BP 2012 Annual Report Download - page 157

Dividends
When dividends are paid on its ordinary shares, BP’s policy is to pay
interim dividends on a quarterly basis.
BP’s policy is also to announce dividends for ordinary shares in US dollars
and state an equivalent sterling dividend. Dividends on BP ordinary shares
will be paid in sterling and on BP ADSs in US dollars. The rate of exchange
used to determine the sterling amount equivalent is the average of the
market exchange rates in London over the four business days prior to the
sterling equivalent announcement date. The directors may choose to
declare dividends in any currency provided that a sterling equivalent is
announced, but it is not the company’s intention to change its current
policy of announcing dividends on ordinary shares in US dollars.
Information regarding dividends announced and paid by the company on
ordinary shares and preference shares is provided in Financial statements
– Note 19 on page 214.
A Scrip Dividend Programme (Scrip) was approved by shareholders in
2010 which enables BP ordinary shareholders and ADS holders to elect to
receive new fully paid BP ordinary shares (or ADSs in the case of ADS
holders) instead of cash. The operation of the Scrip is always subject to
the directors’ decision to make the Scrip offer available in respect of any
particular dividend. Should the directors decide not to offer the Scrip in
respect of any particular dividend, cash will automatically be paid instead.
Future dividends will be dependent on future earnings, the financial
condition of the group, the Risk factors set out on pages 38-44 and other
matters that may affect the business of the group set out in Our strategy
on pages 20-21 and in Liquidity and capital resources on pages 90-93.
The following table shows dividends announced and paid by the company
per ADS for each of the past five years.
Dividends per ADSaMarch June September December Total
2008 UK pence 40.9 41.0 42.2 52.2 176.3
US cents 81.15 81.15 84.0 84.0 330.3
Canadian
centsb80.8 82.5 85.8 108.6 357.7
2009 UK pence 58.91 57.50 51.02 51.07 218.5
US cents 84 84 84 84 336
2010 UK pence 52.07 – – – 52.07
US cents 84 – – – 84
2011 UK pence 26.02 25.68 25.90 26.82 104.42
US cents 42 42 42 42 168
2012 UK pence 30.57 30.90 30.10 33.53 125.10
US cents 48 48 48 54 198
aDividends announced and paid by the company on ordinary and preference shares is provided in
Financial statements Note 19 on page 214.
bBP shares were de-listed from the Toronto Stock Exchange on 15 August 2008 and the last
dividend payment in Canadian dollars was made on 8 December 2008.
UK foreign exchange controls on
dividends
There are currently no UK foreign exchange controls or restrictions on
remittances of dividends on the ordinary shares or on the conduct of the
company’s operations, other than restrictions applicable to certain countries
and persons subject to EU economic sanctions.
There are no limitations, either under the laws of the UK or under the
company’s Articles of Association, restricting the right of non-resident or
foreign owners to hold or vote BP ordinary or preference shares in the
company other than limitations that would generally apply to all of the
shareholders and limitations applicable to certain countries and persons
subject to EU economic sanctions.
Shareholder taxation information
This section describes the material US federal income tax and UK taxation
consequences of owning ordinary shares or ADSs to a US holder who
holds the ordinary shares or ADSs as capital assets for tax purposes. It
does not apply, however, to members of special classes of holders
subject to special rules and holders that, directly or indirectly, hold 10% or
more of the company’s voting stock. In addition, if a partnership holds the
shares or ADSs, the US federal income tax treatment of a partner will
generally depend on the status of the partner and the tax treatment of the
partnership and may not be described fully below.
A US holder is any beneficial owner of ordinary shares or ADSs that is for
US federal income tax purposes (i) a citizen or resident of the US, (ii) a US
domestic corporation, (iii) an estate whose income is subject to US federal
income taxation regardless of its source, or (iv) a trust if a US court can
exercise primary supervision over the trust’s administration and one or
more US persons are authorized to control all substantial decisions of the
trust.
This section is based on the Internal Revenue Code of 1986, as amended,
its legislative history, existing and proposed regulations thereunder,
published rulings and court decisions, and the taxation laws of the UK, all
as currently in effect, as well as the income tax convention between the
US and the UK that entered into force on 31 March 2003 (the ‘Treaty’).
These laws are subject to change, possibly on a retroactive basis. This
section is further based in part on the representations of the Depositary
and assumes that each obligation in the Deposit Agreement and any
related agreement will be performed in accordance with its terms.
For purposes of the Treaty and the estate and gift tax Convention (the
‘Estate Tax Convention’) and for US federal income tax and UK taxation
purposes, a holder of ADRs evidencing ADSs will be treated as the owner
of the company’s ordinary shares represented by those ADRs. Exchanges
of ordinary shares for ADRs and ADRs for ordinary shares generally will
not be subject to US federal income tax or to UK taxation other than
stamp duty or stamp duty reserve tax, as described below.
Investors should consult their own tax adviser regarding the US federal,
state and local, UK and other tax consequences of owning and disposing
of ordinary shares and ADSs in their particular circumstances, and in
particular whether they are eligible for the benefits of the Treaty.
Taxation of dividends
UK taxation
Under current UK taxation law, no withholding tax will be deducted from
dividends paid by the company, including dividends paid to US holders. A
shareholder that is a company resident for tax purposes in the UK or
trading in the UK through a permanent establishment generally will not be
taxable in the UK on a dividend it receives from the company. A
shareholder who is an individual resident for tax purposes in the UK is
subject to UK tax but entitled to a tax credit on cash dividends paid on
ordinary shares or ADSs of the company equal to one-ninth of the cash
dividend.
US federal income taxation
A US holder is subject to US federal income taxation on the gross amount
of any dividend paid by the company out of its current or accumulated
earnings and profits (as determined for US federal income tax purposes).
Dividends paid to a non-corporate US holder in taxable years beginning
after 2012 that constitute qualified dividend income will be taxable to the
holder at a preferential rate, provided that the holder has a holding period
in the ordinary shares or ADSs of more than 60 days during the 121-day
period beginning 60 days before the ex-dividend date and meets other
holding period requirements. In the case of a non-corporate US holder
whose taxable income does not exceed $400,000 ($450,000 in the case
of a joint filer), such dividends will be taxed at a maximum rate of 15%.
Such dividends paid to a non-corporate US holder whose income is above
these dollar thresholds will be subject to tax at a rate of 20%. These dollar
thresholds will be adjusted for inflation for tax years after 2013. Dividends
paid by the company with respect to the shares or ADSs will generally be
qualified dividend income.
As noted above in UK taxation, a US holder will not be subject to UK
withholding tax. A US holder will include in gross income for US federal
income tax purposes the amount of the dividend actually received from
the company, and the receipt of a dividend will not entitle the US holder to
a foreign tax credit.
For US federal income tax purposes, a dividend must be included in
income when the US holder, in the case of ordinary shares, or the
Depositary, in the case of ADSs, actually or constructively receives the
Shareholder information
Shareholder information 155
BP Annual Report and Form 20-F 2012