‘Ball rolling’ for Kerry Co-op share redemption

Kerry Co-operative has set the ball rolling with its Equity Redemption Scheme, which will see shareholders given the option to convert shares in the co-op into cash, it has been confirmed.

Letters explaining the voluntary scheme are being sent to shareholders at present, with details expected to emerge by the end of March.

The move was agreed following a meeting of the co-operative board last week. Further details will not be revealed until closer to the time, according to a source close to the board.

Questions

However, a number of questions have been raised by co-op members in relation to the scheme on offer – with tax being one of the big question marks hanging over the initiative.

It is understood that all sales, or transfers of shares, by current shareholders will be liable to income tax, and will vary depending on the personal circumstances of the individual members.

The tax implications are largely due to the fact that the co-operative no longer meets the Section 701 criteria – that would have traditionally protected agricultural co-ops from tax liabilities – due to its proportion of members not actively farming.

According to documentation on the matter seen by AgriLand, Revenue is challenging the valuation at which co-op shares have been transferred for gift/inheritance tax purposes based on grey market transfers.

The document notes that a Kerry Co-op share is roughly worth €540, a valuation considerably more than the value of shares sold up to now on the grey market; about €300/share.

This will have tax implications with Revenue.

Transfers

It is alleged that one of the Kerry Co-op board of directors has taken no chances – and has already transferred 350 shares to his son, one shareholder maintains.

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