Q & A

Telecom flotation

I know you are probably fed up with hearing about the Telecom flotation, but I have two short questions. Approximately when will the flotation take place as I am going to the US for the summer months? Is there a minimum that will have to be invested in the company, as I am a poor student who hopes to invest his summer work money in the company? Also, if the flotation is during those months when I am away, could I get a parent or friend to purchase shares in my name? I have registered my interest with Telecom.

Mr F.K., e-mail

It is entirely understandable that there should be such a lot of interest in the proposed flotation by the State of part of its majority interest in Telecom Eireann. After all, this will be by far the largest public flotation in the history of the Irish market.

Although no final decisions have been taken on the timing and precise size of the flotation, it appears it will take place in July although potential investors will be able to apply for shares from the middle of June. None of this is much use to you as I gather you will be out of the State from June.

While it is almost certain that there will be a maximum entitlement to shares, there is unlikely to be any minimum, apart possibly from a notional level to ensure the cost of processing applications does not exceed the flotation value of the shares applied for. Telecom, no doubt, will take great heart from the fact that even financially challenged students are convinced of the potential of an investment in the company.

I simply am not sure whether a parent would be able to apply for shares in your place while away. It would be unusual, apart from parents applying for shares on behalf of their minor children. However, it is possible that, using a binding legal agreement, you might be able to confer on them or on a stockbroker the right to buy shares.

Of course, you could always get your parents, or friends, to post out the application to you in the US and complete and return it yourself. In the absence of undue delays, there should be plenty of time for such a process to work.

Stock transfer

While transferring shares into joint names of spouses is not difficult in the ordinary course of events, attempts to do so in the case of Norwich Union stock through the Dublin Stamping Office in Dublin Castle were unsuccessful. I was told I would have to go through Lloyds TSB Registrars in Birmingham. Efforts to do so produced confusing forms and a call to the Belfast Stamping Office only further muddled matters. Could you find out if British stamp duty is required for this simple transaction and, if not, which of the categories on the back of the stock transfer form I received from Lloyds TSB Registrars applies?

Mr W.J.P., Dublin

You do seem to have had a trying time in effecting what at first sight appears to be a very simple transaction - transferring Norwich Union shares from your sole name into those of both yourself and your wife. Mind you, in one respect you had more luck that I did. You did at least manage to get through to the Belfast Stamping Office, even if their response confused you. The only number directory enquiries was able to produce for me was a fax number.

The simple answer to your question is that you do not have to pay stamp duty on such a transaction. This is because the transaction is a gift, not a sale or a paying off of debt. As a matter of interest, the stamp duty payable, should it have arisen, would have been 50 pence sterling (76 cents), although this will rise to £5 for transactions in Britain liable to stamp duty after October next due to changes announced in the last British budget.

Part of the confusion arises from the technical phraseology of the stock transfer form you received. While these are legal documents and do need to be precise, I fail to understand why they cannot either be more user-friendly or be accompanied by a simple explanatory leaflet. This is especially so in Britain where an extensive privatisation programme of nationalised utilities has seen an explosion in the number of ordinary people holding and dealing in shares. The same is increasingly true in Ireland after the Irish Permanent, Norwich Union and First National Building Society flotations, to say nothing of plans to float in Telecom Eireann and Aer Lingus.

Returning to the question of which of the categories in the section on the stock transfer form dealing with transfers free from stamp duty applies in your case, the consensus seems to be that it would be Category L which refers to "the conveyance or transfer of property operating as a voluntary disposition inter vivos for no consideration in money or money's worth nor any consideration referred to in Section 57 of the Stamp Act 1891 (conveyance in consideration of a debt etc)". Boy is that a mouthful. No wonder you were at a loss to judge which of the 13 categories - all boasting similarly impenetrable language - was applicable. In so far as I can determine, this Category L is the one which deals with gifts.

I know there is a reference to stock transfer between spouses in Category G on the same form, but this seems to relate only to transfers made at the point of being married or under the terms of a premarital agreement. It does not relate to transfers between spouses who are already married. I'm not too sure why it is not more embracing of marital transfers given that the British Inland Revenue tells me all such transfers would come under the heading of a gift.

Not that it is relevant to this case, but you might care to know that shares in companies incorporated in the Republic but listed in London would attract a higher rate of stamp duty - 1 per cent - in cases where it applies.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, Fleet Street, Dublin 2, or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.