What is specie dividend?
A dividend in specie refers to distribution to shareholders in a form other than cash. A refund can now be claimed for a dividend in specie.
Can a dividend in specie be shares?
Where a dividend is declared in cash, but satisfied by a transfer of assets, it is called ‘dividend in specie’. This type of dividend falls under Article 34 of model articles for private companies limited by shares (see Schedule 1, The Companies (Model Articles) Regulations 2008 (SI 2008/3229)).
How is a dividend in specie taxed?
Where a company makes an in-specie distribution – in effect makes a dividend consisting of an asset, the actual market value of that asset is generally treated as a taxable distribution in the hands of an individual shareholder.
How do you account for distribution in specie?
Measuring an in-specie distribution Provided the company has adequate distributable reserves, the distribution is made at the carrying value of the (non-cash) asset in the balance sheet (not market value). The accounting entry will normally be: DR – Retained reserves; CR – Asset account (at carrying/book value).
What is a dividend in specie SARS?
Dividend in specie. A dividend in specie is a dividend other than in the form of cash, for example an asset. The market value of the dividend in specie is the amount deemed to be equal to the market value of the asset on the date that the dividend is deemed to be paid.
What are in specie contributions?
In specie contributions are superannuation contributions that are made using assets other than cash. An in specie contribution can include shares, managed funds and real estate. An in specie contribution can be accepted by a superannuation fund if it is permitted within the superannuation fund’s trust deed.
Is a share buy back a dividend in specie?
Generally, the interest associated with the raising of debt to finance a share buy-back will not be deductible in the hands of the company. Apart from offering cash to its shareholders, a company may also distribute an asset in specie to its shareholders in return for the shareholders giving up their shares.
Does an in specie transfer trigger CGT?
While you do not sell the asset down to cash, an in-specie transfer will generally trigger a capital gains tax event, as you transfer the ownership.
Is dividend in specie subject to CGT?
An in specie distribution would typically have already been subject to CGT in the hands of the company making the distribution. The full value of the distribution in specie would again be subject to CGT in the hands of the recipient shareholder, resulting in double taxation of the same economic gain.
How does dividends work in South Africa?
In South Africa dividends come in several forms, but the most common is cash, which is deposited into shareholders’ investment accounts. For example, if a company declares R0. 30 dividend and you own 100 shares, you’ll receive R30. Typically, mature companies with strong cash flows are more likely to pay dividends.
How does dividend tax work in South Africa?
Dividends received by individuals from South African companies are generally exempt from income tax, but dividends tax at a rate of 20% is withheld by the entities paying the dividends to the individuals.
What is an in specie transfer?
What is an in-specie transfer? The transfer of an asset in its current form rather than in the equivalent amount of cash. The legal ownership of the asset is transferred from one provider/scheme to another without the need to sell and re-purchase the asset.
Is there a demerger dividend for Prudential shareholders?
(RTTNews) – Prudential plc (PRU.L, PUK) said a committee of its Board has approved the demerger dividend. Qualifying shareholders are entitled to receive one share of Jackson’s Class A common stock for every 40 Prudential shares held by them at the record time.
Can a company make an in specie dividend?
It may also arise where a company declares a dividend of a specified cash sum, which is then satisfied by the transfer of the relevant asset to its shareholders. In-specie distributions are often made in the context of corporate demergers and reconstructions, and their legal requirements must always be respected.
How are shares issued in a capital reduction demerger?
With regard to your specific question, the accounting treatment is correct but this depends on what treatment was adopted at step 1. Normally in a capital reduction demerger shares are issued with a nominal value equal to the market value of the target company.
What is the value of a specie distribution?
Value of dividend / distribution in specie A company making a lawful distribution in specie may consider making the distribution at a value, being: actual consideration to be paid in respect of the transfer (if any)