Kerry co-op shares plan ‘defies logic’, Alliance claims
Revenue will be the only winners in the share conversion scheme that Kerry Co-op is set to offer its members, Kerry Co-op Shareholders Alliance have warned.
Serious differences have emerged in recent months between the Kerry Co-op board and a section of its shareholders, some of whom are represented by the Kerry Co-op Shareholders Alliance.
Alliance members want to sell their remaining 13.7pc stake in Kerry Group Plc, and share the dividends, worth on average around €165,000, among co-op shareholders.
On Wednesday, Kerry Co-op approved a proposal that will allow members to cash in their shares this year.
However, a source close to the co-op said that under this proposal, members would be liable to pay "millions of tax" as it would be subject to income tax rates as high as 55pc, instead of capital gains tax rates of 25-30pc in the event of a full spin-out.
"This is not the most tax-effective way to treat shareholders. It defies logic. Hundreds of millions of extra tax will be imposed on farmers," the source told the Farming Independent.
Donal Counihan, head of the Kerry Co-op Shareholders Alliance, said co-op advisory committee meetings will take place in Kerry and Limerick this week, where shareholders on the committees will be able to express their concerns on the proposed cash out, but that the power ultimately lies with the board.
"The co-op board are very powerful. It's almost impossible to stop them from passing this, but we hope that if we express our concerns, the board will see that this is not an effective tax option and that members would be liable to a lot of tax," he said.
"Farmers who inherit the shares would be subject to inheritance tax as well as income tax."
The board are also exploring the option of using the shareholding to fund the purchase of the agri-trading arm of Kerry Plc, despite a consultation document sent to members in the summer who voted in the majority to reject this option.
Mr Counihan said that 60pc of A and B shareholders would have to approve the acquisition of Kerry Agribusiness and added that he has the "utmost confidence" that this would be rejected.
Mr Counihan pointed out that the alliance's aim is that they receive at least a 95pc spin-out of shares which they could use to fund and set up their own co-op to "properly represent milk suppliers".
Mr Counihan said they would call for an EGM if at least a 95pc spin-out isn't tabled in the coming weeks.
The Farming Independent contacted Kerry Co-op board but received no response.
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