Labour propose confiscating 10% uk equities - pension planning response?

Triumph13

AndyAdams wrote: »

There are a number of reasons for a buyback, they definitely can't cancel them as that would have an impact on the market capitialisation of the company, when they buy them back the shares will still exist. They may want to hold more stock so they have more control, may want to increase the share price etc.

The whole point of a buyback is to cancel the shares. Rather than pay a dividend to shareholders you use the cash to buy some of the shares and cancel them. Each remaining shareholder now owns a larger percentage of the company and so the stock price goes up compared to what it would have been if they had just paid a dividend instead. The overall market cap only changes in the same way that it does when a dividend is paid,

AndyAdams

Triumph13 wrote: »

The whole point of a buyback is to cancel the shares. Rather than pay a dividend to shareholders you use the cash to buy some of the shares and cancel them. Each remaining shareholder now owns a larger percentage of the company and so the stock price goes up compared to what it would have been if they had just paid a dividend instead. The overall market cap only changes in the same way that it does when a dividend is paid,

I take back the definitely can't cancel comment :-)

Thrugelmir

AndyAdams wrote: »

There are a number of reasons for a buyback, they definitely can't cancel them as that would have an impact on the market capitialisation of the company

Companies regularly purchase their own shares for cancellation. Helps boost the EPS. 20% of all purchase trades in the US in 2017 were down to companies buying their own shares back. Much with cheap borrowed money. With the interest being tax deductible. Financial engineering is alive and well.

NewShadow

Paul_Herring wrote: »

Are you sure about that? I'm not...

We'd have to see the legislation when drafted but a quick scuttle around the internet seems to agree with my interpretation:

https://www.bbc.co.uk/news/business-45626043

Big listed companies forced to pay 10% of their dividends to the government might choose to de-list to avoid the charge and the UK would become less attractive as a place for new businesses to list their shares. How much less attractive is hard to say, but 10% of the company - albeit given over ten years - is a mighty big slice to give away.

Business groups such as the CBI are, perhaps predictably, warning that investors will pack their bags. But Mr McDonnell insists these changes are gradual and that previous attempts to promote the interests of workers or make multinationals pay more tax have failed.

Paul_Herring

NewShadow wrote: »

We'd have to see the legislation when drafted but a quick scuttle around the internet seems to agree with my interpretation:
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Hmm. I got this: https://www.theguardian.com/politics/2018/sep/23/labour-private-sector-employee-ownership-plan-john-mcdonnell

Under Labour’s plans, legislation would require private sector companies with 250 or more employees to transfer at least 1% of their ownership into an IOF each year, up to a maximum of 10%. Smaller companies would be able to set up an IOF on a voluntary basis.

Nothing there about 'shares' - simply 'ownership,' and the possibility of smaller companies (who are less likely to have shares) doing this voluntarily..

Hence my paranoia...

mat5664

make no mistake - the combination of this proposal, together with nationalising utilities and increasing business taxes will be a disaster for UK equities (and the economy in general). Any sign of a snap election, I am switching all my pension funds out of UK equities or anything instrument linked to the UK economy.

michaels

steampowered wrote: »

Large employers (500+ employees) in Germany must have an employee representative on the board.

German employment law is much more protective of employees too. For example it is much, much more difficult for a German employer to sack someone than it is for a UK employer.

Yet the German manufacturing sector seems to have done much, much better than the UK's manufacturing sector over the past few decades.

One does wonder whether giving employees a bit more of a stake in the companies they work for would actually turn out to be a good thing.

There is surely a middle ground between union-dominated closed shops like the UK had in some industries in the seventies, versus the workplace culture most companies have at the moment.

Germany cleverly tied itself to weaker economies at an 'average' exchange rate that resulted in German exports being too cheap and those of most other euro countries being too expensive - hence the crisis in countries like Greece, Italy and Spain who ended up importing loads from Germany and exporting next to nothing. Financial engineering at its finest.

Note Germany also has low levels of home ownership and wide income inequality.

OldBeanz

mat5664 wrote: »

make no mistake - the combination of this proposal, together with nationalising utilities and increasing business taxes will be a disaster for UK equities (and the economy in general). Any sign of a snap election, I am switching all my pension funds out of UK equities or anything instrument linked to the UK economy.

Not according to the Guardian. Our saviour awaits. Heaven help us.

michaels

I guess if you have a DB pension you don't care if the govt expropriates 10% of everyone else's pension savings.....

AndyAdams

Surely if any company is near the 250 threshold there is a disincentive to recruit more PAYE staff, won't it stifle free enterprise and growth?


I think the policy throws up more questions than answers.