Galahad Gold Share Discussion Threads

[sharpshare] 16/1/2008 11:23

Let's try and work out the tax consequences for an ordinary UK resident.
If option A is chosen then the shareholder gets A shares and New ordinary shares. The 16.5p div to be received in mid Feb08 should be taxed in this year at dividend rates (ie 1/9 credit and 32.5% tax rate for marginal taxpayers giving effective rate of 25%?)and the A shares will be converted to worthless deferred shares? Will this allow a negligible value claim for CGT purposes to be made at the dividend payment date (in this tax year) for the A shares? Does the base cost of the A shares and new ord shares need to be determined by reference to the market price when the shares are suspended in early Feb? Does this following example seem right? eg if the market price is 17p when suspended in a few weeks time then the base cost of the A shares = 16.5/17p * the cost of your existing ord shares and the base cost of your new ord shares = .5/17 * the cost of your existing ord shares. Will the base cost of the A shares be the capital loss on the dividend payment date? Is the receipt of the capital liquidation payment of around 2.7p (could be more or less or nothing)in about a year a capital disposal for CGT purposes and then another negligible value claim should be made to allow the deduction of the base cost of the New ords?
All very taxing.
Any informed views?

[thebigswingingdick] 16/1/2008 09:58

Yes, that Feb 2007 looks like a typo. The choice really depends on your own tax position, the dividend will be taxed as income in option A and a cap gain (tax on profit after your allowance) under the other options. This is how I see it:
- If your not going to get taxed either for income or cap gains (eg a SIPP) then take option A because you get the 16.5p quicker
- If you are going to pay less cap gain tax than income tax take option B or C
- If you are going to be within your cap gain allowance for the year anyway take option B (you get the 16.5p quicker than option C)
- If you are going to pay less cap gain tax in the new cap gain tax rules than the old then take option C

[brad1] 15/1/2008 21:44

I am confused too. Do we have to pay tax on the divi (A) or the Fixed Capital Return, or is it related to what you originally invested (ie tax on profit)?

[brad44] 15/1/2008 21:05

Info I received today re payment. anybody any opinions as to which is the best option to take?

GALAHAD GOLD PLC are undertaking a Return of Capital on the following basis:


On 14th September 2008, the Board announced that it intended to propose a Voluntary Liquidation and Share Capital Reorganisation of the Company, which would allow shareholders to realise some of their investment for cash either prior to the commencement of the Liquidation, or during the Liquidation process.

Under the terms of the proposals shareholders can elect for one of the following options:

Option 1: Shareholders will receive 1 New Ordinary share and 1 A share. Each A share will entitle shareholders to receive a single Pre-Liquidation Dividend of 16.5 pence per A share. This will be treated as Income for UK tax purposes.

Or

Option 2: Shareholders will receive 1 New Ordinary share and 1 B share. Each B share will entitle shareholders to receive a Fixed Capital Return of 16.5 pence per B share which may be paid before or after 6th April 2008. This will be treated as Capital for UK tax purposes.

Or

Option 3: Shareholders who do not elect for one of the above options will instead receive 1 New Ordinary share and 1 C share. Each C share will entitle shareholders to a Fixed Capital Return of 16.5 pence per C share which will not be payable before 6th April 2008.

The New Ordinary shares will entitle the holders to participate in any distributions made by the Liquidators after the payment of the Fixed Capital Return on the B shares and C shares and will have similar rights to the Existing Ordinary shares.


You have the following options:
1 Accept Option 1 on your holding of GALAHAD GOLD PLC ORD GBP0.01 shares.
If you elect to accept Option 1, your Ordinary Shares will not be available for you to sell.
2 Accept Option 2 on your holding of GALAHAD GOLD PLC ORD GBP0.01 shares.
If you elect to accept Option 2, your Ordinary Shares will not be available for you to sell.
3 Accept Option 3 on your holding of GALAHAD GOLD PLC ORD GBP0.01 shares.
If you elect to accept Option 3, your Ordinary Shares will not be available for you to sell.


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On the basis of the estimated net asset value of 18.87 pence per Existing Ordinary share the remaining 2.37 pence per Existing Ordinary share (together with any additional amount available for distribution to shareholders) will be distributed following the discharge of all of the Company's liabilities and the release by the Liquidators of any capital retentions required by them. The Directors anticipate such distribution could be made in the first half of 2009.

The proposals are subject to shareholder approval at both a Reorganisation Meeting to be held on 8th February 2008 and a Liquidation Meeting to be held on 20th February 2008.

Subject to acquiring the necessary approval the Record Date for the Share Capital Reorganisation is expected to be 8th February 2008.

Dealings in the Existing Ordinary shares are expected to be suspended as at 7.00a.m. on 8th February 2008. Please note it will not be possible to trade your Galahad Gold shares after this time.

The timing of the payment of the Fixed Capital Return on the B shares will be determined by the Liquidators. However, the Directors currently anticipate that payment will be made before 6th April 2008.

Payment in respect of the elections made for Option 1 are expected to be credited to your account on or after 15th February 2007, payment in respect of elections for Option 2 are expected to be credited to your account on or after 28th March 2008 with payment in respect of elections for Option 3 expected to be credited on or after 10th April 2008.

Before making any decision please take into consideration all relevant factors of the event including the current share price and any possible tax implications. If you require any further information in making your decision please contact an Independent Financial Advisor.

Should you retain your holding of Galahad Gold shares we will update you again in due course.



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If we do not receive a valid election from you, we will elect Option 3 on your behalf.


Please ensure you submit your option before 25 January 2008 to enable us to process your instruction in accordance with the Company's timetable for this event.

I am really not sure which is the best option here? surely they mean Feb 2008 and not 2007 (Payment in respect of the elections made for Option 1 are expected to be credited to your account on or after 15th February 2007,) this must be a typo?

All opinions greatly accepted.

regards

brad

[badtime] 14/1/2008 18:52

Ah i saw tht purchase..thought it must b u...all mine r in my sipp

[tiltonboy] 14/1/2008 17:09

badtime,

If only. More like the other way round.

Managed to pick up 100K, but had to pay 17.125p.

Off to cricket training in a bit.

tiltonboy

[badtime] 14/1/2008 16:05

So what u mean is 7mil for u and the .4 for clients? :)

Enjoy the cricket

[tiltonboy] 14/1/2008 15:44

I need some more..only got 7.4m(not all for me)

[badtime] 14/1/2008 12:56

thts the big thing..div isent going to mtr re tx in a sipp..but its wen the 16.5 is due bak

[thebigswingingdick] 14/1/2008 12:37

I think it's pretty irrelevant if it's in a SIPP, as you won't pay tax anyway. Slight pref for A because you get the initial 16.5p back earlier.

[badtime] 14/1/2008 11:50

ooo.u paid more than me..lol

Yes i thought option b for sipp..but happy to b corrected

[skyship] 14/1/2008 11:48

Had to pay 17.125p for an extra 50k in my SIPP.

Presumably we elect for option "B" in our tax-free SIPPs. Is that right?

[badtime] 14/1/2008 11:42

:) wel..took only 17500 at 17.1
no more spare cash in my sipp

[tiltonboy] 14/1/2008 09:17

Not me. It may be a seller got 17p.

[badtime] 14/1/2008 09:11

bet tilts had that 100k at 17....ive settled for 17.1

[skyship] 14/1/2008 08:19

There you go badtime - 20k @ 17.1p - good trade.... et bonnes vacances!

[badtime] 12/1/2008 22:09

Lol...dont worry i will b...first thing monday morning as i'm on hols from 9.30 same day

[tiltonboy] 12/1/2008 21:26

badtime,

You must get your broker to try harder. I've picked up a couple of million this week.

tiltonboy

[badtime] 12/1/2008 20:43

i agree with everyone..now can i hav those 20k at 17.05 tilts? :)

[skyship] 12/1/2008 16:12

AA - Good point....

[tiltonboy] 12/1/2008 15:22

AA,

I tend to agree.

tiltonboy