ETASSUM24760 - Schedule 2 share incentive plan (SIP): Types of award: Dividend shares: Paragraph 66: Acquisition of dividend shares

The trustees, when acquiring dividend shares on behalf of participants must treat all participants fairly and equally. This means, for example, that dividend shares must be allocated to all participants at the same time. It also means that, when shares carrying differing rights to dividends are to be acquired as dividend shares, they must be allocated proportionately among participants. This can arise when a mixture of newly-issued shares and other shares are available to the trustees for allocation.

The amount of money available to the trustees for reinvestment on behalf of each participant is:

• that participant’s share of the cash dividend received, plus
• the amount of any earlier dividend which was retained by the trustees for future reinvestment on behalf of that individual – see ETASSUM24780.

The trustees must use the cash dividend to acquire dividend shares within 30 days of receiving it, although any residue balance insufficient to purchase a full share can be repaid to the participant or carried forward (refer to ETASSUM24780). This does not prevent the trustees from:

• using shares which they (or their nominee) may already be holding, or
• purchasing shares in the market or subscribing for new shares at different times and at different prices.

However, the “acquisition date” must be the same for all dividend shares acquired from the same dividend and is, in fact, the date on which those shares are appropriated to participants by the trustees.

The number of shares to be acquired for each participant must be determined on the basis of the market value of those shares on the acquisition date (paragraph 66). Market value will be defined by the rules of the Schedule 2 SIP – see ETASSUM28180.