capitaregistrars.com | 21
CHEQUE HAD ITS DAY?
than using cheques? Personally I can see no benefits whatsoever to the shareholders in such a move. The only benefit is to the company, who may save some costs. The only shareholders who might be concerned about receiving cheques are those people who live in areas where the post regularly gets lost, or they frequently change address, or don’t ever visit their bank – and in that case they have the option to select electronic payment anyway.
As to the general issue of phasing out cheques, I think the Payments Council are going to get massive opposition to this in due course. Cheques are a remarkably simple and easy-to-use payment system for most people. I can write a cheque and put it in the post far faster than I can log on to any online payment system.
What concerns do you think shareholders might have about any move to do away with cheques? As
someone who receives all my dividends via cheque (and I have over 100 shares in my portfolio if you include my wife’s holdings also) I find it is by far the most convenient. As a personal CRESTmember, if I purchase a new share, I automatically receive the dividend to my address and don’t need to complete any forms to give my bank details. Also there are enormous risks to security in having bank details so widely held, and being sent backwards and forwards in the post. I have never had a dividend cheque go astray yet in 20 years of stock market investing.
I also know exactly when the dividend is paid into my bank, because I do it myself, which enables me to better control my bank account cash flow. Other shareholders I know have concerns because they sometimes have multiple bank accounts and wish to choose which account they pay dividends into.
How do you think shareholders will react to any move a company makes to change their Articles of Association to permit electronic payments? I think
they will oppose it. Personally I simply sold my Vodafone shares when the company chose to stop cheque payments!
If companies were to stop using cheques for dividend payments, they may also review how they distribute tax vouchers. How do you think
shareholders would react? It is important that shareholders know when dividends have been paid and receive a tax voucher at the same time.
Now that Vodafone has moved ahead on this issue, do you expect to see other firms follow suit? I hope
not! The UKSA policy is that shareholders should be given a choice in this matter. They should not be forced into electronic payments if they do not wish to agree to that. Companies are owned by their shareholders and they should pay attention to the needs and desires of their shareholders. It was clear that there was strong opposition to the cessation of cheque payments at the Vodafone AGM which the directors simply ignored without giving a proper justification.
The homebuilder
MIKE LONNON
Deputy Secretary Taylor Wimpey plc
What’s your current view about removing cheques for dividend payments? Have you made any moves
to prepare for it? We have not yet made any moves to switch away from dividend warrants, nor specifically to prepare for such an eventuality. We are monitoring the situation and will be guided by
SPRING 2010
I can write a cheque and put it in the post
far faster than I can log on to any online payment system
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