BP 2013 Annual Report Download - page 279

A Scrip Dividend Programme (Scrip) was approved by shareholders in
2010 which enables BP ordinary shareholders and ADS holders to elect
to receive dividends by way of 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 be
paid automatically instead.
Future dividends will be dependent on future earnings, the financial
condition of the group, the Risk factors set out on page 51 and other
matters that may affect the business of the group set out in our strategy
on page 13 and in Liquidity and capital resources on page 56.
The following table shows dividends announced and paid by the
company per ADS for the past five years.
Dividends per ADSaMarch June September December Total
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
2013 UK pence 36.01 35.01 34.58 34.80 140.4
US cents 54 54 54 57 219
aDividends announced and paid by the company on ordinary and preference shares are provided
in Financial statements – Note 12.
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, interalia to members of special classes of
holders some of which may be subject to other rules, including: tax-
exempt entities, life insurance companies, dealers in securities, traders in
securities that elect a mark-to-market method of accounting for securities
holdings, investors liable for alternative minimum tax, holders that,
directly or indirectly, hold 10% or more of the company’s voting stock,
holders that hold the shares or ADSs as part of a straddle or a hedging or
conversion transaction, holders that purchase or sell the shares or ADSs
as part of a wash sale for US federal income tax purposes, or holders
whose functional currency is not the US dollar. 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 tax laws of the United States, including the
Internal Revenue Code of 1986, as amended, its legislative history,
existing and proposed US Treasury 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 in
respect of their investment in the shares or ADSs.
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 maximum rate of 20%, 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. Dividends
paid by the company with respect to the ordinary 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. Accordingly, a US holder will include only the dividend
actually received from the company in gross income for US federal
income tax purposes, 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
dividend and will not be eligible for the dividends-received deduction
generally allowed to US corporations in respect of dividends received
from other US corporations. Dividends will be income from sources
outside the US and generally will be ‘passive category income’ or, in the
case of certain US holders, ‘general category income’, each of which is
treated separately for purposes of computing a US holder’s foreign tax
credit limitation.
The amount of the dividend distribution on the ordinary shares that is paid
in pounds sterling will be the US dollar value of the pounds sterling
payments made, determined at the spot pounds sterling/ US dollar rate
on the date the dividend distribution is includible in income, regardless of
whether the payment is, in fact, converted into US dollars. Generally, any
gain or loss resulting from currency exchange fluctuations during the
period from the date the pounds sterling dividend payment is includible in
income to the date the payment is converted into US dollars will be
treated as ordinary income or loss and will not be eligible for the
preferential tax rate on qualified dividend income. The gain or loss
generally will be income or loss from sources within the US for foreign
tax credit limitation purposes.
Shareholder information
BP Annual Report and Form 20-F 2013 275