Heffernan son given €30m stake in Dunnes

The son of Dunnes Stores executive Ms Margaret Heffernan has been given a stake worth approximately €30 million in the retail group, one of the largest privately owned companies in the State.

The register of directors' interests in the Dunne group show Mr Michael Heffernan (33) was given 1,062 ordinary shares in Dunnes Holding Company in April 2002.

It is not known if Mr Heffernan's siblings, who are not directors of Dunnes companies, have also been given shares as they do not appear on the registers.

The number of shares held by Mr Heffernan indicate, however, that his shareholding is one quarter of a distribution of one-fifth of Mrs Heffernan's entitlement.

Group files show that Ms Heffernan was assigned 16,996 ordinary shares in the group holding company on the same date as her son was assigned shares.

Ms Heffernan's brother, Mr Frank Dunne, was assigned 21,244 ordinary shares on the same date.

The shares were transferred from the Dunnes trust in what could be an exercise designed to assign ownership of the group to the next generation of the Dunne family.

A third and final block of 21,244 ordinary shares is held by a nominee company on behalf of an unknown third party or parties. Interested sources have speculated that this is held by the children of the late Mrs Elizabeth McMahon.

Mr Heffernan's 1,062 shares constitute exactly a quarter of the 4,248 difference between Mr Dunne's shareholding and Ms Heffernan's.

The 4,248 difference amounts to one-fifth of 21,244.

The share of the group held by Mr Heffernan equals one-sixtieth of all the ordinary shares at issue. The group is believed to be worth as much as €2 billion, making the stake worth approximately €30 million.

The Dunnes Stores website says Mr Heffernan is head of textiles with the Dunnes group. He is the only member of his generation of the family to hold such a prominent position in the group. He has been a director of a number of the subsidiary companies in the Dunnes group but resigned from most of these positions in September of last year.

Directors of subsidiaries companies are obliged to disclose their interest in the parent company in a register of directors' interest. Such registers are available to the public.

The Dunne family and the Dunne group does not discuss its affairs with the media.

At an extraordinary general meeting of the Dunnes group holding company in 2002, a number of shares were redeemed or cancelled, others reassigned and a new special preference share created. The impact of these resolutions has only recently become clear.

The trust, which formerly held the bulk of the shares in the Dunne group, now only holds one special preference share. The trust was holding the shares for grandchildren of Mr Ben Dunne snr, the founder of the Dunne group. The transfer of the shares from the trust to individual family members may be intended to give Mr Dunne senior's children more control over how the shares are bequeathed.

It may also be connected to issues of control and age. Sources said the transfer of the shares from the trust would have required the consent of all beneficiaries.

The transfer of such valuable shares would normally be accompanied by a huge inheritance tax bill though some sources have speculated that the shares, once transferred, could be assigned to a new trust or trusts.

There are mechanisms within the tax law, according to one source, which allow a transfer of shares from one trust to another, all within the same family, to occur without generating an inheritance tax bill.