LIC has a dual share structure with two classes of shares:
Co-operative control shares (co-op shares)
It is compulsory for farmers using LIC products and services (including sharemilkers) to hold Co-op Shares subject to meeting the following qualification criteria in any one dairy season:
Co-op Shareholders are entitled to vote on matters relating to LIC.
The number of Co-op Shares each farmer (PTPT Code) is entitled to hold is reviewed each July and is based on the equivalent of 4% of your annual spend on qualifying core products and services received during the preceding dairy season (ie to 31 May).
Details about which products and services qualify can be found in LIC’s Constitution.
An example of this calculation is if your annual spend is $8,749.41 the qualifying shareholding is based on 4% of that spend ($349.97). This is rounded to a compulsory shareholding of 350 Co-op Shares. Each Co-op share is valued at $1. Once we know the number of Co-op Shares that you are entitled to, LIC will debit your Debtor Statement with the cost of those shares (in this case $350).
In many cases, a farm’s annual spend varies from year to year and so each July we will review and if necessary adjust your shareholding to reflect the previous year’s spend.
The number of Co-op Shares can therefore go up or down.
If your compulsory holding reduces we will redeem the difference in your shareholding and credit your Debtors Statement on the 31 July with the difference.
If your shareholding increases, we will debit your Debtor Statement with the difference.
When Co-op Shares are redeemed back to LIC it is at the nominal value of $1 per share.
LIC investment shares
There is no requirement to hold Investment Shares but Investment Shares can only be held by Co-op Shareholders.
Investment shares are listed on the NZAX and are traded via a share broker.
Investment Shares can also be transferred between LIC Co-op Shareholders using an Off-Market transfer form.
Co-op Shareholders can elect to join LIC’s Dividend Reinvestment Plan (DRP) or Voluntary Investment Scheme (VIS) as another means of increasing their Investment Share portfolio.
Off Market Transfer forms and Application Forms for the DRP and VIS are available from LIC’s Share Registry team (0800 542 742).
Investment Share Transactions Certificates are posted directly to you, and must be held by you as the shareholder.
The NZX will issue a ‘Faster Statement’ to confirm any changes to your Investment Shareholding.
If you no longer meet the qualification criteria to retain your Co-op Shares, you will have a further two years to trade or transfer any LIC Investment Shares you hold.
LINK MARKET SERVICES LTD (LINK)
LINK manages LIC‘s Share Register and as part of their role will send you an annual Shareholding Statement in mid-July which (if an adjustment is made to your Co-op Shares) will confirm your total shareholdings (Co-op and Investment Shares) at the time the statement is produced.
This Statement will contain an opening balance, the number of Co-op shares required to be held and therefore the number of shares to be purchased or redeemed.
This adjustment will appear as a debit or a credit on your LIC Debtor statement dated 31 July so it is important that you keep your Shareholding Statement so that you can refer to this when your July Statement arrives from LIC.
LIC dividends on co-op shares and investment shares
At the discretion of the LIC Board, an annual dividend may be paid.
Both sets of shares can attract a dividend - on the number of Co-operative Shares and the Investment Shares held as at Record Date.
A dividend statement will be sent to you by LINK and will include the gross dividend amount, the tax paid and the net dividend you will receive. It will also advise how the dividend will be distributed.
It is important that you retain this statement - it is required for your end of year tax calculation.
You have three dividend distribution options:
LIC’S DIVIDEND REINVESTMENT PLAN (DRP) AND VOLUNTARY INVESTMENT SCHEME (VIS)
DRP - The DRP enables Shareholders to use their net cash dividends (on both co-operative and investment shares) to acquire additional Investment Shares in LIC (refer Dividend Reinvestment Plan Offer document).
VIS - The VIS enables those shareholders who have elected to join the VIS to contribute an amount equal to 4% of the prices paid or deemed to have been paid by the shareholder for Qualifying Products or Services purchased from LIC to acquire additional LIC Investment Shares. This contribution will appear on your July LIC Debtor Statement as a charge called LIC VIS SHARES (refer Voluntary Investment Scheme rules).
New Zealand Guardian Trust Company Limited (“Guardian Trust”) is LICs’ Approved Holding Entity (AHE) and as such administers the DRP and VIS.
Guardian Trust in turn have appointed Craigs Investment Partners as the Broker to acquire the Investment Shares on the NZAX market on behalf of shareholders participating in the both the DRP and VIS.
Guardian Trust will hold all contributions to both schemes in a trust account.
Once the purchase of shares on behalf of all DRP and VIS participants has been completed, shares will be allocated based on the amount of money contributed at a weighted average per share purchased via the AHE.
This will be conducted as quickly as practicable, based on the availability of shares for purchase, but has to be completed before the next annual dividend is announced.
If you have additional shares acquired under the DRP and/or VIS they will be registered with the NZAX. A statement will be sent to you advising you of your contribution, the value per share paid and the number of shares allocated. You will also receive a ‘Faster Statement’ from the NZX confirming registration.
LINK MARKET SERVICES INVESTOR CENTRE WEBSITE
LINK's Investor Centre Website www.linkmarketservices.co.nz provides access a range of user-friendly features enabling you to manage your holdings.
Contact LINK Investment Contact Centre for assistance
Ensure you have your old and new usernames at hand when contacting the LINK team - Investor Contact Centre: +64 9 375 5998