Kerry Co-op board to table share conversion proposal

The board of Kerry Co-op will see a proposal tabled next week for the conversion of co-operative shares into Kerry Group shares for members.

The proposal, which is expected to be put forward at the co-op board’s next meeting next Monday (December 3), will see shareholders of the co-operative given the option to exchange their shares for plc shares.

A source close to the co-op board informed AgriLand that there will be a motion put to the board regarding a “future share conversion of some sort”.

The details of this will only be revealed in full at the board meeting, the source added.

However, a number of shareholders have expressed concerns that tax bills from such a conversion could prove extremely costly for those seeking to liquidate or convert.

A conversion rate of one co-op share being worth six Kerry Group shares has been quoted in some quarters, with 10% to be retained by the co-op and 20% retention tax.

This would see shareholders receiving just over four group shares, after which they would deal with their own tax individually.

Tax

The Kerry Co-op Shareholders Alliance has raised fears that many shareholders would have to pay tax rates of 57% because the share exchange would be considered a distribution, and so subject to income tax.

The alliance argues that shareholders would only pay 33% tax if the co-op went into complete liquidation, which the group says would have significant savings for shareholders.

The members raised the point that shareholders would be discouraged from exerting the option due to the hefty tax bills and low return on investment.

Co-op stance

The co-op board’s stance on the matter is that the scheme being put forward is voluntary and will depend on the tax situations of members individually.

The source close to the board said that the move is being made in response to many shareholders seeking the conversion at the society’s annual general meeting, with members seeking their shares and saying they’d sort out their own tax affairs.

The idea of a complete liquidation was rejected outright with one of the three pillars of the society highlighted as to “continue forward as an entity”, as well as “bring liquidity to shares” and “be relevant to farmers”.

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