I have a small number of shares in CRH and I would like to keep them for a few more years before selling them when I retire.
Given that the shares will no longer be listed on the Irish stock market by then, what effect, if any, will this have on my ability to sell my shares?
Mr EC
I hold CRH shares on the Irish Stock Exchange and, up to now, have received dividend statements in euro. Most recently, I received a statement showing the divided in US cents, along with US withholding tax and a net payment in both dollars and euro.
I called Link Registrars, who handle shareholder queries. Initially I was told that Revenue would allow a deduction for the US $ tax against Irish dividend withholding tax. When I objected to the US getting tax on my Irish investments, I was then told that in fact the dollar withholding tax was paid to the Irish Government and was, therefore, Irish withholding tax.
Why has CRH confused things? They could at least outline more clearly what is what on the dividend counterfoil.
Ms G O’B
With the vote last week that will see CRH, the largest member of the Iseq index, leave the Dublin market entirely, it is hardly surprising that shareholders have some questions about what will happen next. And given that they cover broadly related small investor issues, I thought it would make sense to handle both these queries in one piece.
CRH has been a mainstay of the Irish Stock Exchange since the early 1970s, so it is hardly surprising that many Irish retail investors hold its shares. The company had already moved its main listing to London back in 2011 and was a member of the FTSE 100 of the largest UK-listed stocks but had, until now, retained its listing on the Dublin market.
It had first taken a US listing in 2006. Now, it has decided to relocate its main listing to New York, retaining a secondary listing in London and dropping its Dublin quote.
The company argues the move will be good for the company and its shareholders – giving it better access to lucrative contracts there and also to a market where shares have been consistently valued more highly than in Europe. As it is, the group’s North American business has delivered a growing share of the business’s profits – close to 75 per cent on the basis of earnings before interest, tax, depreciation and amortisation last year.
As many as 96 per cent of those voting backed the company’s move at an extraordinary general meeting last week and, assuming the required court approval of the arrangement is forthcoming, the company expects to make the move at the end of the summer – September 25th to be precise.
But there will be drawbacks – at least for small Irish investors. The main disruption is that they will no longer be able to trade their shares in Dublin because the company will no longer be quoted here. Instead, they will sell (or buy) stock either in London or New York.
However, most of the big Irish stockbrokers should be able to arrange such sales, although the charges involved might be different from what they will have been used to.
The bigger issue, for some, is how their shares will be held. As it happens, most CRH stock is held in electronic form in nominee accounts and the holders of these shares should notice little difference.
However, 4 per cent of the company’s shares are held in paper – paper certificates that investors physically hold to prove their ownership. It doesn’t sound like a lot but, given the number of shares CRH has in issue, you are talking about 29.24 million shares.
The issue here is that they don’t do paper certs in the US, at least not for anything but vanity purposes. Instead, shareholdings will be noted by the company’s registrar, or transfer agent as they are known in the US.
As it stands, even now, anyone holding a paper share certificate has the details of their ownership “registered” on a Register of Members held by the registrar. Once this deal concludes, the paper certificates will be worthless and you will instead get a statement from the registrar/transfer agent detailing your shareholding and your unique shareholder identity number.
In reality, you are only getting a head start on your fellow Irish investors. Under EU rules, all shares in companies listed on European markets, including Dublin, will be held in the same way under what is called “dematerialisation” from the start of 2025. Paper certificates will no longer be valid proof of ownership after that date anyhow.
Another difference for Irish shareholders will be that under US listing rules, the Register of Members must be maintained by an SEC-registered transfer agent. CRH has appointed Computershare for this purpose and they, not the current registrar Link, will be the main point of contact for shareholders.
You’re holding your shares till retirement so it is a moot point for you, but for other shareholders who might be looking to trade in the shares over the coming months, it is worth pointing out that none of these changes comes into force until September 25th, or whatever later date the switch actually takes place. Until then, you can trade your shares through the Dublin market as you always have.
But what about dividends?
You are right that CRH now reports its dividends in dollars but this apparently goes back to 2020 when the company changed the currency in which it reported all its financial results to the US currency.
However, the actual payment to shareholders in Ireland is in euro, as Link Registrars explained to me when they responded very quickly to my query on the issue.
And that is confirmed by the dividend counterfoil that you sent me with your query.
It states the dividend in US cents, the number of shares you hold, the full dividend payable in dollars on your holding, the withholding tax also quoted in dollars and the net dividend payable, again in dollars. But it then gives you the euro equivalent, the rate used for the dollar/euro conversion and the date that conversion was done. Link tells me: “Shareholders in Ireland default to euro unless they elect otherwise and the shareholder should still receive a net payment in euro though the other values are displayed in US dollars.”
However, that will no longer be the default position after the main listing moves to New York. At that point, how you receive your dividend will be determined by how your shares are held.
As I understand it, shares in nominee accounts will have the dividend paid in dollars. As a default position, the same will be true for people who currently hold their shares in certificated form – ie via paper share certs. However, this group can contact the transfer agent to continue to have their dividends paid in euro after the switch. They can also have those dividends paid directly into their bank accounts, if they choose.
On the dividend withholding tax, although the figure is presented in dollar terms on your dividend counterfoil, Link assures me this is in fact Irish dividend withholding tax. And looking at the figures on your counterfoil that does appear to be the case as it amounts to the 25 per cent Irish-registered companies are required to deduct at source from dividends of ordinary Irish shareholders. The money is paid directly to the Irish Revenue Commissioners, not to the US Inland Revenue Service.
Link explains that the rate used for dividend withholding tax is generally the rate applying on the dividend “payment date”. However, as the dividend cheques are sent out a day earlier, CRH uses – and Revenue accepts – this day before rate as the foreign exchange rate “struck as close as is practicable to the payment date”. The conversion rate used is the same as the one used to convert your net dividend into euro for payment – the rate quoted on your counterfoil.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street Dublin 2, or by email to dominic.coyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice
