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14
The Gazette of the incorporated Law Society of Ireland.
[JUNE,
1 9 11.
Irish Land Act, 1909.
MEMORANDUM
BY
THE
COUNCIL
IN
REFERENCE
TO
SALE
OF
IMMATURE
GUARANTEED 2f PER CENT. STOCK AND
IMMATURE GUARANTEED
3
PER CENT.
STOCK.
Guaranteed 2f per cent. Stock created
under the Irish Land Act, 1909, is described
as either " Immature " or " Mature."
(A)
"
Immature"
is
the
description
applicable to the Stock between the date of
its creation and the date of the dividend day
next after its creation, and during that period
interest, and not dividend, is payable upon
it. From and after the dividend day first
ensuing after its creation, the regular half-
yearly dividend begins to accrue.
The interest which accrues during the
Immature period is paid by the National
Debt Commissioners to the Land Commis
sion to the credit of the particular estate
in respect of which Stock was created.and that
interest is the property of the original allottee
of the Stock, and is at the rate at which the
Stock subsequently bears dividend. When,
therefore, Immature Stock is sold, a dividend
for the benefit of the purchaser does not
begin to accrue until the dividend day next
after the creation of the Stock :
in other
words, the purchaser buys it "ex dividend "
for the half-year in which the Stock was
created.
(B) "
Mature,"
on the other hand, is the
description applicable to the Stock from and
after the date of the dividend day first
ensuing after its creation, and it carries
regular half-yearly dividends fronj that date,
and when sold carries a dividend
to a
purchaser from the previous 1st January or
1st July, as the case may be.
As Immature Stock only becomes Mature
on passing a gale day, it follows that the
actual
difference in value
between the two
classes of Stock ought to be the amount of
one half-year's dividend, or £1 7s. 6d. per
cent.
Immature Stock, being non-dividend
paying, is not available by trustees as an
investment, and, under a Treasury Regula
tion, this class of Stock is not inscribed in
the books of the Bank of England, thus
restricting the market for
this Stock to
Ireland.
For these reasons principally, it is
difficult to market the Immature Stock, and
the result is that its market price is con
siderably depreciated.
The
difference
in
price
between Mature and Immature Stock,
instead of being £1 7s. 6d. per cent., is, in
practice, £2 5s. Od. per cent., and sometimes
more.
From the foregoing it will be seen that
a considerable loss
is
incurred by selling
Immature Stock.
A somewhat similar difficulty arose with
regard to the 2£ per cent. Guaranteed Land
Stock (redeemable 1921) issued under the
Purchase of Land (Ireland) Act, 1891. This
Stock was also Immature from the date of
its creation until the following dividend day.
There was practically no market for it for
some years, and the usual manner in which
it was realised was, by first exchanging it
for 2£ per cent. Consols (dividend reducible
to 2-| per cent, in 1903) in pursuance of a
power in the Act of 1891.
It is understood
that, where Immature Stock issued under
the Act of 1891 was exchanged for Consols,
the dividend on the Consols was made good
(a)
by the Land Commission, out of the
selling estate, by a transfer to the Bank of
Ireland of an amount of the accruing interest
on the Immature Stock equal to the dividend,
and, when the interest was insufficient, the
deficit was paid out of the proceeds of the
sale of the Consols ;
or
(b)
in the majority
of cases, by the Stock-holder himself or his
broker, paying into the Bank of Ireland in
cash the full amount of the dividend.
A similar arrangement might now be made
between the Treasury, the Land Commission,
and the Bank of Ireland, which should apply
not only to the Guaranteed 2|- per cent.
Stock issued under the Irish Land Act, 1909,
but also to the Guaranteed 3 per cent. Stock
issued under the same Act.
The Council suggest:—
That the National Debt Commissioners
should authorise the Bank of Ireland to
convert, at the request of the Irish Land
Commission, Immature Stock into Mature
Stock on payment to the Bank of the full
half-year's dividend on the Stock; such
dividend to be provided out of the proceeds
of the sale of the Stock.
From enquiries made at the Bank of Ireland
it would appear that there will be no difficulty