24 February 2010
On 7 January 2010 the IPSO announced that they see 2016 as a realistic end date for cheque payments in Ireland
The removal of paper, and in particular cheques, from the dividend process has come under renewed focus for several reasons:
- On 16 December 2009 the UK Payments Council announced that they aim to phase out cheques from the UK market completely by October 2018 - after they described the payment method as being in "terminal decline".
- On 7 January 2010 the Irish Payment Services Organisation ("IPSO") issued an announcement welcoming the UK initiative and proposing 2016 as a realistic end date for cheques in Ireland.
- The increase in Medallion Stamp Duty in 2009 on Irish Euro Cheques to 50c per cheque added to the already significant print, mail, postage and clearing costs of cheques.
- The Finance Bill 2010 once enacted provides for delivery of Tax Vouchers in electronic form to all classes of shareholders both within CREST and outside of CREST.
- Via the E-comms directive and other 'green' initiatives companies and shareholders are looking to remove paper from as many processes as possible.
These drivers mean that 'cheque free dividends' will become increasingly adopted over the coming years but our belief is that for truly 'paperless dividends' the market needs to look at the whole process and not just cheques. For example, we believe that tax vouchers should also be 'electronic' wherever possible to further eliminate costs.
Being heavily involved in the paperless dividend debate we are well positioned to offer your company specific and considered advice on this subject. Click here to view our guidance note on this matter and please contact your Relationship Manager to discuss how we can assist you with the transition to paperless dividends.