If you have not yet recieved your shares, please contact the Company at IR@poolbegpharma.com so that we can try to help to resolve any issues.
Proposal to distribution in specie shareholders
On 11 April 2022, Poolbeg announced that a number of new investors had offered to acquire up to £1.6m distribution in specie shares at a price of 5.9 pence per share i.e. the closing price on 8 April 2022 (the last trading day prior to that announcement).
On 27 April 2022, Poolbeg announced that it had received acceptances from distribution in specie shareholders seeking to sell a total of £366k of Poolbeg shares, representing only 3% of the distribution in specie shares. The vast majority, representing 97% of distribution in specie shareholders, decided to remain invested in Poolbeg following the end of the lock-up period. Overall, the proposal has demonstrated strong shareholder confidence in the Company as it enters the exciting clinical phase of its development.
Will my holding be diluted as a result of this?
Poolbeg ended 2021 well capitalised with a strong cash balance of £20.9m, so it is important to note that the Company was not raising any new funds as part of this £1.6m proposal from New Investors to purchase distribution in specie shares. As such, there will be no dilution to existing shareholders from the acceptance of the £366k from New Investors by the distribution in specie shareholders.
When will I receive my share certificate?
The Poolbeg Pharma shares received were subject to a lock-up period which ended on 20 April 2022. The share certificates for distribution in specie shareholders who did not participate in the proposals (announced on 11 April 2022) have been posted to the registered holders.
Shareholders can then dematerialise the share certificate and hold the shares via CREST if they so choose. For any distribution in specie shareholders who originally held their Open Orphan shares on 17 June 2021 in a nominee account or any other type of account, then the new Poolbeg share certificate will be sent to the shareholders’ broker or account manager.
Who is Croft Nominees Limited?
Croft Nominees Limited is an entity controlled by the lawyers to Open Orphan and Poolbeg Pharma, DAC Beachcroft LLP. Croft Nominees Limited was appointed by Open Orphan and Poolbeg Pharma to act as trustee for the nine-month post IPO lock-up of Poolbeg Pharma shares. This appointment was to help facilitate the practical enforcement of the lock-up restrictions.
On or around 26 April 2022, Croft Nominees will no longer hold any of these shares, as their sole function was to act as a nominee which is standard practice in these types of transactions.
Why was there a lock-up period?
The lock-up period was intended to contribute to the creation of an orderly market for a period after Poolbeg Pharma’s admission to trading on AIM. Poolbeg Pharma’s admission to AIM took place on 19 July 2021. Such lock-up periods can vary from 3, 6, 9, or 12 months in length and the Company took the decision to lock up shareholders for a 9-month period.
Will there be tax on the distribution in specie shares?
The following comments are intended only as a general guide,shareholders are encouraged and recommended to seek their own financial tax advice.
A. UK resident shareholders: The distribution in specie shares issued to shareholders as part of the demerger from Open Orphan are treated as a distribution for UK tax purposes, which could be taxable as dividend income. However, as advance clearance for a statutory demerger was obtained from HMRC, the distribution is exempt for UK income tax purposes, and hence there should be no UK income tax liabilities for UK resident shareholders upon receipt of these distribution in specie shares.
Disposal of the distribution in specie shares by UK resident shareholders will be subject to capital gains tax if a chargeable gain is made. The capital gains tax base cost is close to nil (0), therefore nearly the full consideration will be subject to capital gains tax.
There has been some confusion around the base cost and some shareholders thought that the base cost for these shares might be 6p, however, we can clarify that the base cost for capital gains purposes is close to nil because no consideration was paid for the receipt of these shares.
B. UK resident shareholders with shares held in an ISA:
Open Orphan plc and Poolbeg Pharma plc ordinary shares are ISA qualifying investments.
The Company can confirm based on advice received that if a shareholder held Open Orphan plc shares in an ISA account on the ex-dividend date (17 June 2021), the resulting Poolbeg Pharma distribution in specie shares should be directed to and held in your ISA account after 20 April 2022 when they are released from lock-up. This dividend income received into your ISA is treated the same way as any other exempt income that was generated from your ISA qualifying investment.
As with all ISA held shares, should you sell your dividend in specie Poolbeg shares, there will be no tax payable if the proceeds remain within your ISA account.
In addition, if these distribution in specie Poolbeg shares remain within the ISA, they do not form part of the £20k annual ISA allowance as they result from a distribution from an existing ISA shareholding.
We fully understand that there had been some confusion among some of our investors and also potentially among some of the ISA online account managers, but we can confirm that shareholders should have no issue retaining Poolbeg Pharma dividend in specie shares within a qualifying ISA account.
C. Ireland resident shareholders: Advice has been obtained from professional advisors in Ireland who have confirmed that there should be no Irish income tax liabilities as a result of the issue of the distribution in specie shares as part of the demerger. The receipt of dividends could be subject to Irish income tax, and independent advice should be sought.
Disposal of the distribution in specie shares by Irish resident shareholders will be subject to capital gains tax if a chargeable gain is made. The capital gains tax base cost is close to nil, therefore nearly the full consideration will be subject to capital gains tax. There has been some confusion around the base cost and some shareholders thought that the base cost for these shares might be 6p, however, we can clarify that the base cost for capital gains purposes is close to nil because no consideration was paid for the receipt of these shares.
D. Non-UK and Irish resident shareholders: May be subject to tax on dividend income under any law to which they are subject to outside the UK. In addition, they may be subject to tax on a future disposal of shares under any law to which they are subject to outside the UK. Such shareholders should consult their own tax advisers concerning their tax liabilities.
What is the base cost for tax purposes if distribution in specie Poolbeg Pharma shares which are not held in ISA?
If a UK resident shareholder sells their Poolbeg Pharma distribution in specie shares there will be capital gains tax payable, however as stated above, there will be no income tax due on receipt on these shares. The base cost for capital gains calculation purposes will be 1% of the original cost base of the Open Orphan shares which will be close to nil (0), therefore nearly the full consideration will be subject to capital gains tax.
There has been some confusion around the base cost and some shareholders thought that the base cost for these shares might be 6p, however, we can clarify that the base cost for capital gains purposes is close to nil because no consideration was paid for the receipt of these shares.
Please note, no capital gains or other tax will be due until the taxpayer sells the Poolbeg Pharma shares in the first instance.
How many shares were received for holdings in Open Orphan?
Open Orphan shareholders who were on the register at close of business on 17 June 2021 were allocated shares using a ratio of 1 Poolbeg Pharma share for every 2.98 ordinary shares held in Open Orphan.
What is the ongoing relationship between Open Orphan and Poolbeg Pharma?
Open Orphan and Poolbeg Pharma are non associated companies that are run independently of each other, both are listed on the AIM market of the London Stock Exchange with independent boards and management teams. There are a number of cost synergies including shared office space and shared staff costs.
For further information, please read the following demerger update announced by Open Orphan on 17 June 2021:
https://www.investegate.co.uk/open-orphan-plc–orph-/rns/demerger-update/202106170700091713C/
