Questions and Answers

Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier 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.

Nominee accounts at W&R Morrogh

I have bought US shares through this stockbroking firm in the past two years, which I understand were being held in a nominee account. Accepting that you would not be au fait with the exact situation of this firm as it is in the hands of a receiver (PricewaterhouseCoopers), what is the likelihood of my investment being secure. I have written to PwC a number of times in the past few months but they have not indicated one way or the other.

If these US-quoted shares are held in a custodial bank in the US, how or when would I be able to access them.

Am I being naive or is there any realistic chance of me recovering my investment?

Mr J.Q., Mayo

While not being au fait with the precise nature of the affairs of W&R Morrogh, I can assure you it is no surprise that the receiver has been slow to state categorically what the situation might be with the assets of any particular creditor, including people who held shares through the company.

As receiver, its responsibility is to gather detailed information on the assets and then determine how best these should be allocated to the creditors, who would have different priorities.

What is true is that, in general, shares held in nominee accounts are more vulnerable where there is any question of impropriety in the handling of a stockbroker's affairs.

This is because the shares within such nominee accounts are normally in the name of the stockbrokerage and are more easily accessible to anyone within such a firm that would look for access to money.

Having said that, it is too early to say what the chances are of you recovering some or all of your investment from the firm. I would not say you were being naive in expecting it - but I would not build your hopes too high.

On the other hand, if your investment has disappeared, you would be covered under the investor compensation scheme for up to 90 per cent of the investment, or £20,000 (€25,400).

Vodafone

You may be interested to know that I have just phoned the number you gave in order to request a form to arrange scrip dividends from Vodafone (The Irish Times, September 9th, 2001) and was told that they are changing from scrip to drip (?) and will be contacting all shareholders in time for next dividend, and consequently they are not issuing the form you mention.

Ms S.H., e-mail

You are not the first and I suspect you will not be the last to find yourself misdirected on this issue. All I can tell you is that the information I gave was provided by the company's registrar.

Even the company, which I have now contacted in the light of the experience of people like you, admits that the information was incorrect and should not have been given.

So what is the truth? Yes, scrip dividends are not available from Vodafone any more and yes, the company is introducing the somewhat unfortunately titled DRIP scheme. This, I am told, stands for Dividend Re-investment Programme and should fundamentally allow investors the same option.

A spokesman for Vodafone assures me the scheme will be open to all investors, including the large number of small Irish investors currently holding cheques that are not, in truth, worth the paper they are written on when one considers the cost of converting the small dividend from sterling.

So what should those shareholders do with the existing dividends? I understand they can be retained by the shareholder or the registrar until they have grown large enough to be converted into shares or to be worth the bother and expense of cashing.

Of course, you don't have use of the money in the interim but, if the amount in question in the case of most small Irish shareholders is important, they probably should not be investing in shares directly in any case.

Eircom

I decided to accept Denis O'Brien's offer just before the final Valentia offer of early August.

As a result I am prevented from availing of Valentia.

However, I would like to know what is the position regarding:

(a) my shares, which are now under the control of eIsland; and

(b) when I will receive the cash value of my shares as promised by eIsland?

There must be many Eircom shareholders in the same position as me.

Mr D.V.-B., e-mail

In general, the shares committed to eIsland, not Denis O'Brien, would have to be released if the offer fails to win sufficient acceptances within 42 days to allow them to take control of the company.

That would leave you free to reassess the field and accept the best offer at the time - currently Valentia's - or not, as you see fit. Alternatively, you could formally withdraw your shares from eIsland.

No doubt either bidder will be able to apprise you of the mechanics of such a move.

Of course, if the eIsland offer lapses or is withdrawn, control of the shares automatically reverts to you.

For as long as the shares are pledged to eIsland, however, they cannot be pledged anywhere else - such as the higher Valentia offer.

As to getting money from eIsland, you will receive nothing from any bidder until one has been declared successful.

As Valentia has between 70 and 80 per cent of the shares as of last Friday, you are not likely to be getting any money from eIsland.

What you can do is regain control of your shares and pledge them to Valentia.

If, as seems likely, it receives control of 80 per cent of the shares by the next deadline - 3 p.m. today - it will pay out on those shares at the rate of €1.365 per share.

You don't have to join the Valentia camp but, if you do not and if it does secure 80 per cent, it can compulsorily acquire your shares.

However, it has four months to do so, meaning that you would receive your money at a later date. You will not, however, lose out financially by not actively supporting the Valentia bid.