| Tue 8 May 2012, 12:00 | | CLR/CLRP - Clover Industries Limited - The introduction of dividend withholding |
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CLR CLRP
CLR
CLR/CLRP - Clover Industries Limited - The introduction of dividend withholding
tax and the company`s intention to adjust The Clover preference share dividend
rate
CLOVER INDUSTRIES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2003/030429/06)
JSE Ordinary share code: CLR ISIN: ZAE000152377
JSE Preference share code:CLRP ISIN: ZAE000152385
("Clover" or "the Company")
THE INTRODUCTION OF DIVIDEND WITHHOLDING TAX AND THE COMPANY`S INTENTION TO
ADJUST THE CLOVER PREFERENCE SHARE DIVIDEND RATE
Shareholders are advised that, following the imposition of the new Dividend
Withholding Tax ("Dividends Tax") regime as contemplated in Part VIII of Chapter
II of the Income Tax Act, 58 of 1962, as amended, with effect from 1 April 2012,
the Company will be required to withhold an amount equal to 15% of the value of
all dividends declared to shareholders who are individuals or trusts. This will
result in Clover realising a saving in respect of Secondary Tax on Companies
("STC") that it would otherwise have paid on preference share dividends paid to
preference shareholders.
Following an analysis of the rights of the preference shareholders contained in
the Memorandum of Incorporation of the Company (the "MOI"), the board of
directors of the Company (the "Board") has determined that it is in the interest
of the preference shareholders for the savings that will be realised by Clover
in the manner aforesaid to be passed on to all preference shareholders in the
proportions in which they hold the preference shares inter se. This will
ameliorate the effects of the Dividend Tax on preference shareholders who are
individuals and trusts by ensuring that they participate in the savings realised
by Clover, on behalf of preference shareholders, as a result of the abolishment
of the STC regime.
Accordingly, the Board has determined that it will propose certain amendments to
the MOI that will ensure that dividends payable in respect of the Company`s
preference shares will be adjusted (grossed-up) as a result of the introduction
of the Dividends Tax. The proposed amendments contemplate, inter alia, that the
preference dividend rate (as defined in the MOI), at which preference
shareholders receive preference dividends from the Company, be increased from
90% of the average prime rate (as defined in the MOI) to 99% of such average
prime rate in order to pass the effects of the savings referred to above on to
all preference shareholders proportionately.
Owing to certain potential practical difficulties in procuring the registration
of the amendments to the MOI before the next preference dividend is declared and
paid to preference shareholders at the end of June 2012, the proposed amendments
will be drafted in such a way as to take effect from (a) 1 April 2012, if the
special resolutions of the shareholders required to give effect to the
amendments of the MOI are registered by the Companies and Intellectual Property
Commission on or before 15 June 2012; or (b) 30 June 2012, if the special
resolutions of shareholders required to give effect to the amendments of the MOI
are registered by the Companies and Intellectual Property Commission on or after
16 June 2012.
The abovementioned resolutions will be passed at a combined meeting of ordinary
and preference shareholders and at a separate meeting of the preference
shareholders, respectively. In this regard, shareholders are advised that the
Company will shortly be posting a combined circular to ordinary and preference
shareholders detailing the reasons for, and effects of, the proposed amendments,
which circular will contain notices convening each of the meetings referred to
above and proxy forms for use in connection with each of the meetings.
Johannesburg
8 May 2012
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 08/05/2012 12:00:01 Produced by the JSE SENS Department.
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