Newbie - timing of purchase and receiving certificate

[deltrotter]

Hi all

Another newbie question re VCTs.

Do the VCTs only issue shares after the final deadline? For example, on Wealth Club, Pembroke VCT have a deadline of noon on April 5th.

If you applied now and transferred payment, would you have to wait until after April 5th to receive the certificate?

Leading on from that then, bearing in mind you may of course lose out if an offer gets filled up, are there any benefits to applying very early (e.g. nearly 6 months ahead of the deadline in the case of the Pembroke example above).

TIA

Del

[scotia]

Hi all

Another newbie question re VCTs.

Do the VCTs only issue shares after the final deadline? For example, on Wealth Club, Pembroke VCT have a deadline of noon on April 5th.

If you applied now and transferred payment, would you have to wait until after April 5th to receive the certificate?

Leading on from that then, bearing in mind you may of course lose out if an offer gets filled up, are there any benefits to applying very early (e.g. nearly 6 months ahead of the deadline in the case of the Pembroke example above).

TIA

Del

In my experience, if you applied for a new issue of a VCT within the current taxable year, then when a sufficient number of applications had been received, the VCT would issue new shares, and this might happen a few times throughout the year until the issue was full or until the end of the financial year was reached - with the final issue being made by the 5th of April. Sometimes, if the offer was made towards the end of the financial year, or if there was a slow uptake, then only a single issue would be made close to the 5th April. Currently it looks like many offers are being made early, and are filling quickly, so I don't think in these cases there will be a wait until April for the shares to be issued.

[deltrotter]

Thanks Scotia - appreciated.

[Boots]

I think the time to the allotment (the determination of the number of shares you will receive) and subsequent sending of a share certificate can be quite variable. Most seem to be within a few weeks, but some I have waited for months. I am presently waiting on British Smaller Companies, I applied in late September and I think I read recently that the allotment won't be until early January.

Generally there will be something in the offer material about the timing of the allotment, but it may be obscured by "Early Bird Deals" and "Allotment after every £xm raised" which makes it difficult to properly predict when you might get your shares.

The offers are (IMO) always framed as "This Tax Year" or "Choose either TY 20/21 or 21/22", so I think you would get your shares within the tax year you requested - assuming your application was successful.

[deltrotter]

Thanks Boots

[naflod]

Hi Del

Another potential advantage to early applications, when the VCT issues shares in tranches, is the earlier access to dividends. You mentioned Pembroke as an example; they had dividend payments in January 2020 and March 2021, so an early allotment would provide a quick start to your return on the investment (or recouping part of the investment if you want to look at it that way) or a means to increase your investment by partaking in the Dividend Reinvestment Scheme, generating a further 30% tax relief on the cost of the additional shares acquired.

naflod

[deltrotter]

Hi Naflod

Excellent point - thank you.

I was kind of thinking that the monies might as well be earning a pittance in my account than nothing in the VCTs pending allocation, but as you say, if they issue in tranches I would (hopefully) be getting earlier dividends.

Cheers

Del

[Kidman]

I can add a bit more on Pembroke.

I applied this year as soon as their offer opened. That way I was eligible for the early-bird discount. They did their first allotment a few weeks ago, the certificate arrived a few days later and the allocation was in time for the shares to be issued cum-dividend for a dividend which has now been paid.

Based on past experience I would expect them to do further allocations roughly monthly. A few years ago when they were less well known they waited longer to keep costs down.

[deltrotter]

Thanks Kidman - appreciated.