I may want to sell some Aer Lingus shares that I have had for a long time. How do I do that?
Mr DC, email
Aer Lingus is certainly in the news right now, as IAG – the group which includes British Airways and Iberia and which is run by former Aer Lingus boss Willie Walsh – has submitted two bids for the company in recent weeks.
That activity has seen the share price surge.
However, it is worth remembering that these new elevated levels for the value of the shares only bring the value of the stock back to just above their flotation price.
Back in 2006, Aer Lingus floated at €2.20. It immediately jumped to €2.40 and actually managed to trade as high as €3.27 in March 2007.
However, for most of the intervening six or so years, it has been trading below the €2 mark, hitting a low of 46 cent in July 2009. As recently as a month ago, it was trading around the €1.80 mark.
The confirmed bids for the company have been at €2.30 and €2.40 a share. With the company trading above that price, it seems shareholders are confident that a third, higher bid will be forthcoming. But the level of the previous two bids would seem to suggest some of the wilder hopes of the market – for a bid close to €3 a share or even higher – are unlikely to be fulfilled.
If a bid is successful, your shares will be acquired as part of that exercise at whatever final price is struck.
Of course, with both the State and Ryanair being major shareholders, nothing is certain. The Government wants reassurances about direct flights from Dublin to the US and slots at Heathrow which could prove difficult for IAG.
Ryanair’s view will be coloured by its assessment of what any deal will mean for its future competition with IAG. Of course, Ryanair has also been ordered by UK competition authorities to sell down its stake – from 29.8 per cent to 5 per cent – though this is currently under appeal.
If a deal doesn’t happen, the shares could slide back towards their previous €1.70-€1.85 trading range. They could fall even below that, given that a takeover by IAG has always been seen as the most likely deal for Aer Lingus, and it would be precluded form returning to the table for some time.
If you are looking to sell your shares now, the presumption must be that you do not believe a deal will go through. Otherwise, you should hold on to your shares.
If you do want to sell, you need to contact a stockbroker and instruct them accordingly. If you hold the shares electronically, whichever broker is currently custodian of them would be your natural port of call; if they are held as paper certificates, a broker will want to have them in hand before they execute any deal.
Assuming you are not looking for the broker to advise you on whether now is a good time to sell or not, you are looking for an “execution-only” deal.
Charges vary and you should ring around the various brokers to see how they compare. They include Davy, Goodbody/Fexco, Investec, Merrion, Campbell O’Connor and Cantor Fitzgerald. A full list is available at this site: http://iti.ms/1IDOiys.
Another option is to use the service of Capita, the company that manages the share register for Aer Lingus. Its CapitaDeal is an online service where you register and carry out your transaction. Details can be found at http://iti.ms/1wb7RY9.
Capita notes that, unlike many brokers, you won’t have to open an account (and pay the associated charges) to trade, which avoids the issue of background checks, utility bills and the like – at least for one-off trades worth less than €30,000 in value.
Capita charges 1.5 per cent of the deal value – with a minimum charge of €50 and a maximum of €170 – plus a €5.50 compliance charge for phone trading and a lower 1 per cent (€39.99 minimum / €120 maximum) plus €5.50 charge for trading online.
If you bought at the flotation price, you would be making a gain of 30 cent a share (going by the price on Friday, January 9th). Once you sort out your overall gain, deduct any costs incurred in buying and selling the shares. After that, any gain above €1,270 will be liable to capital gains tax at a rate of 33 per cent.
Can lump sum gift be spread over eight years?
About eight years ago, I opened an account for my son for €20,000 with Irish Nationwide. He is now about to buy a house and wants to use this money as part of the deposit. The bank has asked him to provide a statement from me saying that I gave the money as a gift. As it was eight years ago, will he be entitled to €3,000 a year exemption for eight years?
Mr JH, email
No, he won't. As the gift was a lump sum of €20,000 given at the one time, the Revenue will consider that only €3,000 will qualify under the small gift exemption. The balance will be counted against his capital acquisitions tax threshold.
However, as the threshold for gifts and inheritances between a parent and a child is €225,000, your son will not face any tax bill on this gift unless he has previously received significant gifts or inheritances from you or his mother.
If you had wanted to avail of the small gift exemption, you would have had to open the account with no more than €3,000 and lodge further sums of no more than that amount for each intervening year.
Repeating small gifts without paying tax
I know
you have dealt with queries on the above subject many times and may wonder at another but here goes anyway . . . if a parent gifts
€3,000 to an adult child in a single year, can that same child receive a similar amount from say, a sibling, grandparent
or aunt within the same year? Can this pattern be repeated any other year?
Ms EG, email
In very simple terms, yes and yes. A child – or any person – can receive €3,000 each year under the small gift exemption from any number of people without having to consider any tax issues. That could be yourself and other family members or even total strangers.
The only issue for Revenue is that the money must actually come from the “disponer” (the person nominally giving the money) rather than being channelled through yourself or someone else who has already given €3,000 in that particular year.
And yes, they can receive €3,000 from those same people or others next year and in any future years. Send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara St, Dublin 2 or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.
