HSBC 2008 Annual Report Download - page 56

HSBC HOLDINGS PLC
Report of the Directors: Operating and Financial Review (continued)
Financial summary > Balance sheet > Share capital and reserves
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accordingly. Subject to the Articles of Association of
HSBC Holdings, the Board may, with the prior
authority of an ordinary resolution of HSBC
Holdings and subject to such terms and conditions as
the Board may determine, offer to any holders of
ordinary shares the right to elect to receive ordinary
shares of the same or a different currency, credited
as fully paid, instead of cash in any currency in
respect of the whole (or some part, to be determined
by the Board) of any dividend specified by the
ordinary resolution. At the 2007 Annual General
Meeting shareholders gave authority to the Directors
to offer a scrip dividend alternative until the
conclusion of the Annual General Meeting in 2012.
Subject to the relevant insolvency laws and the
Articles of Association of HSBC Holdings, if HSBC
Holdings is wound up, the assets available for
distribution among the holders of ordinary shares
will be distributed among such holders in proportion
to the number of ordinary shares held by them
respectively, such distribution to be adjusted to take
account of any amount remaining unpaid on a
holder’s share. On a winding up, the liquidator may,
with the sanction of a special resolution of HSBC
Holdings and any other sanction required by law,
divide among the shareholders in specie the whole or
any part of the assets of HSBC Holdings and may,
for that purpose, value any assets and determine how
the division shall be carried out as between the
shareholders or different classes of shareholders.
Preference shares
The non-cumulative preference shares of £0.01 each,
the non-cumulative preference shares of US$0.01
each (the ‘Dollar Preference Shares’) and the non-
cumulative preference shares of €0.01 each carry the
same rights and obligations under the Articles of
Association save in respect of the timing of and
payment of proceeds from the redemption of each
class of share, to the extent issued, and certain rights
and obligations that attach to each class of
preference share as determined by the Board prior to
allotment of the relevant preference shares. The
Dollar Preference Shares are the only class of the
preference shares which have been issued and
allotted to date.
Holders of the preference shares will only be
entitled to attend and vote at general meetings of
HSBC Holdings if any dividend payable on the
relevant preference shares in respect of such period
as the Board shall determine prior to allotment
thereof (which, in the case of the Dollar Preference
Shares in issue at 2 March 2009, is four consecutive
dividend payment dates) is not paid in full or in such
other circumstances, and upon and subject to such
terms, as the Board may determine prior to allotment
of the relevant preference shares. Whenever holders
of the relevant preference shares are entitled to vote
on a resolution at a general meeting, on a show of
hands every such holder who is present in person or
by proxy shall have one vote and on a poll every
such holder who is present in person or by proxy
shall have one vote per preference share held by him
or her or such number of votes per share as the
Board shall determine prior to allotment of such
share.
Subject to the Articles of Association, holders of
the relevant preference shares shall have the right to
a non-cumulative preferential dividend at such rate,
on such dates and on such other terms and conditions
as may be determined by the Board prior to
allotment thereof in priority to the payment of any
dividend to the holders of ordinary shares and any
other class of shares of HSBC Holdings in issue
(other than (i) the other preference shares in issue
and any other shares expressed to rank pari passu
therewith as regards income; and (ii) any shares
which by their terms rank in priority to the relevant
preference shares as regards income). Dividends on
the Dollar Preference Shares in issue at 2 March
2009 are paid quarterly at the sole and absolute
discretion of the Board of Directors. The Board of
Directors will not declare a dividend on the Dollar
Preference Shares if payment of the dividend would
cause HSBC Holdings not to meet the applicable
capital adequacy requirements of the FSA or the
profit of HSBC Holdings available for distribution as
dividends is not sufficient to enable HSBC Holdings
to pay in full both dividends on the relevant
preference shares and dividends on any other shares
that are scheduled to be paid on the same date and
that have an equal right to dividends. HSBC
Holdings may not declare or pay dividends on any
class of its shares ranking lower in the right to
dividends than the preference shares nor redeem nor
purchase in any manner any of its other shares
ranking equal with or lower than the preference
shares unless it has paid in full, or set aside an
amount to provide for payment in full, the dividends
on the preference shares for the then-current
dividend period.
The preference shares carry no rights to
participate in the profits or assets of HSBC Holdings
other than as set out in the Articles of Association
and subject to the Companies Act 1985, do not
confer any right to participate in any offer or
invitation by way of rights or otherwise to subscribe
for additional shares in HSBC Holdings, do no not
confer any right of conversion and do not confer any
right to participate in any issue or bonus shares or