FSRP - FirstRand - Proposed Taxation Amendments an
FSR FSRP FSPP
FSR
FSRP - FirstRand - Proposed Taxation Amendments and the Effect thereof on the
Non-Cumulative Non-Redeemable Preference Shares Issued by Firstrand
FirstRand Limited
(Incorporated in the Republic of South Africa)
Registration number: 1966/010753/06
B Preference share code: FSRP ISIN: ZAE000060141
B1 Preference share code: FSPP ISIN: ZAE000070900
("FirstRand" or "the Company")
PROPOSED TAXATION AMENDMENTS AND THE EFFECT THEREOF ON THE NON-CUMULATIVE NON-
REDEEMABLE PREFERENCE SHARES ISSUED BY FIRSTRAND
In his budget speech on 21 February 2007, the Honourable Minister of Finance
("the Minister") announced that Secondary Tax on Companies ("STC") will be
replaced by a `dividend tax` on 01 October 2007 and will be applied in two
phases. Currently dividends attract STC which is payable by the company
distributing the dividend.
In Phase 1, this dividend tax will be levied upon the company paying the
dividend and will be levied at a rate of 10%. In Phase 2, which will be
completed in 2008, the dividend tax will be levied upon shareholders. This
conversion from company tax to shareholders tax is dependent upon the
renegotiation of several international tax treaties. The dividend tax will
apply to all distributions regardless of profits. The legal liability for this
tax will also be moved from the company paying the dividend to the shareholder
receiving it.
During phase 1, as per the Minister`s budget speech, there will be no additional
taxation in the hands of the B and B1 preference shareholders. Phase 2 may
result in an additional cost for the B and B1 preference shareholders and an
equivalent benefit for FirstRand.
Should FirstRand wish to compensate the B and B1 preference shareholders for the
dividend tax this would require amendment to the Company`s Articles of
Association and therefore ordinary and preference shareholder approval.
The B and B1 preference shareholders are accordingly advised that until such
time as the legislation is promulgated and shareholder approval is obtained, it
is not possible to determine exactly what the impact will be on the non-
cumulative non-redeemable preference shares issued by FirstRand.
The B1 and B2 preference shareholders should accordingly continue to exercise
caution in dealings with their preference shares.
Sandton
27 February 2007
Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Date: 27/02/2007 10:11:01 Produced by the JSE SENS Department.
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