphus wrote:Edit: And by the way, my SIPP manager emailed me today to say they'd set up a couple of corporate actions on their website to allow their Unilever shareholders to vote their shares at the Extraordinary General Meeting and the Court Meeting, and I've used them to do so. Not certain exactly what your "you're on your own" response was about, but if it was about voting (rather than for instance getting advice about the Dutch withholding tax issues), not all SIPP managers are like them...

Gengulphus


It was about the witholding tax. In general, they will issue a certificate to say that it has been paid, but will not reclaim it, but advise "going to a company which offers such a service". My SIPP is with A J Bell, and they are currently considering whether to help by providing a service themselves - perhaps because so many of their customers are phoning them about ULVR?

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168005

Postby idpickering » September 21st, 2018, 6:56 pm

Arborbridge wrote:
My SIPP is with A J Bell, and they are currently considering whether to help by providing a service themselves - perhaps because so many of their customers are phoning them about ULVR?


You're probably right Arb. This company is well loved it seems. We are on the seventh page of messages in this thread from us HYPers alone discussing it after all, which is amazing.

Ian.

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Re: Unilever - SIMPLIFICATION OF UNILEVER'S CORPORATE STRUCTURE

#168008

Postby Dod101 » September 21st, 2018, 7:05 pm

The joy of actually being on the register via a certificated holding. I simply sent off my forms voting down the proposals. I could also have done it online. I have also emailed the Chairman of Unilever and the Leverhulme Trust, urging the Trust to vote down the proposals.

Ian You must do what you feel most comfortable with, but Unilever is still a good business despite this kerfuffle.

Dod


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