First, let us look at the financial aspects. Shareholders receive a right to a share of a company's earnings. Called dividends, they are paid net of basic-rate tax, usually twice a year. You will be sent a cheque for the amount due, though you can normally ask for it to be paid direct to your bank account. You will also receive a dividend voucher, which you should keep for when you complete your tax return.
However, you may not receive a dividend due shortly after you purchased the shares. If you bought the shares "ex div", it means the former owner will receive the payment. To ensure a smooth administration, there has to be a cut-off point. The dividend goes to the person on the company's register of shareholders at a particular date, generally three weeks before the payment is made. Share prices usually fall when they go ex dividend, which is some compensation for the new investor. In The Independent, there is an x against the price of ex dividend shares. The contract note from your stockbroker states if the shares were purchased ex dividend.
Some companies give shareholders the option of taking dividends in shares a "scrip dividend". This is ideal if you are seeking growth as opposed to income. However, do keep a note of their "price" and the date you receive them as you will need this information for capital gains tax calculations when the holding is sold.
All shareholders named on the register are entitled to receive certain documents that the company periodically issues. These include the annual report and accounts and notices about important events such as acquisitions or disposals. It is important to remember that if you hold your shares through a nominee, such as a PEP, only the nominee's name will appear on the register. Therefore, if you want company information, you must check your nominee will send it to you - and it may charge for this service.
Every company must hold an annual general meeting (AGM) once a year. Shareholders whose names are on the register have the right to attend and speak at AGMs. While the vast majority are sedate affairs, some can be quite lively. For example, the attendance of Cedric the Pig at British Gas's AGM in protest at Cedric Brown's remuneration package.
It is not unknown for companies to give shareholders who attend handouts. For example, Cadbury Schweppes has given chocolates and Hillsdown a bag of groceries. However, even if the AGM is at noon, do not expect a buffet lunch. You will usually be offered a drink, or coffee and biscuits.
The purpose of AGMs is for shareholders to vote on important matters affecting the company, such as raising more capital by a rights issue or appointing and dismissing directors or auditors. Shareholders are invited to ask the chairman questions. Those who do not wish to attend may vote by post.
Under company law, shareholders can also put forward motions if they can muster 5 per cent of the company's total voting rights, or 100 shareholders, each with at least pounds 100 worth of shares. Resolutions must be submitted no less than six weeks before the meeting. A copy of the resolution must be sent to all shareholders - companies are allowed to charge for the cost of their circulation.
Increasingly, more companies are giving shareholders perks. For example, there may be reduced accommodation costs from a hotel chain; a discount on sundry items purchased from a high street retailer or even a modest price reduction on a new home! The rules vary: some companies insist on a minimum level of shares being held, perhaps for a minimum period, while others are happy to give the concession to all.
Of course, no investment decision should be made on the basis of the perks. The normal criteria for selecting shares for your portfolio should always prevail.
Midland Stockbrokers has compiled a list of companies that offer perks in a wide variety of categories. It also details the terms of the offers. For a free copy, write to Midland Stockbrokers, Perks Guide, Marketing Department, Mariner House, Pepys Street, London EC3N 4DA, enclosing a self-addressed A4 or A5 size envelope.Reuse content