Around 4.1 million people will be entitled to this basic distribution while the rest will receive an additional hand-out of up to 1,181 shares depending on the balance in their accounts on two key dates.
An additional distribution of shares will be paid to members who had a total balance of at least pounds 1,000 on 25 November 1994 and 24 February 1997. The additional shares will be worked out from the lower of the two balances.
The maximum will be made to savers with more than pounds 50,000 in their accounts. Savers and borrowers are entitled to two payments.
The share price valuations are made by Deutsche Morgan Grenfell, the merchant banking adviser to Halifax, on the assumption that the society was floated on 16 December 1996. It estimates the society would have had a market capitalisation of pounds 10.4bn to pounds 12bn on that date.
Rob Thomas, building society analyst at UBS, the investment bank, said Halifax was being cautious about its payouts. "My mid-point would be their top end," he said.
Over the next few days members of Halifax will receive a 172-page transfer document in which Mike Blackburn, chief executive of the society, urges them to vote in favour of the flotation.
"Halifax's conversion will represent the largest single extension of private share ownership ever witnessed in the UK," Mr Blackburn said.
Members can vote by post by 17 February or at the special general meeting in Sheffield on 24 February.
More than 50 per cent of the society's investing members, over 3.3 million, must vote in favour for the flotation to proceed. This is a greater proportion than required by the other societies which intend to become banks, such as Alliance & Leicester and Woolwich, because Halifax is taking a slightly different route to flotation, mainly because it has waived its right to a five-year protection against being taken over.
The flotation is likely to receive enough votes to go ahead although it is facing opposition from Halifax Action Group. "This [flotation] is being done largely to benefit those in the City who have raked in enormous fees and board members whose salaries have and will increase enormously," said Serge Lourie, a chartered accountant who is running the action group and standing for election to Halifax's board.
Mike Ellis, banking and savings director at Halifax, said the board was aiming to avoid such accusations. "We're not taking share options to distance ourselves from those comments."
Halifax is not establishing executive share options at conversion but intends to introduce a long-term incentive scheme in 1999. Directors of the society participate in a short- and medium-term bonus scheme. The medium-term one will not pay out unless Halifax completes its conversion process.
The directors have waived their rights to the free shares being distributed to employees of the society and will take only shares they are entitled to as borrowers or savers.
There is a cash bonus for members aged under 18 because they are ineligible to vote. It is about 9.4 per cent of balances in share accounts.
To cope with the first day of trading Halifax will ask members to indicate whether they intend to sell their shares.
It will offer members keeping shares three options - placing them in a nominee account, receiving the share certificates, or putting the shares into a PEP account.
Investment column, page 19
Countdown to conversion
Transfer documents and voting forms are being posted now to 8 million members
Halifax's conversion and free share distribution needs approval from 3.35 million members
Voting forms have to be returned before 18 February
Dealings in the shares on the Stock Exchange are due to begin in June
Lower total balance pounds Total number of free shares
50,000 or more 1,181
Borrowers receive flat 200 shares.