QUESTIONS AND ANSWERS
Iberdrola shareholders can find the answers to some of the most frequently asked questions concerning the Scrip Dividend: "Iberdrola Dividendo Flexible" program by clicking on the following answers.
This section contains 20 questions.
The following contacts are available should you have any doubts or questions that are not addressed above.
For ease of reference they have been grouped as follows:
It is a shareholder remuneration system that Iberdrola has implemented in order to allow them to decide whether they wish to receive all or a portion of their compensation in cash or in paid-up shares of Iberdrola (i.e., without payment by the shareholder).
To develop this system, on 31 March 2017 the Iberdrola General Shareholders' Meeting approved two capital increases, payable by the reserves provided for in Section 303.1 of the Spanish Companies Act (Ley de Sociedades de Capital).
In this regard, on 6 November 2017, the Company's Board of Directors agreed to undertake the second capital increase in January 2018. Shareholders will automatically receive free allocation rights that shall be listed on the stock market. For the first time, in this edition of the "Iberdrola Flexible Dividend" remuneration system, its traditional options will be supplemented with an interim dividend corresponding to the fiscal year 2017. Accordingly, shareholders may choose between (a) keeping the rights and receiving new shares, (b) selling the rights off market to Iberdrola and receive cash at a guaranteed purchase price, (c) selling the rights on the market receiving compensation in cash, the amount of which will depend on the listing price of the rights or (d) receiving an amount in cash by means of the interim dividend corresponding to the fiscal year 2017.
The absolute value of the remuneration received by the shareholders under the options mentioned in (a), (b) and (d) will be equivalent (in terms of market value and notwithstanding the different tax treatment applicable to each of them). Therefore, the purchase price committed by the Company for each free allocation right will be equal to the gross amount per share to be paid as interim dividend for the fiscal year 2017.
The free allocation rights purchased in the market during the trading period will not entitle their owners to receive the interim dividend or to transfer all or a portion of their free allocation rights to Iberdrola at the guaranteed fixed price.
This change seeks to make the remuneration system more attractive to all types of investors.
You will have the opportunity to choose between these four options:
- Not selling your rights and receiving the free allocation shares to which you are entitled.
- Selling all or a portion of your free allocation rights to Iberdrola pursuant to the purchase commitment assumed by Iberdrola, thus receiving cash at the guaranteed fixed price per right.
- Selling all or a portion of your rights on the market, thus receiving cash at a price that will, generally, depend on market conditions, and more specifically on the listing price for the free-of-charge allocation rights.
- Receiving cash through the payment of the interim dividend corresponding to the fiscal year 2017.
You should communicate your election (sell the free allocation rights to Iberdrola or on the market or receive an amount in cash by means of the interim dividend corresponding to fiscal year 2017) to the bank or custodian with which your shares are deposited, taking into account the deadlines for each alternative.
This is a decision that you must make. If you prefer to receive free new shares of Iberdrola that you can always sell if needed, then choose not to sell the rights and receive shares. On the other hand, if you have a need for liquidity or if you generally prefer cash, sell the rights or choose to receive an amount in cash by means of the interim dividend corresponding to fiscal year 2017.
However, as your specific situation will depend upon your personal and financial circumstances, as well as your tax regime, you should check your decision with your advisors, if you deem it appropriate.
If you decide to sell your shares on the market, you must contact the bank or custodian with which your shares are deposited and follow its instructions in order for it to sell your rights on the market during the trading period established for such purpose. The trading period of the free allocation rights will take place between 11 and 25 January 2018.
If you decide to sell your rights to Iberdrola at the guaranteed price, you must also contact your bank or custodian and follow their instructions in order for them to be able to process the sale of your rights to Iberdrola. However, in this event, the deadline to request this option will be 22 January 2018.
If you decide to receive an amount in cash by means of the interim dividend corresponding to the fiscal year 2017 you must contact your bank or custodian before 22 January 2018.
If you do not give any instruction to your bank or custodian, you will receive shares, based on the number of your free-of-charge allocation rights and the number of rights needed to receive a newly issued share.
No. The capital increase is free of expenses and fees. Iberdrola will assume the expenses of issuance, subscription, floatation, admission to listing and other items relating to the capital increase. However, the institution with which you have deposited your shares may, in accordance with applicable law, freely establish fees and expenses for maintaining the securities on its books.
Yes. In order to do so, you must notify your bank your intention to sell a portion of your free-of-charge allocation rights or receive an amount in cash by means of the interim dividend corresponding to fiscal year 2017 and keep the other portion within the relevant deadlines.
You will receive shares of Iberdrola based on the number of your free-of-charge allocation rights and the final number of rights needed to get a newly issued share.
Iberdrola submitted a binding consultation to the General Tax Directorate (Dirección General de Tributos) regarding the tax treatment applicable to the shareholders of Iberdrola in the common regions (territorio común). The consultation was answered on April 28, 2010 (V0848-10) and supplemented by the explanation of October 4, 2010 (V2206-10).
Please, note that the tax regime for residents of Ceuta and Melilla, the Historic Territories of the Basque Country (Territorios Históricos del País Vasco) and the Autonomous Region of Navarra (Comunidad Foral de Navarra), although similar to that of the common regions, has a different treatment.
You should keep in mind that the taxation of the "Iberdrola Dividendo Flexible" system summarized in this document does not specify all possible tax consequences. For that reason, it is recommended that you read in detail the answer to the consultation issued by the General Tax Directorate, together with its explanation, and pay particular attention to any changes that have occured in legislation in force as of the date of this document, in standards of interpretation, and in the particular circumstances of each shareholder or holder of free-of-charge rights.
In particular, the amounts obtained upon the sale of rights received by those Iberdrola shareholders who are taxpayers for Spanish Individual Income Tax ("IIT") and Spanish Non-Resident Income Tax (without permanent establishment in Spain) ("NRIT") purposes, will be treated as a capital gain for the seller on the fiscal year in which the transfer takes place. In addition, for IIT taxpayers, these amounts will be subject to withholding on account of IIT, currently at a 19% rate. Generally, this withholding tax is levied by the corresponding depositary.
Finally, the amounts received by Iberdrola shareholders under both the interim dividend and the option of selling their rights to Iberdrola, will be treated as a dividend for Spanish tax purposes and, hence, subject to the applicable taxation and withholding tax.
Shareholders who are not resident in Spain and the holders of ADRs and CDIs should consult with their tax advisors regarding the effects of the Iberdrola Dividendo Flexible system, including the right to apply the provisions of treaties signed with Spain for the avoidance of double-taxation.
The sale of the rights on the market is a market transaction and so, you will receive the cash once the transaction is settled, usually on the second day after the sale.
The net amount of the rights sale and the interim dividend is expected to be paid on 29 January 2018.
It is expected that the newly issued shares start to be traded on 7 February 2018.
You will receive one free allocation right per share held.
The number of free-of-charge allocation rights required to receive one newly issued share will be calculated on the basis of the listed price for Iberdrola shares on 2, 3, 4, 5 and 8 January 2018 (that is, the five days prior to the approval of the implementation of the transaction), as well as the formula approved in the 2017 General Shareholders' Meeting available on this website. It will be announced on 9 January 2018 by means of a notice of significant event.
That will depend on the depositary agreement that you have signed with your bank or custodian (or the instructions provided to them). They usually sell the spare rights on the market (subject to the corresponding taxation mentioned above) and pay shareholders the proceeds from resulting of this sale.
However, if such agreement or the instructions you have given to the bank or custodian do not contemplate/permit such sale, the paid-in shares corresponding to such odd-lots (both yours and those of the other shareholders in the same situation) will be deposited into a securities account in the name of Iberdrola and for the benefit of third parties. After the passage of three years from the date the deposit was made, the shares may be sold by Iberdrola and the net amount from the sale of the shares will be deposited and made available to the interested parties at Banco de España or at Caja General de Depósitos in accordance with the provisions of Section 117.3 of the Spanish Companies Act (Ley de Sociedades de Capital).
Yes. This would be an investment decision that is independent of the "Iberdrola Dividendo Flexible" system.
Depending on the option you choose, you will receive shares or cash. If you choose to sell the rights in the market you will receive the amount corresponding to the listed price of the rights at that moment, whilst if you decide to sell the rights to Iberdrola, you will receive at least 0.140 euros per right. And if you choose to receive an amount in cash corresponding to the interim dividend for the fiscal year 2017 you will receive an equivalent amount per share.
The increase in capital stock will have a market value between 898 million euros minimum and 947 million euros maximum. The final amount will depend on the number of shareholders that opt for receiving newly issued shares and the listing price used as a reference to calculate the number of shares to be issued.
The bare owner (nudo propietario) is entitled to decide what to do with the free-of-charge allocation rights corresponding to shares subject to an usufruct. If the bare owner chooses to receive new shares or to sell the rights on the market, the usufruct will extend to cover the new shares or the proceeds of the sale. If, on the other hand, the bare owner chooses to sell the rights to Iberdrola, the corresponding cash will be subject to the same withholding as dividends and will be considered a “fruit” (fruto civil) of the shares, belonging to the usufructuary (usufructuario).