Kerry co-op share redemption scheme can be introduced without vote from members
The Kerry Co-op shareholder redemption scheme may be introduced even if is not approved by shareholders at a Special General Meeting (SGM) next week it has emerged.
Kerry Co-op recently sent its members an information pack about a voluntary cash for shares scheme which gives shareholders the opportunities to sell some or all of their shares. Members were able to apply for the scheme until June 5.
The SGM will be held as soon as possible after the AGM which is taking place in the Brandon Hotel in Tralee, Co Kerry on 19 June.
According to the notice of a Special General Meeting issued to shareholders and seen by the Farming Independent a resolution to add the share redemption scheme to the rule book will be voted on at the SGM.
However Kerry Co-op chair Mundy Hayes told the Farming Independent that the board has the authority to introduce the cash for shares scheme without a vote from its shareholders.
“The board has the authority to bring in this scheme. It has to be addressed at board level. The board has approved it and has the authority to introduce it. The board has to front up and make a decision on it,” said Mr Hayes.
The document states that the rule change would ensure that the shares in Kerry Group plc required to fund the share redemption scheme will be retained for that purpose and give assurance to shareholders that the scheme will be available for all.
The document also explains that it will also have the effect of ringfencing 96.5pc of the Kerry Group plc shares held by the Kerry Co-operative Creameries Ltd for redemption through this or future schemes.
Another key resolution is to consider and if thought fit to pass changes to the rule book to remove the requirement for Kerry Co-op to hold 10pc plus one share in Kerry Group plc.
A third resolution on changes to modernise the rules of the Society to reflect changes in law in recent years will also be considered.
Members of the Kerry Co-op Shareholders Alliance members who want to sell their remaining 13.7pc stake (€2.2bn) in Kerry Group Plc and share the dividends, worth on average around €165,000, among co-op shareholders have urged members to reject the share redemption vote next week
Alliance members said that the proposed scheme is the "least tax efficient" as shareholders who opted for the scheme would have to pay 55pc income tax rather than Capital Gains Tax.
“It is the least tax efficient scheme and won’t suit any dairy farmer. I would urge every dairy farmer in the area to vote no to the scheme” said Alliance member and Listowel dairy farmer Dave Scannell.
Head of Kerry Co-op Shareholders Alliance Donal Counihan added that there is a lot of "anxiety around the scheme", with many shareholders still unclear on what they will be voting on at Wednesday’s meeting and concern that the scheme can be introduced regardless of shareholders' vote.
However, Mr Hayes explained that the proposed Share Redemption Scheme represents the best current option to releasing equity to members.
“This is a voluntary initiative and is the direct result of calls in recent years from our members to address the ongoing liquidity issues in their shareholdings and to remove the restriction on the requirement of the Co-op to hold a 10pc shareholding in Kerry Group plc.
“It is also the first option being considered by the Co-op as we look at a range of measures to enable our members to obtain the true value of their equity.”
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