2
CONTENTS
WELCOME TO THE FINNING
INTERNATIONAL INC. ROI EMPLOYEE
SHARE PURCHASE PLAN ... 3
BUILDING UP YOUR FINNING
SHAREHOLDING………4
Part 1
General……….5
Whomanages the Plan? Am I eligible to join the Plan? How do I join the Plan?
HOW THE PLAN WORKS………6-10
How much can I contribute? How do I make my contributions? What is the benefit of participating?
What does the Trustee do with my contributions? How do I receive my Matching Shares?
May I change my contributions? May I take a break from contributions?
What happens to my contributions if I go on maternity or sick leave?
For how long must my shares remain in the Plan before I can sell or transfer them?
ACCESSING YOUR SHARES………
11-12
When can I get hold of my Shares?How do I sell my shares?
Will it cost me anything to sell my shares?
Do I have to sell my Partnership Shares as soon as the two-year retention period has passed?
Do I have to sell my Matching Shares as soon they become free of income tax?
LEAVING FINNING ... 13
How would my leaving Finning or my death affect shares already appropriated to me under the Plan?SHAREHOLDER RIGHTS………..14
Will I enjoy the rights of a shareholder while my shares are held by the Trustee?Will I receive dividends on my shares? Where can I find the value of Finning Shares?
Part 2
TAX AND YOUR SHARES…………15-17
How does the Plan limit the tax I pay?How do I pay the Income Tax on an early disposal of my Matching Shares?
How are dividends taxed?
Do I have to pay any other tax when I sell my shares? Do I have to inform the Revenue Commissioners about the Plan?
FURTHER INFORMATION………18-19
How will changes in Finning affect the Plan ?Changing or terminating the Plan Your employment
Restrictions
WELCOME TO THE FINNING INTERNATIONAL INC. ROI
EMPLOYEE SHARE PURCHASE PLAN (‘THE PLAN’)
THE PLAN HAS BEEN SET UP FOR
OUR EMPLOYEES IN THE
REPUBLIC OF IRELAND.
IT’S FLEXIBLE – YOU CAN CHOOSE
HOW MUCH YOU WANT TO
CONTRIBUTE EACH MONTH
(MINIMUM €10, MAXIMUM €70)
AND YOU CAN VARY THIS
AMOUNT EACH YEAR OR TAKE A
BREAK FROM CONTRIBUTIONS.
The Plan aims to provide you with an
opportunity to buy Finning Shares (referred to as ‘Partnership Shares’) from your after-tax earnings. The Shares are held in trust on your behalf for two years.
For every Partnership Share you buy we’ll give you one extra free share (referred to as ‘Matching Shares’). These shares must be held in trust for three years for you to get the tax advantages.
The Plan is designed to encourage you to build up a holding of Finning shares throughout your career with us. So, the longer you stay with us, the more shares you will be able to build up – and the better the tax advantages.
Some of the key benefits of the Plan are:
• It’s flexible – you can choose how much you want to contribute each month (min €10, max €70), and you can vary this amount from year to year or take a break from
contributions.
• It’s a long-term investment – your contributions are used to buy Partnership Shares. For as long as you remain a Finning employee, you can continue to invest in the Plan.
• You receive free Matching Shares.
• You can save on Income Tax on your Matching Shares.
• Your Partnership Shares and Matching Shares may earn dividends.
4
BUILDING UP YOUR FINNING SHAREHOLDING
There are four ways in which the Plan allows the value of your Finning shareholding to grow:
1
YOUR MONTHLY
CONTRIBUTIONS
The Trustee uses your monthly contributions to acquire Partnership Shares at the end of each calendar quarter.Your contributions must be between €10 and €70 per month (but no more than 7.5% of your monthly basic salary). Even though your monthly contributions will be the same each month during a calendar year, the number of Partnership Shares purchased for you at the end of each calendar quarter will vary, depending on the market value of Finning shares on the day of appropriation and the Euro/Canadian dollar exchange rate.
3
DIVIDENDS ON YOUR
SHARES
When Finning pays a dividend to its shareholders, you will be entitled to the dividends payable on your shares (both Partnership and Matching) held in the Plan. The dividends will be paid to the Trustee who will then pay them to you (subject to deduction of applicable taxes).
4
THE MARKET VALUE OF
YOUR SHARES
Over time, the market value of your shares will vary and can go up or down.
PART 1
GENERAL
WHO MANAGES THE PLAN?
In order to benefit from the favourable tax concessions, the Plan is set up using a trust.
Finning has appointed Computershare Trustees (Ireland) Limited (referred to as the ‘Trustee’), to act as trustee of the Plan. It will hold the shares on your behalf. The Trustee acts independently of the Company.
Computershare Plan Managers also act as Administrators of the Plan.
AM
I
ELIGIBLE
TO
JOIN
THE
PLAN
?
You can join the Plan at any time if:
• You are an employee of Finning (Ireland) Limited (referred to as the ‘Company’);
• You pay tax under the Irish PAYE system; and
• You have been employed by the Company for three months or more. It’s up to you whether or not to join the Plan – participation is voluntary.
HOW DO I JOIN THE PLAN?
You will receive an invitation pack containing the forms required to enrol in the Plan from Computershare. Please complete and return them in accordance with the instructions given. If you have any queries or have not received your invitation pack, please contact the Computershare helpline on:
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HOW THE PLAN WORKS
HOW MUCH CAN I CONTRIBUTE?
When you join the Plan, you need to decide on a specified amount – between €10 and €70 – that you wish to contribute each month (this can’t be more than 7.5% of your monthly basic salary).
HOW DO I MAKE MY CONTRIBUTIONS?
Your agreed monthly contributions are deducted directly from your after-tax pay.
WHAT IS THE BENEFIT OF PARTICIPATING?
There is no tax savings for your Partnership Shares. They will be bought from your after-tax earnings.
However, your purchase of Partnership Shares entitles you to receive free “Matching Shares” on a 1:1 basis, and that is the most important benefit of participating.
Also, Matching Shares will offer you a tax savings; in the normal course you would pay income tax, employee PRSI and the universal social charge (“USC”) on the value of free shares issued in connection with your employment. Because the Plan is approved by the Revenue Commissioners, you will not pay income tax on your Matching Shares, provided you leave them in the Plan for three years after they are allocated or “appropriated” to you (or two years if you leave in special circumstances i.e. redundancy, death, illness or retirement).
You will, however, have to pay employee PRSI and USC each month on the market value of the Matching Shares appropriated to you in that month. The Company will deduct the amount for the PRSI and USC from your monthly salary.
WHAT DOES THE TRUSTEE DO WITH MY CONTRIBUTIONS?
At the end of each calendar quarter, the Trustee will use your accumulated contributions to acquire your Partnership Shares. These will be Finning shares which are listed on the Toronto Stock Exchange. They will be bought in Canadian Dollars. This means that the value of any shares you have in the Plan will be affected by the fluctuation in exchange rate between the Canadian Dollar and the Euro. Only whole shares can be purchased, so any contributions left over from a quarterly purchase will be refunded to you through payroll as soon as possible after the purchase date.
HOW DO I RECEIVE MY MATCHING SHARES?
You will automatically receive one free Matching Share for each Partnership Share you buy. Matching Shares will be appropriated to you at the end of each calendar quarter on the same date as your Partnership Shares.
Example:
You contribute €50 per month to the Plan. That amount is deducted monthly from your after-tax earnings as follows.
Calendar Quarter Monthly contribution to plan Total Monthly Contributions for quarter Canadian Dollar equivalent* Finning Share Price** Partnership Shares Purchased Free Matching Shares Total Finning Shareholding January 2015 – March 2015 €50 €150 $210 $25 8 8 16 April 2015 – June 2015 €50 €150 $231 $26 8 8 32 July 2015 – September 2015 €50 €150 $195 $30 6 6 44
* Assumes different Canadian Dollar/Euro exchange rates. ** Assumed Finning share prices are for illustrative purposes only.
As soon as possible after the Appropriation Date for each calendar quarter, the Plan Administrator will send you a notice showing:
(i) the total amount of your after-tax salary deductions for that calendar quarter; (ii) the number of Partnership Shares bought using your after-tax salary deductions;
(iii) the number of free Matching Shares awarded to you in respect of your Partnership Shares; (iv) the initial market value or “Locked-In Value” of each Partnership Share and Matching Share; (v) the Retention Period for your Partnership Shares and Matching Shares (two years after their
Appropriation Date);
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(vii) the “Release Date” for your Matching Shares (the three-year anniversary of the Appropriation Date).
This information is important for tax purposes and should be kept with your tax records.
MAY I CHANGE MY CONTRIBUTIONS?
You may change your monthly contribution amount but only at the beginning of a new calendar year; the rate that you decide will then be fixed for the remainder of that year. Please contact Computershare at employee.queries@computershare.ie to obtain the necessary forms.
Please note your contributions cannot be backdated.
MAY I TAKE A BREAK FROM CONTRIBUTIONS?
You may stop your contributions at any time. Please contact Computershare at
employee.queries@computershare.ie to obtain the necessary forms. Payroll will then be
notified of your change and deductions will cease with effect from the next practicable payroll run. You may not restart your contributions in the same calendar year. You may do so in a subsequent calendar year by completing new forms which you can obtain from contacting Computershare at
employee.queries@computershare.ie.
You cannot make up for missed contributions.
WHAT HAPPENS TO MY CONTRIBUTIONS IF I GO ON MATERNITY OR SICK LEAVE?
If you are temporarily absent from work and still receiving pay – e.g. maternity or sick pay – you can continue to contribute to the Plan. Payroll will ensure your monthly contributions are not above 7.5% of your monthly basic salary.
FOR HOW LONG MUST MY SHARES REMAIN IN THE PLAN BEFORE I CAN SELL
OR TRANSFER THEM?
The rules are different for Partnership Shares and Matching Shares:
Partnership Shares
As a condition of your participation in the Plan, you must agree that your Partnership Shares will be held by the Trustee in the Plan for two years beginning with the Appropriation Date (the "Retention Period"). During this period you may not deal with your Partnership Shares in any way i.e. you may not sell them, give them away or pledge them as security for a loan. However, the Retention Period will end earlier if:
• you cease to be employed because of death, injury, disability or redundancy; or • you reach the State pension age (at present, 66 years).
At any time after the Retention Period has expired, you can direct the Trustee to sell your Partnership Shares for you or to transfer them into your name.
Because Partnership Shares are purchased with after-tax earnings, you will not be liable to income tax/USC/PRSI in respect of those shares when they are sold for you or transferred to you.
However:
(a) in the first three years beginning with the Appropriation Date (but after the end of the two-year Retention Period), Partnership Shares can only be withdrawn from the Plan if the related Matching Shares are withdrawn at the same time - put another way, if you withdraw a number of shares from the Plan during that period that were appropriated on an Appropriation Date, half of them will be deemed to be
Partnership Shares, with no income tax liability, and half of them will be deemed to be the corresponding Matching Shares (normally with an income tax liability for the Matching Shares); and
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Matching Shares
You must normally leave your Matching Shares in the Plan for the two-year Retention Period. During the Retention Period you may not deal with your Matching Shares in any way i.e. you may not sell them, give them away or pledge them as security for a loan.
However, the Retention Period will end earlier if:
• you cease to be employed because of death, injury, disability or redundancy; or • you reach the State pension age (at present, 66 years).
After the Retention Period, you may direct the Trustee to sell your Matching Shares for you or to transfer them into your name. However:
(a) if you direct the Trustee to do any of these things within three years beginning with the Appropriation Date you will normally incur an income tax liability (although, as explained above, Matching Shares can only be withdrawn at the same time as the corresponding Partnership Shares): and
11
ACCESSING YOUR SHARES
WHEN CAN I GET HOLD OF MY SHARES?
You will generally not be permitted to take your Partnership or Matching Shares out of the Plan until two years after the date they were appropriated to you. If you want to get the full tax benefits for your Matching Shares, you generally must leave both your Partnership Shares and Matching Shares in the Plan until three years after they were appropriated to you.
The Trustee will hold the shares on your behalf.
HOW DO I SELL MY SHARES?
You can sell your shares, once they are free of the relevant Retention Period, by completing the necessary sales form, which can be obtained from Computershare at
employee.queries@computershare.ie.
The provision of the share sale service is not a recommendation by Finning or Computershare to buy or sell Finning shares. Any other method of sale will need to be arranged separately with your own financial institution.
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WILL IT COST ME ANYTHING TO SELL MY SHARES?
There are usually dealing charges associated with selling shares. Please refer to Computershare Plan Managers for further details.
Other brokers’ fees may vary.
DO I HAVE TO SELL MY PARTNERSHIP SHARES AS SOON AS THE TWO-YEAR
RETENTION PERIOD HAS PASSED?
No. It’s up to you whether to sell/transfer your Partnership Share after the two-year Retention Period has ended but note that selling your Partnership Shares earlier than three years after the Appropriation Date will generally result in the full loss of tax benefits on the Matching Shares that were appropriated to you at the same time as those
Partnership Shares.
DO I HAVE TO SELL MY MATCHING SHARES AS SOON THEY BECOME FREE
OF INCOME TAX?
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LEAVING FINNING
HOW WOULD MY LEAVING FINNING OR MY DEATH AFFECT SHARES ALREADY
APPROPRIATED TO ME UNDER THE PLAN?
This depends on why you leave.
If you leave because of injury, disability, redundancy or reaching the State pension age (at present 66 years), you may at any time thereafter direct the Trustee to sell your Partnership and/or Matching Shares for you or transfer them into your name, even if the normal two-year period Retention Period has not expired, but you will have an income tax liability, albeit reduced, in respect of your Matching Shares (see Part 2 for the tax implications).
In the event of your death, your personal representatives or executors may direct the Trustee to sell your Partnership Shares and Matching Shares or transfer them into their names. No income tax/USC/PRSI is payable.
If you leave Finning for any other reason (i.e. other than those outlined above), any shares held by the Trustee on your behalf continue to be held by the Trustee as though you were still an employee. Consequently, you cannot sell your Partnership Shares or Matching Shares or have them transferred into your name until after the expiry of the normal two-year Retention Period and, to receive your Matching Shares free of income tax, you must leave them in the Plan for the full three-year period – in practice, the related Partnership Shares would also have to be left in the Plan for that period because, as explained earlier, Partnership Shares and Matching Shares appropriated at the same time can only be withdrawn at the same time within the first three years after the Appropriation Date.
14
SHAREHOLDER RIGHTS
WILL I ENJOY THE RIGHTS OF A SHAREHOLDER WHILE MY SHARES ARE HELD BY THE
TRUSTEE?
Yes, but only through the Trustee who holds the shares on your behalf and who will carry out your instructions in accordance with the Trust Deed and the Rules of the Plan.
Copies of all notices, circulars and other documents sent to shareholders will be made available to you on request to the HR Department. Many of these documents are also made available on Finning's website(www.finning.com).
While your shares are held by the Trustee, you will not be able to attend shareholders’ meetings. The Trustee may, however, seek instructions from you as to how it should vote your Finning shares on your behalf.
WILL I RECEIVE DIVIDENDS ON MY SHARES?
You will receive any dividend paid to the Trustee in respect of your Partnership and Matching Shares and the Trustee will in turn pay it to you (see Part 2 for information on the taxation of dividends).
WHERE CAN I FIND THE VALUE OF FINNING SHARES?
15
Part 2
TAX AND YOUR SHARES
HOW DOES THE PLAN LIMIT THE TAX I PAY?
As this is a Revenue Commissioner-approved plan, it is designed to be as tax-efficient as possible. The Income Tax on withdrawing your shares depends on the type of shares (i.e. Partnership or Matching) and the length of time they have been held in the Plan.
Share type On Acquisition Shares held 0 - 2 years (“Retention Period”) Shares held 2 - 3 years Shares held 3+years Partnership Shares
Partnership Shares are acquired using post-tax earnings and so provide no tax savings of themselves.
Partnership Shares may not be sold during the Retention Period except if you leave Finning in special circumstances.*
Shares may be sold, Capital Gains Tax payable. (But note that Matching Shares for any Partnership Shares must be sold at the same time, generally resulting in loss of tax benefits for the Matching Shares).
Capital Gains Tax
Matching Shares
No Income Tax , but you must pay employee PRSI and the Universal Social Charge (USC) on the value of your Matching Shares when they are appropriated to you each calendar quarter. The PRSI and USC will be deducted from your pre-tax salary.
Shares cannot be withdrawn or sold except where you leave Finning in special circumstances.* In that case Income Tax is charged on 50% of the lower of:
a) Market value when acquired
b) Sale proceeds or market value when withdrawn No income tax is charged in the case of death.
Income Tax is charged on the lower of 100%:
a) Market value when acquired
b) Sale proceeds or market value when withdrawn If you leave Finning in special circumstances* the income tax is charged on 50% of (a) or (b) above. No income tax is charged in the case of death.
No Income Tax. Capital Gains Tax.
* Special circumstances: death, injury, disability, retirement at State pension age (at present, 66 years).
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16
HOW DO I PAY THE INCOME TAX ON AN EARLY DISPOSAL OF MY MATCHING
SHARES?
If you direct the Trustee to sell or transfer your Matching Shares to you or some other person within three years after the Appropriation Date, the Trustee must collect from you, before the transfer takes place, tax at the standard rate (currently 20%) on the relevant value of the Matching Shares involved, being their initial market value (or “Locked-In Value”) or, if less, the sale proceeds or market value at the time you direct the Trustee to sell or otherwise deal with them. The Trustee will then pay this tax over to the Revenue Commissioners. You will be liable to income tax at the marginal rate (20% or 41% depending on your income), but will receive a credit for the amount of tax paid over to the Trustee.
Where the shares are transferred or disposed of within three years after the Appropriation Date, you should notify your Inspector of Taxes of the chargeable transaction when filing your income tax return at the end of the year. The Tax Inspector may then decide to raise an income tax assessment to collect the tax due from you or, more likely, he will reduce your tax-free allowance so that, effectively, income tax payable on the realisation of the shares will be dealt with under the PAYE system. The income tax must be discharged by 31 October in the year following the year of the benefit (subject to preliminary tax obligations on 31 October the year of the benefit).
HOW ARE DIVIDENDS TAXED?
Any dividend payment you receive with respect to shares held by the Trustee on your behalf will be subject to deduction of Canadian Withholding Tax of 30% if you do not complete a NR301 form. That form will be sent to you by Computershare.
The Trustee will withhold encashment tax at the rate of 20%. The gross dividend will be taxed under the self-assessment system at your marginal rate of tax with applicable credit for the tax withheld.
You will also be liable to pay PRSI on dividend payments. This is paid by you under the self-assessment system.
17
DO I HAVE TO PAY ANY OTHER TAX WHEN I SELL MY SHARES?
If you leave your shares in the Plan until the three-year Release Date, you will have to pay capital gains tax (“CGT”) on the excess of the sale proceeds over their initial market value when they were appropriated to you.
Furthermore, you will only have to pay CGT if your total taxable gains for that tax year – from all sources – exceed the annual exemption level (currently €1,270).
If you dispose of shares in the period from 1 January to 30 November in any year, CGT is due by 15 December of that year. If you dispose of shares between 1 and 31 December, CGT is due by 31 January of the following year.
These notes are provided for guidance only and are not intended to be exhaustive. Tax planning is a specialised area and if you are in any doubt about your own tax position, you should seek independent financial advice before taking any actions that would give rise to liability for income tax or CGT. You should also remember that tax legislation could change from year to year.
DO I HAVE TO INFORM THE REVENUE COMMISSIONERS ABOUT THE PLAN?
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FURTHER I N F O R M A T I O N
HOW WILL CHANGES IN FINNING AFFECT THE PLAN?
In respect of the shares held on your behalf in the Plan, you will have broadly similar rights to other shareholders if Finning:
Offers its shareholders the right to buy additional Finning shares;
Changes its share capital (e.g. splits its shares); or
Is subject to a take-over bid.
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CHANGING OR TERMINATING THE PLAN
The Company reserves the right to change or end the Plan at any time. If any material changes are made, you will be notified.
YOUR EMPLOYMENT
The Plan does not form any part of your contract of employment and any benefit you may receive under the Plan does not form any part of your contractual remuneration. Benefits paid under the Plan are not part of pensionable pay.
RESTRICTIONS
You cannot assign or secure a loan against your shares, or use them in any way to guarantee payment, until after the end of any relevant Retention Period.
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omputershare.ie
DEFINITIONS
Appropriate
the allocation to you of Partnership and Matching Shares, to be held by the Trustee
on
your behalf.
Appropriation
Date
the date each calendar quarter when you are credited with new Partnership Shares and Matching Shares.
Company
Finning (Ireland) Limited.
Finning
Finning International Inc.
Matching
Shares
Free shares given to you, one for each Partnership Share you buy.
Partnership Shares
Shares bought on your behalf using deductions from your after-tax salary.
Plan
Finning International Inc. ROI Employee Share Purchase Plan
Plan Administrator
Computershare Plan Managers, who will be responsible for the day-to-day administration of the Plan.
Share
If you have a share in a company, it means that you (the shareholder) own part of the value of the company. As a shareholder, you can receive a proportion of the profit the company makes – referred to as the ‘dividend’. The directors of the company decide how much, if any, of the profits will be paid to shareholders by way of a dividend.
The value of a share can vary and is influenced by how well the company is doing. The share price is also sensitive to general economic circumstances, world political events and other factors outside the company’s control.
The shares referred to in this booklet are Ordinary Shares in Finning International Inc.
Trustee
The independent Trustee of the Plan, Computershare Trustees (Ireland) Limited, who will hold your Partnership Shares and Matching Shares on your behalf until they are released from the Plan.
