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:

  • Questions & Answers 1 to 10

     

    1. What does the "Iberdrola Dividendo Flexible" program consist of?

    2. What options do I have under this system?

    3. So, if I want to receive the amount from this system in cash, what do I have to do?

    4. Which option is better for me, receiving cash or shares?

    5. How much time do I have to give notice of my choice?

    6. If I choose to receive shares, do I have to pay for them?

    7. Can I choose to receive a portion in free shares and a portion in cash?

    8. What happens if I don't choose either option?

    9. How is the "Iberdrola Dividendo Flexible" system taxed?

    10. If I choose to sell my rights on the market, when will I receive the cash?

     

     

    1. What does the "Iberdrola Dividendo Flexible" program consist of? 

    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) and which has previously been put into practice in previous years.

    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 Corporate Enterprise Act.

    In this regard, on 25 April 2017, the Company's Board of Directors agreed to undertake the first capital increase in July 2017. Shareholders will automatically receive free allocation rights that shall be listed on the stock market. Shareholders may choose between (i) selling these rights, thus receiving compensation in cash, or (ii) keeping them and receiving new shares.

    Iberdrola will assume an irrevocable commitment to purchase the free-of-charge shares at a fixed price, such that all shareholders who choose to do so will be guaranteed the ability to sell their shares and receive cash in the gross amount of 0.147 euros per right.

     

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    2. What options do I have under this system? 

    You will have the opportunity to choose between these three 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.

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    3. So, if I want to receive the amount from this system in cash, what do I have to do? 

    You should communicate your election (sell to Iberdrola or on the market) to the bank with which your shares are deposited, taking into account the deadlines for each alternative.

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    4. Which option is better for me, receiving cash or shares? 

    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.

    However, as your specific situation will depend upon your personal and financial circumstances, as well your tax regime, you should check your decision with your advisors, if you deem it appropriate.

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    5. How much time do I have to give notice of my choice? 

    If you decide to sell your shares on the market, you must contact the bank or finantial institution 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 5 and 19 July 2017.

    If you decide to sell your rights to Iberdrola at the guaranteed price, you must also contact your depositary institution 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 14 July 2017.

    If you do not give any instruction to your bank or financial institution, 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.

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    6. If I choose to receive shares, do I have to pay for them? 

    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.

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    7. Can I choose to receive a portion in free shares and a portion in cash? 

    Yes. In order to do so, you must notify your bank your intention to sell a portion of your free-of-charge allocation rights and keep the other portion.

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    8. What happens if I don't choose either option? 

    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.

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    9. How is the "Iberdrola Dividendo Flexible" system taxed? 

    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).

    Consultation to the General Tax Directorate (Spanish version)

    Please, note that the tax regime for residents of the Historic Territories of the Basque Country (Territorios Históricos del País Vasco) and in the Autonomous Region of Navarra (Comunidad Foral de Navarra), Ceuta and Melilla, 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 and, specially the changes introduced by the Law 26/2014 of 27 November, that will come into effect on 1 January 2017.

    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.

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    10. If I choose to sell my rights on the market, when will I receive the cash? 

    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.

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  • Questions & Answers 11 to 20

     

    11. If I choose to sell my rights to Iberdrola, when will I receive the cash?

    12. If I choose to receive shares, when will they start to be listed?

    13. How many rights do I receive for each of my Iberdrola shares?

    14. How many rights are needed to receive one new share?

    15. What will happen to rights that are not sufficient to receive a share?

    16. If I want more shares than those corresponding to my free-of-charge allocation rights, can I buy more free-of-charge allocation rights?

    17. So, what will I receive in January 2017?

    18. What is the amount of the "Iberdrola Dividendo Flexible" system?

    19. How will the "Iberdrola Dividendo Flexible" system affect the Dividend Reinvestment Plan (DRP)?

    20. What happens in the case of an usufruct (usufructo) of shares?

     

     

    11. If I choose to sell my rights to Iberdrola, when will I receive the cash? 

    The net amount of the rights sale is expected to be paid on 21 July 2017.

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    12. If I choose to receive shares, when will they start to be listed? 

    It is expected that the newly issued shares start to be traded on 28 July 2017.

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    13. How many rights do I receive for each of my Iberdrola shares? 

    You will receive one free allocation right per share held.

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    14. How many rights are needed to receive one new share? 

    The number of free-of-charge allocation rights required to receive one newly issued share is 47. It is calculated on the basis of the listed price for Iberdrola shares on 26, 27, 28, 29 and 30 June 2017 (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.

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    15. What will happen to rights that are not sufficient to receive a share? 

    That will depend on the depositary agreement that you have signed with your bank o financial institution. They usually sell the spare rights on the market and pay shareholders the proceeds from resulting of this sale.

    However, if such agreement or the instructions you have given to the depositary institution 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 Corporations Law (Ley de Sociedades de Capital).

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    16. If I want more shares than those corresponding to my free-of-charge allocation rights, can I buy more free-of-charge allocation rights? 

    Yes. This would be an investment decision that is independent of the "Iberdrola Dividendo Flexible" system.

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    17. So, what will I receive in July 2017? 

    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 0.147 euros per right. If you choose not to sell the rights you will receive one newly issued Iberdrola shares for every 47 rights held.

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    18. What is the amount of the "Iberdrola Dividendo Flexible" system? 

    The increase in capital stock will have a market value between 920 million euros minimum and 997 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.

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    19. How will the "Iberdrola Dividendo Flexible" system affect the Dividend Reinvestment Plan (DRP)? 

    The "Iberdrola Dividendo Flexible" system replaces the DRP while the system is in effect.

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    20. What happens in the case of an usufruct (usufructo) of shares? 

    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).

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