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Dividend question


I find the dividend rather curious . I hasten to state from the start that i dont care about receiving a dividend . I joined the society to buy the wine and explore the culture of wine . However I have discovered that in some years enough profit is made for the committee to declare a dividend.

In exploring the rules I find that though money is added to a members share account know one actually receives any money during their lifetime. The dictionary defines dividend as the distribution of profits to share holders by the directors of a company. So it would seem the wine societies dividend is in name only. If so whats the point in having a dividend ? Am i missing something here?

Is it a tax avoidance method? in 2013/2014 review it states " The Committee declared a total dividend of £2.4m (£1.5m in 2012/13) [note 6 to the financial

statements] which was split between 3% (£0.6m), transferred to the members’ accumulated

profit account [note 15 to the financial statements] and 2% sales discount dividend (£1.8m)

transferred to the sales discount account [note 16 to the financial statements].

******* The effect of this total dividend was to extinguish the tax on current activities to zero (£2,000*

in 2012/13). Once adjustments were made to the prior year liability and the deferred tax asset,

Clearly its an interesting aspect of the culture of the Society. I would be glad if someone could enlighten me.strong text

opened #4



I didn’t think I had the financial expertise to answer this so I sought a bit of help, and our Chairman Sarah Evans has written us a helpful response (thanks, Sarah!)

I’ll post her answer below:

The construction of The Society is really incredibly clever and the people who first set it up and created the rules did a fab job. Here goes at my explanation.

As a mutual, we know that The Society is there for the benefit of its members. It doesn’t seek to profit maximise. It can benefit its members in a variety of ways and where profits are made surplus to what we need for day to day running we can benefit members either through lowering our margins, by expanding our services or through declaring a dividend.

The key lies however, in the idea that we are there for our members; therefore, it is right that members get the financial benefit from The Society’s success.

The idea of a mutual, therefore, is to recognise this and to allow dividends to be declared, reducing the tax burden for The Society but passing the income on to its members where they would declare the dividend (when received) in their tax returns. This is of double benefit to members because is also reduces leakage of cash from The Society in paying tax. It is quite legitimate for mutuals to reduce their tax in that way. In fact, have a look at Rule 70 which makes it clear that profits should be credited to members’ accounts first, but subject to the restrictions in Rule 72, and only any surplus after that should be retained by The Society [and be subject to tax].

The founders of The Society, in their infinite wisdom, also foresaw that The Society would need working capital to enable it to buy wine in the first place, build warehouses, have staff etc etc etc. Rule 74 therefore leaves it at the discretion of Committee when, or if, the dividends will be actually paid to members, thereby retaining the dividends in the business as its working capital. Accumulated profits attributable to any individual share are only paid out when the share is cashed in on the members’ death. This, of course, means that the dividend is of little/no interest to the member and means that The Society’s focus is on what will benefit the member while they are alive - best value, great wines, outstanding service.

So there you have it! Financial stuff usually goes over my head but I thought that was pretty interesting! :slight_smile:

Hope this helps. :smiley:


When I die my executors should approach the society to redeem my share. How would they do that? What often must happen a member dies and no one claims it back. In those circumstances is there a default time limit in for claims from members estates?


As they would with any other aspect of your estate…through the administrator / executor of the estate

I’m not aware that their is a time limit for the administration of the estate - other than for tax purposes

one point - if you are a member for the dividend “benefit” I think you may have got the wrong idea about being a member …having said that, I’m not going to tell my family that my share is worth about £14…don’t want one of them to pop-me-off for the dosh :wink:


As @JamesF helpfully answered above, the executor of the will just needs to contact The Society. We have a dedicated team member who deals with all such queries and will help the executor either cash in the share or transfer it to a family member (a lot of the time shares are passed from parents to their grownup children, which is rather lovely).


Yes when i think about it the amount of dividend on a £20 pound share isnt going to be much . In fact it might be a good idea to have a method whereby shareholders can leave any accruing dividend to the Society. Having Joined in My 70s there isnt going to be much if any in my account.


if its the 1870s it might be a worthwhile amount :wink:

the annual review always contains the dividend info


Can you pass your shares to anyone ? If I die would i be able to pass my share to my wife who has a different surname from mine?


Absolutely! :slight_smile: When the executor of the will contacts us and provides a copy of the death certificate, we give them the option to either transfer or cash in the share - it doesn’t have to be left in a will to anyone and they don’t have to share the member’s surname.


Not that I’d care as I would be dead, BUT if Mr. Leah was passed my share …. well lets just say, he would be somewhat surprised when he checked the reserves :shushing_face:


I’m just glad that I wouldn’t be there for the bollocking :dizzy_face:


Ha me too… and he doesn’t even know about the Lay and Wheeler reserves :rofl:


Neither would @leah, following the grim scenario of her demise!


This is a great thread. Thanks.

I love the idea of passing my share onto one of my kids.


I believe in the after life . So one could have the experience of drinking the wine without having to buy it or having a bottle or having to drink it.


Aah, but which one?? :sweat_smile:


Buy your kids a share now!


I thought ahead, and only have one child. :wink:


I can’t, they’re underage and if their recent spate of unapproved Netflix purchases are anything to go by, I’d be skint by Easter :grin:.