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In specie distribution: Tax treatment and salient dates
FORTRESS REIT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2009/016487/06)
JSE share codes: FFA ISIN: ZAE000248498
FFB ISIN: ZAE000248506
Bond company code: FORI
(Approved as a REIT by the JSE)
(“Fortress” or “the company”)
IN SPECIE DISTRIBUTION: TAX TREATMENT AND SALIENT DATES
Shareholders are referred to Fortress’ condensed unaudited consolidated interim financial statements for the six
months ended 31 December 2019 (“the interim reporting period”), published on SENS on 5 March 2020, wherein
the board of directors declared a dividend of 77,67 cents per Fortress A ordinary share (“FFA”) and of 74,84 cents
per Fortress B ordinary share (“FFB”) share for the interim reporting period (“the dividends”).
For this interim reporting period, the board of directors resolved that the dividends declared on both FFA and FFB
shares will be settled by way of an in specie distribution of Resilient REIT Limited (“Resilient”) shares at a price of
R52,69 per share, being a 5% discount to the five-day volume-weighted average price (“VWAP”), to close of
business on 2 March 2020,less the Resilient dividend declared for the six months ended 31 December 2019 of 267,96
cents per share.
Salient dates and times
The dividends are payable to Fortress shareholders in accordance with the timetable set out below:
2020
Finalisation announcement published on SENS by 11:00 (SA time) Tuesday, 17 March
Last date to trade cum dividend: Tuesday, 24 March
Shares trade ex dividend: Wednesday, 25 March
Record date: Friday, 27 March
Payment date: Monday, 30 March
Share certificates may not be dematerialised or rematerialised between Wednesday, 25 March 2020 and Friday,
27 March 2020, both days inclusive. Payment of the dividend will be made to shareholders on Monday,
30 March 2020. In respect of dematerialised shares, the dividend will be transferred to the CSDP accounts/broker
accounts on Monday, 30 March 2020. Certificated shareholders’ dividend payments will be deposited on or about
Monday, 30 March 2020.
The above dates and times are indicative and are subject to receipt of exchange control approval. Any amendments
to the dates and times will be released on SENS.
Implementation of the in specie distribution
In accordance with Fortress’ status as a REIT, shareholders are advised that both the in specie and cash distributions
meet the requirements of a “qualifying distribution” for the purposes of section 25BB of the Income Tax Act, No.
58 of 1962 (“Income Tax Act”) and both of these amounts in relation to FFA and FFB shares will constitute a
dividend for South African income tax purposes.
The in specie distribution will be determined on the basis that every shareholder holding 1 000 or more FFA or FFB
shares will be entitled to receive Resilient shares to the value of the dividend outstanding on the FFA and FFB shares
in the ratio of 1 Resilient share for every 67.84 FFA shares or 70.40 FFB shares held at the close of trade on the
record date, being Friday, 27 March 2020. Fortress shareholders holding less than 1 000 FFA or FFB shares will have
the dividends settled in cash.
In implementing the in specie distribution, Fortress is required by the JSE to apply the JSE’s rounding principle. As
such, if a Fortress shareholder becomes entitled to a fraction of a Resilient share arising from the in specie distribution,
such fraction will be rounded down to the nearest whole number, resulting in the allocation of whole Resilient shares
and a cash payment for the fraction.
In accordance with the JSE Listings Requirements, the value of such cash payment will be the VWAP of the Resilient
share less 10% on Wednesday, 25 March 2020. A SENS announcement in respect of the value of such cash payment
will be published by 11:00 on Thursday, 26 March 2020.
Taxation considerations relating to the dividends
The dividends received by or accrued to South African tax residents must be included in the gross income of such
shareholders and will not be exempt from income tax (in terms of the exclusion to the general dividend exemption,
contained in paragraph (aa) of section 10(1)(k)(i) of the Income Tax Act) because they are dividends distributed by
a REIT. The dividends are, however, exempt from dividend withholding tax provided that such shareholders provide
the following forms to their Central Securities Depository Participant (“CSDP”) or broker, as the case may be, in
respect of uncertificated shares (and who may provide this information to the company), or the company, in respect
of certificated shares:
a) a declaration that the dividend is exempt from dividends tax; and
b) a written undertaking to inform the CSDP, broker or the company, as the case may be, should the
circumstances affecting the exemption change or the beneficial owner cease to be the beneficial owner,
both in the form prescribed by the Commissioner for the South African Revenue Service. Shareholders are advised
to contact their CSDP, broker or the company, as the case may be, to arrange for the abovementioned documents to
be submitted prior to payment of the dividend, if such documents have not already been submitted.
Dividends received by non-resident shareholders will not be taxable as income and instead will be treated as an
ordinary dividend which is exempt from income tax in terms of the general dividend exemption in section 10(1)(k)(i)
of the Income Tax Act. Any dividend received by a non-resident from a REIT will be subject to dividend withholding
tax at 20%, unless the rate is reduced in terms of any applicable agreement for the avoidance of double taxation
(“DTA”) between South Africa and the country of residence of the shareholder. Assuming dividend withholding tax
will be withheld at a rate of 20%, any cash dividend will be reduced by a rate of 20% on such amount and dividend
withholding tax will be levied at a rate of 20% on the market value of the in specie distribution portion of the dividend.
The net dividend amount due to non-residents on the cash dividend is 62,13600 cents per FFA share and 59,87200
cents per FFB share. A reduced dividend withholding rate in terms of the applicable DTA may only be relied on if
the non-resident shareholder has provided the following forms to their CSDP or broker, as the case may be, in respect
of uncertificated shares, or the company, in respect of certificated shares:
a) a declaration that the dividend is subject to a reduced rate as a result of the application of a DTA; and
b) a written undertaking to inform their CSDP, broker or the company, as the case may be, should the
circumstances affecting the reduced rate change or the beneficial owner cease to be the beneficial owner,
both in the form prescribed by the Commissioner for the South African Revenue Service. Non-resident shareholders
are advised to contact their CSDP, broker or the company, as the case may be, to arrange for the abovementioned
documents to be submitted prior to payment of the dividend if such documents have not already been submitted, if
applicable.
The base cost of the Resilient shares forming the subject matter of the in specie distribution will be equal to the ruling
price of the Resilient shares on the record date being Friday, 27 March 2020 and a SENS announcement will be
released on Monday, 30 March 2020, advising shareholders of this information.
As the Resilient shares constitute shares in a REIT, the transfer of the Resilient shares from Fortress to the Fortress
shareholders is exempt from securities transfer tax in terms of section 8(1)(t) of the Securities Transfer Tax Act No.
25 of 2007.
The information provided above does not constitute tax advice and shareholders are advised to obtain appropriate
advice from their professional advisers in this regard.
Exchange control
Resilient shares will not be freely transferable from the Common Monetary Area and must be dealt with in terms of
the Exchange Control Regulations. The following summary of the Exchange Control Regulations is not
comprehensive and is intended as a guide only. In the event that shareholders have any doubts in respect of their
obligations in terms of the Exchange Control Regulations, they should consult their professional advisers.
Emigrants from the Common Monetary Area
Resilient shares received by Fortress shareholders who are emigrants from the Common Monetary Area and whose
registered address is outside the Common Monetary Area will:
- in the case of dematerialised shareholders, be credited to their blocked share accounts at the CSDP controlling
their blocked portfolios; or
- in the case of certificated shareholders or shareholders who have rematerialised their shares such that they are
evidenced by a share certificate or other physical document of title, have their document of title endorsed “non-
resident” in terms of the Exchange Control Regulations and sent to the authorised dealer in foreign exchange
controlling their blocked assets.
The CSDP or broker will ensure that all requirements of the Exchange Control Regulations are adhered to in respect
of their clients falling into this category of investor, whether shares are held in dematerialised or certificated form.
All other non-residents of the Common Monetary Area
Resilient shares received by Fortress shareholders who are not residents of the Common Monetary Area and who
have never resided in the Common Monetary Area and whose registered address is outside of the Common Monetary
Area will:
- in the case of dematerialised shareholders, be credited to their share accounts at the CSDP controlling their
portfolios; or
- in the case of certificated shareholders or shareholders who have rematerialised their shares such that they are
evidenced by a share certificate or other physical document of title, be deposited with an authorised dealer in
foreign exchange in South Africa nominated by such shareholder. It will be incumbent on the shareholder
concerned to nominate the authorised dealer and to instruct the nominated authorised dealer as to the disposal
of the relevant shares. If the information regarding the authorised dealer is not given, the Resilient shares will
be held in trust for the shareholder concerned pending the receipt of the necessary information or instruction.
The CSDP or broker will ensure that all requirements of the Exchange Control Regulations are adhered to in respect
of their clients falling into this category of investor, whether shares are held in dematerialised or certificated form.
FFA shares in issue at the date of declaration of the dividend: 1 191 595 172
FFB shares in issue at the date of declaration of the dividend: 1 093 213 028
Fortress’ income tax reference number: 9218846179
5 March 2020
Lead sponsor
Java Capital
Joint sponsor
Nedbank Corporate and Investment Banking
Date: 05-03-2020 04:57:00
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The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
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