CL-2018-000297, CL-2018-000404, CL-2018-000590, - [2025] EWHC 2364 (Comm)

Clearstream material publicly available at the time supported the view that a cum-ex buyer of Danish shares should be credited, and their seller debited, with what I am calling a dividend compensation payment, if the sale settled. On one reading of the Clearstream material, cum-ex trading where settlement is always intended to be with ex-div shares was within the cases where what it called a ‘market claim’ should be processed on a settlement after the record date. In my view, on balance, the better reading of the relevant Clearstream material is that it dealt only with the processing of market claims as defined by the CAJWG Standards, but as I have just indicated I can see how it might have been read differently. Nothing in the Clearstream material advised that a cum-ex dividend compensation payment would be treated as a dividend for tax purposes in Denmark, although it did not expressly rule that out, as it did for certain other jurisdictions where Clearstream felt able to make a positive statement to the contrary, for example, for the Netherlands, “Note: Market claims are considered indemnities. Recipients of indemnities are not able to reclaim Dutch withholding tax”, and for Italy, “Compensations on the Italian market are not considered as income but as a price adjustment”.

A reasonable view that may have been gleaned from the Clearstream material at the time was that of Rajen Shah, expressed in an email to Sanjay Shah and Mr Horn on 30 August 2012, that for Danish shares: “Dividend entitlement is based on traded position at ED [i.e. ex-date]. The CSD [i.e. VPS] will credit accounts only when position settles (this should not impact entitlement)”. Again, however, the secret to the Solo Model trading that was by then underway (the first trading was around TDC’s dividend date of 8 August 2012) was the absence of shares and the related share-less settlement method. The Clearstream material did not help to answer the question whether trades settled in that way might generate a Danish tax refund entitlement.