TIDMBNC
RNS Number : 6323M
Banco Santander S.A.
14 October 2016
MATERIAL FACT
Banco Santander, S.A. discloses information in connection with
the flexible compensation scheme "Santander Dividendo Elección"
(scrip dividend scheme) to be applied to the second 2016 interim
dividend. An informative document is enclosed for purposes of
article 26.1.e) of Royal Decree 1310/2005, of 4 November
(implementing Directive 2003/71/EC on the prospectus to be
published when securities are offered to the public or admitted to
trading).
Boadilla del Monte (Madrid), October 14, 2016
INFORMATIVE DOCUMENT
CAPITAL INCREASE CHARGED TO RESERVES
BANCO SANTANDER, S.A.
October 14, 2016
-----------------------------------------------------------
THIS DOCUMENT HAS BEEN PREPARED IN ACCORDANCE WITH ARTICLE
26.1.E) OF ROYAL DECREE 1310/2005.
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1. OBJECT
The ordinary general shareholders' meeting of Banco Santander,
S.A. ("Banco Santander", "Santander" or the "Bank") held on March
18, 2016 resolved, under item eight of its agenda, to increase the
share capital of Banco Santander, with full charge to reserves, in
an amount to be determined in accordance with the terms and
conditions set out in the resolution (the "Increase"), delegating
the execution of the Increase to the board of directors, with
authority to delegate in turn to the executive committee, pursuant
to article 297.1.a) of the consolidated Spanish Capital
Corporations Law, as passed by means of Royal Legislative Decree
1/2010, of 2 July ("Spanish Capital Corporations Law").
The executive committee of the Bank, in the meeting held on
October 14, 2016, has resolved to execute the Increase in
accordance with the terms and conditions set out by the ordinary
general shareholders' meeting, and has fixed the overall market
value of the Increase (Amount of the Alternative Option) in 665
million Euro, pursuant to that resolution of the general
shareholders' meeting.
In accordance with article 26.1.e) of Royal Decree 1310/2005, of
4 November (implementing Directive 2003/71/EC on the prospectus to
be published when securities are offered to the public or admitted
to trading), the preparation and publication of a prospectus
related to the admission to listing of the shares issued as a
consequence of the execution of the Increase will not be necessary
"provided that a document is made available containing information
on the number and nature of the shares and the reasons for and
details of the offer". This informative document provides such
information. This document is available at the Bank's website
(www.santander.com) and at the CNMV's website (www.cnmv.es).
2. PURPOSE OF THE INCREASE: "SANTANDER DIVIDO ELECCIÓN" SCHEME
The Increase serves as an instrument for the
shareholder-compensation scheme named "Santander Dividendo
Elección" which shall be applied to the second 2016 interim
dividend in October / November 2016. This scheme allows
shareholders to opt between receiving newly issued Santander shares
or an amount in cash broadly equivalent to the second interim
dividend of 2016. The "Santander Dividendo Elección" scheme is
similar to other programs implemented in the past by other
international banks and extended among some of the companies which
form part of the IBEX-35. With it Santander's shareholders will be
able to adapt their compensation to their preferences and personal
situation, also benefiting from a more favourable tax treatment in
case they opt to receive new shares.
"Santander Dividendo Elección" scheme works as follows. Each
shareholder will receive a bonus share right for every Santander
share held. These rights will be listed on and may be traded on the
Spanish Stock Exchanges during a 15 calendar day period. Following
the end of this period, the rights will be automatically converted
into new Santander shares. Each shareholder may opt for one of the
following alternatives:
(i) Receive new Santander shares. In this case, the shareholder
will receive free of charge the number of shares corresponding to
the number of rights held. The delivery of shares will not be
subject to Spanish withholding tax.
(ii) Receive a cash payment broadly equivalent to the
traditional second interim dividend. To this end, Banco Santander
has assumed an irrevocable commitment to acquire the bonus share
rights for a fixed price. This option will be offered only to
shareholders who have acquired their Santander shares no later than
on the date on which the announcement of the Increase is published
in the Official Bulletin of the Commercial Registry ("BORME")
(envisaged for 17 October, 2016, as set out in the calendar shown
in Section 3.4 below) and only with regard to the bonus share
rights granted free of charge. Consequently, the bonus share rights
acquired on market may not be tendered in Banco Santander's offer.
This option will be subject to the same tax treatment as a dividend
distribution and, therefore, the amount to be paid to the
shareholders will be subject to a current 19 % Spanish withholding
tax deduction.
(iii) Receive a cash payment through selling rights on market.
Given that the rights will be listed, the shareholders may sell
them on market at any time during the trading period described in
section 3.5 below at the prevailing market price rather than at the
guaranteed price offered by Banco Santander. The proceeds for the
on market sale will not be subject to Spanish withholding tax.
Additionally, shareholders will be able to combine the above
mentioned alternatives in view of their specific needs.
Shareholders who do not make an election will receive new shares
unless they have previously given (in previous programs) permanent
instructions as described in section 3.5 below.
3. DETAILS OF THE OFFER
3.1. Number of rights needed and number of shares to be issued
Pursuant to the formulae set forth in section 2 of the general
shareholders' meeting resolution, the executive committee has set
the following details of the Increase:
(i) The number of bonus share rights needed to receive a new
share is 87. The shareholders of Banco Santander who have acquired
their Santander shares no later than at 23:59 on the day of
publication of the announcement of the Increase in the Official
Bulletin of the Commercial Registry ("BORME") (envisaged for
October 17, 2016) will be allotted a bonus share right for each
share of Santander held. Therefore, the aforementioned shareholders
will have the right to receive a new share for each 87 old shares
held on the mentioned date.
Such number of rights has been calculated as follows,
considering that the number of outstanding shares of the Bank is
14,434,492,579 that the Amount of the Alternative Option is
665,000,000 Euros, as indicated above, and that the average market
price of the Santander share in the term set out in the capital
increase resolution (PreCot) is 3.973 Euros:
Num. rights = NTAcc / (Amount Alternative Option / PreCot) =
14,434,492,579 / (665,000,000 / 3.973) = 86.23795340807 = 87 rights
(rounded up to the nearest whole number).
(ii) The number of shares to be issued is 165,913,707.
Nevertheless, the actual number of shares which shall be finally
issued may be lower, as it will depend on the number of rights
acquired by Banco Santander under its commitment to purchase bonus
share rights. Banco Santander will waive the bonus share rights it
acquires by virtue of such commitment. Therefore, only the shares
corresponding to the bonus share rights not acquired by Banco
Santander will be issued. This number results from the following
formula:
NAN = NTAcc / Num. rights = 14,434,492,579 / 87 = 165,913,707
new shares (rounded down).
3.2. Amount of the Increase and reserve against which it will be charged
In view of the number of shares to be issued set out above, the
maximum amount of the Increase is 82,956,853.50 Euros. The amount
by which the Bank's capital will actually be increased is dependant
upon the number of shares finally issued.
The amount of the Increase will be charged against the share
premium reserves, which amounted to 45,001 million Euros as of
December 31, 2015.
3.3. Price of the commitment to purchase rights
The gross price at which Banco Santander commits to purchase
rights is 0.045 Euros per right, calculated pursuant to the formula
set forth in the Increase resolution as follows:
Price of the commitment to purchase the bonus share rights =
PreCot / (Num. of rights + 1) = 3.973 / (87 + 1) = 0.04514772 =
0.045 (rounded up or down to the nearest Euro thousandth and, in
case of a half Euro thousandth, rounded up to the nearest Euro
thousandth).
As a result, those shareholders willing to receive their
compensation in cash, will be able to sell their bonus share rights
to Banco Santander at a fixed gross price of 0.045 Euros.
3.4. Calendar
The envisaged calendar for the execution of the Increase is the
following:
(i) October 17, 2016. Publication of the announcement of the
Increase in the Official Bulletin of the Commercial Registry
("BORME"). Reference date for the allotment of rights (23:59 h.
CET) (last trading date).
(ii) October 18, 2016. Beginning of the trading period of the
rights. Santander share quotes "ex-coupon" (ex date).
(iii) October 27, 2016. Last date to request compensation in
cash (sale of rights to Santander Group).
(iv) November 1, 2016. End of the trading period of the rights.
Acquisition of bonus share rights by Banco Santander from those
shareholders who have requested cash broadly equivalent to the
traditional second interim dividend.
(v) November 3, 2016. Cash payments to those shareholders who have so requested.
(vi) November 4, 2016. Banco Santander waives the rights
acquired from those shareholders who have requested their
compensation in cash (sale of rights to Santander Group). Closing
of the Increase.
(vii) November 5 - November 14, 2016. Actions for the
registration of the Increase and admission to listing of the new
shares on the Spanish Stock Exchanges.
(viii) November 14, 2016. Beginning of ordinary trading of new
shares on the Spanish Stock Exchanges(1) .
3.5. Allotment of rights and procedure to opt for cash or new shares
The bonus share rights will be allotted to the shareholders of
Banco Santander who have acquired their Santander shares no later
than at 23:59 on the day of publication of the announcement of the
Increase in the Official Bulletin of the Commercial Registry
("BORME") (envisaged for October 17, 2016). The trading period of
the rights will begin on the next business day and will have a term
of fifteen calendar days (from October 18 to November 1, 2016).
During the trading period of the rights, the shareholders may
opt for cash or new shares as explained above, as well as for
acquiring on market bonus share rights to subscribe for new shares.
However, those shareholders who wish to accept the commitment to
purchase rights offered by Banco Santander and receive cash at the
guaranteed price shall need to communicate their decision no later
than October 27, 2016. The commitment to purchase rights is
addressed only at the rights allotted free of charge to
shareholders, and not to those acquired on market. To choose among
the alternatives offered by the "Santander Dividendo Elección"
scheme, shareholders will have to contact the entities where their
Santander shares and corresponding bonus share rights are
deposited. Specifically:
(i) Shareholders whose shares are deposited at Grupo Santander.
These shareholders may opt to receive, in the current program,
their compensation in cash at the guaranteed fixed price offered by
Banco Santander from time to time. To this end, they will have to
contact their usual branch and give the relevant order.
Shareholders who opted in any previous "Santander Dividendo
Elección" scheme to receive cash in subsequent programs at the
guaranteed price will receive their compensation in cash and no
communication shall be required. In the absence of an express
communication, shareholders who have not opted in previous programs
to receive cash permanently will receive new shares. Grupo
Santander shall not charge any fees or costs to those shareholders
who opt to receive cash at the guaranteed fixed price or to receive
new shares. In case of sale of the rights on market, Grupo
Santander shall charge the usual fees or costs pursuant to the
applicable regulations.
(ii) Shareholders whose shares are deposited with other
entities. These shareholders will have to contact the entity where
their shares are deposited to make their decision. Specifically, if
they want to receive cash at the fixed purchase price of Banco
Santander's commitment, they shall make their option no later than
October 27, 2016. In the absence of an express communication,
shareholders will receive new Santander shares(2) . The depositary
entities may charge to shareholders fees or costs related to the
allotment of shares or to the sale of rights pursuant to the
applicable regulations.
The Increase is carried out free of fees and costs for
shareholders in connection with the allotment of the new shares,
with Banco Santander assuming the costs for the issue,
subscription, placing on market, listing and other related
costs.
4. NATURE OF THE SHARES TO BE ISSUED
4.1. Face value, issue price and representation of shares
The new shares to be issued in the Increase will be ordinary
shares with a face value of fifty Euro cents (0.5) each, of the
same class and series as those currently outstanding. The new
shares will be issued at an issue price of fifty Euro cents (0.5),
that is, without issuance premium, and will be represented in
book-entry form, the records of which will be kept by Sociedad de
Gestión de los Sistemas de Registro, Compensación y Liquidación de
Valores, S.A.U. (Iberclear) and its participant entities.
4.2. Reserves to which the shares will be charged and balance sheet used for the Increase
The Increase is free of charge and, therefore, does not require
any payment from the shareholders. As stated above, the Increase
will be charged against the share premium reserves, which amounted
to 45,001 million Euros as of December 31, 2015.
The balance sheet used for purposes of the Increase is that
corresponding to December 31, 2015, duly audited by Deloitte, S.L.
on February 12, 2016 and approved by the ordinary general
shareholders' meeting on March 18, 2016 under item one A of its
agenda.
4.3. Shares in deposit
Following the end of the trading period of the bonus share
rights, the new shares that have not been capable of being allotted
due to causes not attributable to Banco Santander will be kept in
deposit and available to those who evidence lawful ownership of the
relevant bonus share rights. Three years after the end of the bonus
share rights trading period, the shares still pending to be
allotted may be sold at the risk and expense of the interested
parties in accordance with article 117 of the Spanish Capital
Corporations Law. The net proceeds of the sale will be deposited in
the Bank of Spain or in the General Deposit Bank (Caja General de
Depósitos) at the disposal of the interested parties.
4.4. Rights of the new shares
The new shares will confer the same voting and economic rights
upon their holders as the currently outstanding ordinary shares of
Banco Santander from the date on which the capital increase is
declared to be subscribed and paid up, which is envisaged to happen
on November 4, 2016.
4.5. Admission to listing
The Bank will apply for the listing of the new shares on the
Madrid, Barcelona, Bilbao and Valencia Stock Exchanges through the
Spanish Automated Quotation System (Mercado Continuo), and shall
take the steps and actions that may be necessary with the competent
bodies of the foreign Stock Exchanges on which Banco Santander
shares are traded (currently Lisbon, London, Milan, Warsaw, Buenos
Aires, Mexico, New York -through ADSs -American Depositary Shares-
and São Paulo, through BDRs -Brazilian Depositary Receipts-) in
order for the new shares issued under the Increase to be admitted
to trading. Subject to the granting of the relevant authorizations,
it is expected that the ordinary trading of the new shares in the
Spanish Stock Exchanges will begin on November 14, 2016.
5. TAX REGIME
Below there is a brief description of the tax regime currently
applicable in Spain to the options available for shareholders. This
description does not constitute tax advice and does not include all
tax considerations that may be relevant for each shareholder in
view of his particular circumstances. Therefore, shareholders are
advised to consult with their tax advisors the tax regime
applicable to them.
The delivery of the shares issued in the Increase will be
considered for tax purposes as a delivery of fully paid-up
free-of-charge shares, and therefore, shall not be considered
income for purposes of Personal Income Tax (Impuesto sobre la Renta
de las Personas Físicas) ("IRPF"), Corporate Income Tax (Impuesto
sobre Sociedades) ("IS"), or Non-Resident Income Tax (Impuesto
sobre la Renta de no Residentes) ("IRNR"), whether or not the
shareholders act through a permanent establishment in Spain.
The acquisition value, both of the new shares received in the
Increase and of the shares from which they arise, will be the
result of dividing the total cost by the applicable number of
shares, both old and new. The acquisition date of the new shares
will be that of the shares from which they arise.
If the shareholders sell their bonus share rights on the market,
the amount so obtained will be taxed as follows in 2016:
(i) For purposes of the IRPF and the IRNR without permanent
establishment, the amount obtained in the sale of the bonus share
rights on the market follows the same rules as those applying to
pre-emptive rights. Consequently, the amount obtained in the
transfer of the bonus share rights on the market reduces the
acquisition value for tax purposes of the shares giving rise to
such rights, by application of Section 37.1.a) of Act 35/2006, of
28 November, on IRPF.
In this way, if the amount obtained in such transfer is higher
than the acquisition value of the securities from which the rights
arise, the excess amount will be treated as a capital gain for the
seller in tax period in which the transfer takes place.
In the case of shareholders who are individuals and residents of
the Historical Territories of the Basque Country, the amount
obtained for the transfer of the bonus share rights is regarded as
a financial profit.
(ii) Taxation under the IS and the IRNR with permanent
establishment in Spain, to the extent that a full business cycle
has been completed, will be determined in accordance with the
relevant accounting rules, with the pertinent adjustments, if
applicable, as set forth under Law 27/2014, of 27 November, on
IS.
In the event that the holders of the bonus share rights accept
the Bank's commitment to purchase the bonus share rights for a
fixed price, the tax regime applicable to the amount obtained in
the transfer to the Bank of the bonus share rights held in their
capacity as shareholders will be that applicable to cash dividends
and, therefore, shall be subject to withholding.
6. FOREIGN JURISDICTIONS WHERE BANCO SANTANDER IS LISTED
The options, terms and procedures indicated in this informative
document may not be the same as those applicable to the
shareholders owning Santander shares on the different foreign stock
exchanges where the Bank is listed. These shareholders are urged to
consult the public announcements made and other documents published
in their jurisdictions.
* * *
Banco Santander, S.A.
_______________________________
Óscar García Maceiras
Vicesecretary of the Board of Directors
(1) Estimated date. Subject to the granting of the relevant
authorizations. The admission to trading of the new shares on the
foreign Stock Exchanges on which the shares of the Bank are traded
shall also be requested.
(2) Special arrangements may exist for those shareholders who
hold their shares through the UK nominees and in the form of ADRs -
please note section 6.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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