Aviva shareholders in line for €4bn windfall

More than 90,000 Irish investors who hold shares in Aviva might be in for a windfall.

The insurer plans to pay out €4bn to shareholders after building up cash from the sale of some of its overseas businesses.

It’s proposing to pay this money by giving new ‘B shares’ to existing investors – then buying these back.

But the scheme has caused confusion ahead of Aviva’s upcoming AGM tomorrow.

The main part of Aviva’s plan – creating B shares – needs approval from shareholders.

‘Every ordinary shareholder will receive one temporary share known as a B share for each share they currently hold,’ says an Aviva spokesman. ‘We will then pay a fixed amount to redeem each B share.’

The company plans to give these B shares a value of 101p. It will then immediately buy back those B shares later this month, resulting in a capital gain for shareholders rather than paying out direct income.

This is because capital gains tax is generally lower than income tax for people in the higher tax bracket.

If you currently hold 2,000 Aviva shares, you will therefore receive approximately €2,200 – if the plan goes ahead.

The proposal will be put to a vote of Aviva’s shareholders at tomorrow’s meeting. Should at least 75% back the plan, it will go ahead. Shareholders should have been sent their voting forms and shareholder reference number by post or via email.

You can vote by post or by attending the meeting online (visit web.lumiagm.com/171925-637).

There’s no real ‘catch’ in the plan for retail investors. If it goes ahead, they will receive the money.

A more complete guide can be read on the MoS’s online personal finance portal Thisismoney.co.uk