Sanlam is proposing to demutualise and list on the stock exchange. Part of the process is making a share offer to policyholders who must then vote for or against the proposal.Here are some of the answers to questions policyholders may be asking.
Demutualisation is the change from a mutual society owned by
policyholders to a company owned by shareholders.
For a number of reasons. As a company, Sanlam will be able to
borrow money or raise new capital for expansion by offering shares through the
Johannesburg Stock Exchange (JSE).
First, it will distribute policyholders' money, which has been
held back to run the business, to the policyholders themselves in the form of free shares.
The value of the free shares to be distributed depends on several
things, including conditions on the JSE.
On July 31, 1998, Sanlam estimated the value of the free shares at
R14 billion.
Once the life assurer has demutualised and distributed this money
as free shares, which you can keep or sell, Sanlam intends to offer investors the
opportunity to buy more shares because it estimates that it still may need another R4 to
R5 billion for its proposed restructuring.
* You qualify if you had a Sanlam assurance or retirement annuity
policy at midnight on March 31 and still hold the policy on October 15;
* If your policy matured between these two dates and you took your
money you still qualify;
* If a policyholder died between these two dates, shares will be
issued to the policyholder's estate;
* If you took possession of a policy through a cession. For
example, say a husband on divorce ceded a policy to a former wife, she will receive the
shares. However, the cession must have been registered with Sanlam by March 31 this year;
* If you ceded your policy to a bank as security on a loan.
Security cessions of policies do not mean a bank can take your shares; and
* You also qualify for 300 shares if you are an employee of Sanlam
or Gensec Asset Managers.
* Anyone who does not own a Sanlam policy;
* Anyone who ceded a policy to someone else and the cession was
recorded by Sanlam by March 31 this year;
* Anyone who is a Sanlam unit trust holder or who is a member of
Sanlam Health. As an investor in these products you are not a "member" of
Sanlam.
All eligible policyholders will be sent an information pack which
will tell you how many shares you will get.
Shares will be awarded in two categories:
* There is a fixed allocation of 250 shares for everyone except
for people who are members of individual retirement annuity funds with no other policies;
and
* There is a variable allocation which depends on the size and
type of each policy.
No one will get fewer than 300 shares.
The document with the number of shares you will
receive looks like this...
HOW MANY SHARES DO YOU
GET?
Members of individual retirement annuity funds with no other
policies
color="#FFFFFF" size="1">All other eligible policyholders
Fixed allocation
(for each eligible policyholder)
Nil
250 Free shares
Variable allocation
(for each eligible policyholder)
The greater of:
One free share for every R90 of the savings measure for each participating policy.
OR
One free share for every R50 of the annual premium measure.
The greater of:
One free share for every R90 of the savings measure for each participating policy.
OR One free share for every R50 of the annual premium measure.
Minimum allocation
(for each eligible policyholder)
300 free shares
300 free shares
NOTES:
1)
Non-participating policyholders will receive R110 and not R90 for each savings measure.
Non-participating policyholders do not have a contractual right to share in the profits of
Sanlam so they receive fewer shares. Non-participating policies are investment policies
directly linked to the stock market.
2) A savings measure is the amount you have invested in the policy plus the
growth on the investment less the costs (such as tax and commissions).
3) A policy which has no investment value, such as
one which assures only your life, is also given a value, taking account of the amount you
would receive if you died or were disabled now.
If you have a participating policy that has a "savings
measure" (see definitions in the table above) of R50 000, you will receive a fixed
allocation of 250 free shares PLUS a variable allocation of 555 free shares, giving you a
total of 805 free shares.
If you have a participating policy that has a "savings
measure" of R2 000, you will receive a fixed allocation of 250 free shares PLUS a
variable allocation of 22 free shares. This totals 272 free shares. This is below the
minimum allocation so you will get 300 free shares.
Yes, you will be asked to vote on whether the process should go
ahead or not.
The directors of Sanlam have recommended that you should vote Yes
because they think you will benefit.
Trade union federation Cosatu has voiced its objections to
demutualisation.
You will receive a voting form shortly which you must complete and
send back to Sanlam by October 8, 1998. You do not have to vote but if you don't, you will
not influence the final decision.
You must do one of the following:
* Return to Sanlam the confirmation of policyholder's details,
which you should have received between April and May this year; OR
* Return to Sanlam the form on which you will vote on whether or
not Sanlam should demutualise, which you should receive in the mail soon; OR
* Return to Sanlam your bank account details on the form that you
should receive in the mail about now; OR
* Complete and return the share application form which will be
sent to you in November or December, if demutualisation is approved.
Yes. You remain a policyholder with all your benefits unchanged.
Your policy will continue to run while you pay the premiums. The free shares are separate
from, your policy. Both Sanlam's chief actuary and the independent actuary appointed by
the Financial Services Board are convinced that demutualisation will not affect Sanlam's
ability to cover the benefits to which you are entitled. The High Court will also have to
be convinced that your interests are protected.
You can hold onto your shares or you can sell them. The price you
will receive for your shares depends on what other people are prepared to pay for them.
Shares can change in value from one minute to another. Sanlam has
estimated on information, on July 31, your shares would have been worth between 700 and
900 cents each. However circumstances change.
Once you have been issued your shares you will need to look up
Sanlam under the Financial sector of the Johannesburg Stock Exchange in your daily
newspaper or in Personal Finance to see what is being offered for a share.
Remember the prices of shares are always published in cents.
Sanlam has made arrangements for you to sell and buy shares
through a special service. This will save you the bother of working through a stockbroker.
No, unless you ask for one.
Sanlam has set up a special company, known as the Sanlam Share
Account, to hold all the shares.
You will receive a statement from the company which will also pay
your dividends to you and offer you an avenue to buy and sell shares.
If you are a member of a pension or a provident fund, you will not
get any shares yourself because the fund will be the policyholder.
The trustees of your fund must use the free shares that the fund
gets for the benefit of the fund's members.
Sanlam has sent pension and provident funds booklets with further
details.
As a member of a fund you will also benefit indirectly as the
assets in your pension or provident fund will increase in value and these could be passed
on to you as better benefits when you retire.
Yes, most employees of Sanlam and its asset management arm,
Gensec, will get 300 free shares each, as well as any shares they are entitled to as
policyholders.
The total number of free shares given in this way will not be more
than 0,25 percent of all the free shares allocated to policyholders.
Directors of Sanlam will not get any of the free shares allocated
to employees.
The taxman has told Personal Finance that you will pay no tax on
the sale of your free shares, whether you sell them as soon as you are able or at some
future date.
However if you buy shares from another person or take advantage of
the discounted shares and sell them soon afterwards you are likely to be taxed on any
profit you make.
If you hold onto the shares for at least five years then you will
not be taxed on any profit you make on the sale of your shares.
If you hold onto your shares you will receive dividends, probably
every six months. Dividends you receive on any shares are not taxed.
However, the taxman will take some of the money without you
noticing it. In the budget in March, Finance Minister Trevor Manuel announced a 2,5
percent levy on the reserves. The money is being put into the special fund for creating
jobs for the young, the Umsobomvu Fund.
You do not have to pay this levy directly. Sanlam will do it for
you.
You will get another bite at the cherry when Sanlam issues extra
shares to get the R5 billion more it wants to expand its business. Policyholders will be
given a chance to buy shares at a discount. The discount will be announced later but you
could pay about five to 10 percent less for a share than the price that will paid by
others. After Sanlam has listed you will be able to buy more shares from other
shareholders if they choose to sell.
No. You will have to wait until Sanlam has listed. Some people
have been trying to buy Sanlam shares already but in terms of the rules made by Sanlam, to
prevent policyholders being exploited by crooks, the shares will only be issued to you.
No, unless you are a policyholder living in a foreign country
(except Namibia). The 8 000 foreign policyholders will only be allowed to take cash.
If you decide you want to hold onto your shares this will also
have benefits. If you hold onto the shares you will be a part owner of Sanlam and you will
get your share of any profits Sanlam makes and distributes as dividends. The profits you
receive will be in proportion to the number of shares you hold. Example: Say you are lucky
enough to own 10 shares in a company with 100 shares, you would receive 10 percent of the
profits.
If a company is well run and its profits keep increasing, more
investors will want to buy its shares and the shares will increase in price.>
The profits are paid out through what are called dividends. If
there are no profits or the profits are very small you are unlikely to receive a dividend.
Sanlam has set up a toll-free Demutualisation Helpline for
policyholders, on 0800 60 33 55.