Ownership of underlying share and company divestments/mergers

[ravip0uk1]

Hi, 

I've used IG previously for CFDs and am looking into using you for shares. I have a couple of questions:

 

1) Using the share dealing platform, will I actually own the underlying share? 

2) When I'm holding shares for a company that goes through some kind of divestment/merger and there are stock options and dividend options for share holders, how do these get treated by IG? 

 

[rimmy2000]

Hey Ravi,

 

I have a dealing account with IG and have not really consifered this so good question. I expect we'll get the official line next week - and I am interested in the answer here. But I expect the shares you buy through IG would be held in a nominee account. This is the way with the other share dealing accounts I use.

 

See this Ts&Cs guide for IG SHareholding here >> https://www.ig.com/usermanagement/customeragreements?igCompany=iggb&agreementType=customer_agreement&productCode=IGSTK&locale=en_GB

 

Page 7 > Section 14 > Point 13 states:

" (14) Instruments purchased by us on your behalf or transferred to us will be registered in the name of a nominee company or our name or a sub-custodian. We will be responsible and liable for our nominee to the same extent as for our own acts, including losses arising from fraud, wilful default or negligence"

 

I believe *and happy to stand corrected* this takes away voting rights, for example at an AGM, (but I still attend AGMs as listen only)

 

In respect of Corporate Actions, your second question: I believe IG would get in touch via email or through the platform. Again, this is how my other accounts handle Corp Actions. I also am keen on the answer. See the same document Section 11 page 5.

 

Obviously for spread bet account there are none of the conventional rights ascribed to ownership as the stake is on the underlying instrument price rather than in the asset.

 

I am sure IG will put us right.

 

Rgds

[JamesIG]

Great reply  but let me just clarify a few points 'officially'. You can also have a look at our share dealing web page here: https://www.ig.com/uk/investments/share-dealing 

 

• Stock via a share dealing account is held in a Nominee account. This means that the securities are held by IG so we can facilitate cost effective transactions whilst you are still the true owner of the stock. If you wish to withdraw your stock at any time, you can.
• If you wish to materialise your stock into an older (and arguably dated) share certificate, you can, however please note that physical share dematerialisation fee is £50 + VAT per certificate. This fee is levied to us by our broker, and passed on to you.
• If IG were to become insolvent, the stock would still be in your name and wholly owned by yourself. 
• We’ll deposit dividends into your account as soon as we receive a payment from any shares you own. The payment will appear as cash on your ledger, and in most instances will take a couple of working days to settle (as the cash payment needs to clear before we can apply it).
• Corp Actions are dealt with on a case by case basis. We will be in contact depending on the specifics of the CA. 

 

Any other questions please let me know.

[rimmy2000]

helpful to know this, thanks!

[Invis]

On 15/01/2018 at 13:17, JamesIG said:

We’ll deposit dividends into your account as soon as we receive a payment from any shares you own. The payment will appear as cash on your ledger, and in most instances will take a couple of working days to settle (as the cash payment needs to clear before we can apply it).

Hi James,

I'm pretty new to IG - when you note they will appear as cash - will dividends specifically reference the stock they have come from - I assume they would to facilitate ease of tracking? I was hoping to set up a DRIP but believe this may not be possible in IG share dealing accounts or ISAs - is this correct?

 

Thanks

[JamesIG]

23 hours ago, Invis said:

... will dividends specifically reference the stock they have come from ...

They certainly will. Something like "HSBC Dividend" along with any conversion values if paid in a different currency to the one you have as your base currency.

23 hours ago, Invis said:

...I was hoping to set up a DRIP but believe this may not be possible in IG share dealing accounts or ISAs - is this correct?

Unfortunately at the moment we don't offer DRIP functionality, although it is something a number of our clients have requested and I've made sure to continue to inform and update the non-leverage project management team on these client requests.