Jump to content
Note to existing users - password reset is required Read more... ×
Sign in to follow this  
clarkey1972

Dividend cheques

Recommended Posts

I got another diviend cheque this week, and put it with all the others as ive never cashed them.

Ive always figured i would rather the club keep the money, then i wondered are they legally allowed to keep the cash or does it just sit in some sort of holding account for ever and a day.

Does anyone know how it works?

Rich

Share this post


Link to post
Share on other sites
I am the same as you. I don''t know but I am planning on ringing the club tomorrow to find out. 
In my case I had these shares brought for me and I would prefer the club to have the dividend.
Davo

Share this post


Link to post
Share on other sites

Given the price of new shares and the puny amount of my dividend it would take me years to save up for even one share.

 

Davo

Share this post


Link to post
Share on other sites
Dividends are paid out of profits which are different to ''cash''. In essence, if a dividend is declared and paid the accounts will show a drop in the capital account equal to the payment out and the bank will be adjusted accordingly. However, if the cheques are not cashed the end of year reconciliation will show a cash excess over expenditure which will probably be taken to a liability account. This will sit there until the following year when a decision may be made to release the liability on the basis it is unlikely to ever be called and so the released amount will be booked to profit and loss.This is where my rudimentary understanding of accounts gets me but I stand to be corrected - in summary the excess (your unclaimed amount) will be used by the club in the longer term.

Share this post


Link to post
Share on other sites
[quote user="Sir Humphrey Appleby"]Dividends are paid out of profits which are different to ''cash''. In essence, if a dividend is declared and paid the accounts will show a drop in the capital account equal to the payment out and the bank will be adjusted accordingly. However, if the cheques are not cashed the end of year reconciliation will show a cash excess over expenditure which will probably be taken to a liability account. This will sit there until the following year when a decision may be made to release the liability on the basis it is unlikely to ever be called and so the released amount will be booked to profit and loss.This is where my rudimentary understanding of accounts gets me but I stand to be corrected - in summary the excess (your unclaimed amount) will be used by the club in the longer term.[/quote]

Thanks for that, its pretty much how i had assumed it would work

Share this post


Link to post
Share on other sites

Sir Humph is technically right. 

 

Practically the unpresented cheques will sit within the bank reconciliation to start with.  However a cheque has to be cashed within 6 months, the person holding the cheque would then have to return to the club and ask for a new one to be issued.  Once past the 6 month stage the club, and the auditors, would ask the question will these cheques ever be cashed.  They will look back on historic patterns to some extent to determine this.  If there is a history of some of the cheques never being cashed then they may well write back the cheque and release the liability allowing the club to use that cash on something else.  They may do this on a probability basis, or if the amounts involved are not material to the true and fair view of the accounts they may just write back the whole amount.  I am not the club''s FD, you would have to ask them on what basis they manage the write-back as there is no specific mention of an accounting policy on this - however unless the question is asked at the AGM there probably is no compulsion to answer.

 

Legally the club still owes the shareholder that dividend, so at any point in the future any shareholder can seek to have a new cheque issued if they have sufficient proof that they were legally entitled to that dividend.  This will then be a charge in the clubs at that point in time if the dividend had been written back previously.  This year-end (being May) I would expect the club still to maintain a liability for uncashed dividend cheques as it is within 6 months of the cheque being isssued.  The most likely timing is that the cheque will be written back next financial year.  The club will be able to use those funds for anything it wants.

 

However as I mentioned on another thread the total liability for the three years is around £194K; given the potential riches next financial year if we retain our EPL status, even the full liability would not trouble the accounts / auditors in terms of materiality so the uncashed dividends will be quietly released.  On that thread someone else mentioned writing to the club and specifically stating that the cheque would not be cashed if the funds were donated to the academy.  That may be one for you to consider if you are keen the money is invested into the playing squad.

Share this post


Link to post
Share on other sites
Thanks for that sheff.

I know now with all the riches its peanuts to the club, but a few years ago im sure it would have been welcomed by them if all shareholders had sent the cheques back.

Maybe they should ask people to tick something if you want to re-invest the money back in the club.

With my company shares each year i take extra shares rather than cash. But its an option at dividend time.

Share this post


Link to post
Share on other sites

Sorry to come in on another conversation but it is related.

I have held 5 ''B'' Preference shares since 2002 and each year (from memory) received a dividend of £20.25 (just over 4%) from them. This year I received the £20.25 as normal but also a further £20 for each of the last two years with some interest for late payment . Is this a Premiership bonus and will it continue for every year that we remain in the top flight? And is it likely to increase with the rise in income next season?

Share this post


Link to post
Share on other sites
[quote user="Tangible Fixed Assets anyone"]

Just to clarify, are you posting about a dividend as a result of holding B Preference Shares and not a dividend related to ordinary shares?

[/quote]

 

Or it could possibly be A preference shares which, along with the B preference shares, do (if not all the time!) pay a dividend. I don''t believe the ordinary shares have ever paid a dividend.

Share this post


Link to post
Share on other sites

Tangy, this discussion is for cheques received for "B" Preference Shares. 

 

Muttley, the dividend on these shares was not "declared" in previous two financial years due to lack of distributable reserves.  However legally divdends on these shares are payable once there are distributable reserves, hence the payment now of three years of divdiends plus back dated interest on the first two years of dividends.  Although the reason the payment is possible is due to the club earning significant profits from the first season back in the Premier League, it is not a "bonus".  From hereon the dividend will revert back to a regular annual payment of the dividend at 3% above Santander''s base rate. 

 

Purple - I am sure you are more than well versed with the share structure of the club, but these "B" Preference shares have rights to these dividends after the "A" Preference Shares but before the Ordinary shares.  No dividend was declared on the ordinary shares.   

Share this post


Link to post
Share on other sites
Cheques are valid for 6 years (think this is something to do with the time limit for debts, and a cheque is a proof of a debt). It is common practice for banks to reject cheques over 6 months old, as there may be a doubt about whether the cheque has been lost, stolen or the payment made by other means, but it is at the discretion of individual banks.

Share this post


Link to post
Share on other sites
[quote user="shefcanary"]

Tangy, this discussion is for cheques received for "B" Preference Shares. 

 

Muttley, the dividend on these shares was not "declared" in previous two financial years due to lack of distributable reserves.  However legally divdends on these shares are payable once there are distributable reserves, hence the payment now of three years of divdiends plus back dated interest on the first two years of dividends.  Although the reason the payment is possible is due to the club earning significant profits from the first season back in the Premier League, it is not a "bonus".  From hereon the dividend will revert back to a regular annual payment of the dividend at 3% above Santander''s base rate. 

 

Purple - I am sure you are more than well versed with the share structure of the club, but these "B" Preference shares have rights to these dividends after the "A" Preference Shares but before the Ordinary shares.  No dividend was declared on the ordinary shares.   

[/quote]

 

Indeed, shef, but as far as I am aware it is not a question of the ordinary shares being third in line as far as dividend payments are concerned. I don''t think they are in line at all. There is no stipulation that the ordinary shares might at any point pay a dividend. There is certainly no mention of that in the accounts, whereas there is for the As and the Bs. This is why I was a touch confused (for the first time!) by Tangible''s post, in which he asked whether the OP was referring to dividends for preference or ordinary shares.

Of course there could be an AGM vote to allow dividends for the ordinaries, but as a holder of a significant tranche I will not be holding my breath.

Share this post


Link to post
Share on other sites
[quote user="shefcanary"]

Tangy, this discussion is for cheques received for "B" Preference Shares. 

 

Muttley, the dividend on these shares was not "declared" in previous two financial years due to lack of distributable reserves.  However legally divdends on these shares are payable once there are distributable reserves, hence the payment now of three years of divdiends plus back dated interest on the first two years of dividends.  Although the reason the payment is possible is due to the club earning significant profits from the first season back in the Premier League, it is not a "bonus".  From hereon the dividend will revert back to a regular annual payment of the dividend at 3% above Santander''s base rate. 

 

Purple - I am sure you are more than well versed with the share structure of the club, but these "B" Preference shares have rights to these dividends after the "A" Preference Shares but before the Ordinary shares.  No dividend was declared on the ordinary shares.   

[/quote]

Much appreciated

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×