Flexible dividend: FAQs

It is a remuneration program that allows shareholders to decide whether they prefer to receive part or all of their remuneration in cash or in REPSOL bonus shares, i.e., at no cost to shareholders.

The program is implemented via capital increases charged to voluntary reserves from non-distributed earnings with Repsol’s irreversible commitment to purchase the free-of-charge allocation rights at a guaranteed set price.

The last trading date—the day the notice of capital increase is published in the Official Gazette of the Mercantile Registry— is the last day for trading REPSOL shares entitled to automatically receive free allocation rights for the new shares issued. It will be necessary to own a minimum number of rights for the allocation of each new share. Such number will result from the relation between the amount of the capital increase and the number of outstanding shares.

The allocation rights will be listed on the stock exchange for 20 calendar days after publication of the notice on the capital increase in the Official Gazette of the Mercantile Registry. During this period, shareholders may choose between (i) selling these rights to REPSOL at a guaranteed set price, (ii) selling their rights on the stock exchange and receiving cash, or (iii) keeping their rights and receiving the bonus shares corresponding to them.

REPSOL will guarantee, with an irreversible commitment to purchase rights at a set price, that those shareholders who wish to can sell their rights and receive cash. This option is only available to the shareholders who hold shares on the record date, i.e., the effective settlement date for transactions made on the last trading day and only for the free allocation rights they receive. As a result, it is not possible to apply for this option regarding free allocation rights acquired on the stock exchange.

To benefit shareholders by allowing them to decide if they want to receive their remuneration, totally or partially, in bonus shares, without limiting in any way their option to receive the entirety of the remuneration in cash, if so desired.

With this, REPSOL has adopted a practice that other Spanish and multinational companies already have in place.

No, with this system, REPSOL offers its shareholders the option to receive their remuneration, totally or partially, in cash or, if desired, in bonus shares. REPSOL continues to guarantee that all shareholders who so wishwill receive all of their remuneration in cash.

The purchasing price to which Repsol will commit to acquire free-of-charge allocation rights will be set by the formulas included in the Annual General Meeting's resolution for this purpose. It is expected that the purchase price will be announced on June 11th, 2019, and its calculation depends, among other things, on the quotation price of Repsol's shares on the following days: June 4th, 5th, 6th, 7th, and 10th, 2019.

REPSOL has not made any decision on its future use.

Shareholders may freely choose to do any of the following:

• Not sell the rights and receive free-of-charge the corresponding shares, according to the formula determined when the capital increase is carried out.
• Sell part or all of the rights on the stock exchange. In this case, shareholders would receive the total in cash according to the market price of the free-of-charge allocation rights.
• Sell part or all of the free-of-charge allocation rights to REPSOL under the purchase commitment taken on by the Company. In this case, shareholders would receive the total in cash, according to the guaranteed set price. This option is only available to the shareholders who hold shares on the record date, i.e., the effective settlement date for transactions made on the last trading day and only for the free allocation rights they receive. As a result, it is not possible to apply for this option regarding free allocation rights acquired on the stock exchange.

One right per share.

That is a decision which shareholders must make reviewing their own personal, financial, and asset-related circumstances.

Generally, shareholders must decide whether they prefer to receive new bonus REPSOL shares or if they have liquidity needs and prefer cash.

In any case, as the specific situation for each shareholder depends on his/her own personal, financial, and asset circumstances, as well as on his/her applicable tax system, shareholders must review their decisions with their financial advisors, should they deem it appropriate.

Yes. To do so, shareholders must sell part of their free-of-charge allocation rights either to REPSOL or on the stock exchange and keep the other part.

If their Repsol shares are listed on Spanish stock exchanges, shareholders will receive the Repsol shares that correspond to them, according to the formula determined when the capital increase is carried out. Regarding the remaining rights—i.e., the rights that do not meet the minimum number to acquire a new share according to the aforementioned formula—, normally these rights are sold on the stock exchange and shareholders receive the cash from the transaction. This is subject to the terms of the relationship that shareholders maintain with the institution with which their shares are stored.

By contrast, for holders of American Depositary Shares (ADSs) or American Depositary Receipts (ADRs), the default option is to receive cash—except if the holders have reported their decision in prior operations to receive new shares—via transfer of the free-of-charge allocation rights to REPSOL at the set price guaranteed by REPSOL.

In both cases, the default option will be subject to the terms of the relationship that shareholders maintain with the institution with which their shares are held.

If shareholders decide to sell their rights on the stock exchange, they must contact the institution where their shares are held and follow its instructions in order that the institution may sell the rights during the negotiation period set for these purposes. This period will be at least 15 calendar days after publication of capital increase announcement in the Official Gazette of the Mercantile Registry.

If shareholders decide to sell their rights to REPSOL at the guaranteed price, they must also contact their depositary institution and follow its instructions so that it may process the sale of their rights to REPSOL. The period to select this option expires several days prior to the end of the rights negotiation period on the stock exchange.

It is expected that in the execution of the extension of the first paid-up capital increase approved by the 2019 Annual Shareholders Meeting, the Rights trading period begins on June 15th, 2019 and expires on July 4th, 2019. The period to select the option to sell rights to REPSOL will be open from June 15th to the July 4th, 2019.

The date after which Repsol shares will be listed as ex-coupon will be the first trading day following the last trading date (the last day for trading REPSOL shares entitled to participate in the Repsol Flexible Dividend Program). This date is June 17th, 2019.

Shareholders must contact the financial institution where they have deposited their shares to provide instructions on how to sell their free-of-charge allocation rights to REPSOL or on the stock exchange, according to the option they have selected and always taking into account the deadlines established for each option.

Shareholders must take into account the option that will be applied if they do not send any instruction to the financial institution where their shares are held (See question 10. What happens if shareholders do not select an option?)

Rights will be sold to REPSOL at a guaranteed price while they will be sold on the stock exchange at the list price for these rights. Therefore, in the second case, shareholders may receive an amount that is greater, equal to, or lower than the guaranteed price.

In either case, the financial institution where shareholders have deposited their shares may establish, in accordance with the applicable laws, the commissions and expenses which they freely determine for processing purchase orders and the sale of free-of-charge allocation rights.

In any case, as the specific situation for each shareholder depends on his/her own personal, financial, and asset circumstances, as well as on his/her applicable tax system, shareholders must review their decisions with their financial advisors, should they deem it appropriate.

On the second trading day after the sale, the same as any transaction performed in this market.

On the same dates on which they traditionally received dividend payments in cash and, generally, the second trading day after the end of the negotiation period for rights on the stock exchange.

It is expected that in the execution of the first paid-up capital increase approved by the 2019 Annual Shareholders Meeting, the payment date to shareholders who sell their rights to REPSOL will be made on July 8th, 2019.

No. REPSOL has agreed to purchase free-of-charge allocation rights at a set price calculated prior to the beginning of the negotiation period for rights. The gross price that shareholders will receive they sell their rights to REPSOL will be the same the value of the new shares they would receive if they did not sell their rights. This figure may be subject to rounding.

If shareholders decide to sell their rights on the stock exchange, the total they will receive for this sale will depend on the list price of the rights on the market.

No. The capital increase will be performed free of expenses and commissions in relation to the allocation of newly issued shares. REPSOL will cover the expenses for issuing, underwriting, putting shares on the market, admission to trading, and other expenses related to the capital increase.

Nonetheless, the financial institution where shareholders have deposited their shares may establish, in accordance with the applicable laws, the commissions and expenses which they freely determine for underwriting new shares and administration, resulting from maintaining the stocks in the accounting records.

REPSOL will prepare an Informative Document containing details on the transaction and its schedule.

The final number of rights needed for the allocation of one new share (exchange ratio) will mainly depend on the quotation price of the shares on the following days: June 4th, 5th, 6th, 7th, and 10th, 2019; it will also depend on the number of outstanding shares in the moment of implementation of the capital increase (currently 1,558,877,582 shares).

Before the start of the period offered to the shareholders for making their decision, REPSOL will make publicly available the number of Rights needed for the allocation of one new share and the guaranteed fixed price of the Purchase Commitment. It is expected that in the execution of the first paid-up capital increase approved by the 2019 Annual Shareholders’ Meeting, this information will be published on June 11th, 2019 in the Informative Document.

Therefore, if a shareholder has REPSOL shares deposited in various institutions, he/she may receive a fewer new shares than if all of his/her shares were deposited in the same institution.

If, for example, the exchange formula is 1 new share for each 20 rights and a shareholder has 60 shares deposited in the same institution, he or she would receive 3 new shares. If another shareholder has 60 shares deposited in 2 separate institutions—39 in bank A and 21 in Bank B—he or she would receive only 2 new shares: 1 for each bank, and 20 rights remaining (19+1) that, unless the shareholder instructs differently, will be sold on the stock exchange.

Being subject to the terms of the relationship shareholders have with the institution where their shares are deposited, normally they are sold on the stock exchange, unless shareholders instruct differently, and shareholders receive the cash from transaction.

Yes. This is an investment decision separate from the REPSOL Flexible Dividend system.

The new shares will be allocated several days after the date on which the cash payment is made to the shareholders who decided to sell their rights to REPSOL.

This difference between the cash payment date for the purchase price of rights and the delivery date of the new shares is mainly due to the processing needed to introduce the new shares to the stock exchange and include them in the appropriate accounting records.

Subject to obtaining all necessary authorizations, it is expected in the execution of this first paid-up capital increase, approved by the 2019 Annual Shareholders’ Meeting, that the commencement of ordinary trading of the new shares on the Spanish stock exchanges will be on July 22nd, 2019.

It will depend on the shareholders that decide to receive shares and the list price for shares taken as a reference to calculate the number of rights needed to receive a new share.

The first day the free-of-charge allocation rights are listed on the market, Repsol shares will begin to be listed deducting the theoretical value of the free-of-charge allocation right. Therefore, the date on which Repsol stock will be listed as ex-coupon is June 17th, 2019.

We do not expect it to have a significant impact.

The bare owner has the right to make the decision about what to do with the free-of-charge allocation rights corresponding to shares in usufruct. If you decide to receive new shares or sell the rights on the stock exchange, the usufruct will extend to new shares or the product of the sale. If you decide to sell the rights to REPSOL, the cash you receive will be considered as fructus civiles of the shares, corresponding to the limited owner.

However, as your specific situation depends on your own personal, financial, and asset circumstances, as well as on your applicable tax system, you must review your decision with you consultant, if you deem it appropriate.

The bare owner has the right to make the decision about what to do with the free-of-charge allocation rights corresponding to shares in usufruct. If the bare owner decides to sell the rights to REPSOL, you will receive, as the limited owner, the corresponding cash, which will be considered as fructus civiles of the shares. If the bare owner decides to receive new shares or sell the rights on the market, the usufruct will extend to new shares or the product of the sale.

However, as your specific situation depends on your own personal, financial, and asset circumstances, as well as on your applicable tax system, you must review your decision with you consultant, if you deem it appropriate.

In this case, the joint owners must designate a single person to exercise shareholder rights and, in this case, to decide what to do with the free-of-charge allocation rights corresponding to shares under joint ownership.

This is subject to the terms of the relationship that shareholders maintain with the institution with which their shares are held.

No.

For tax purposes, the delivery of new shares will be considered as delivery of bonus shares and will therefore not be considered income under the Individual Income Tax On Natural Persons (IRPF in Spain), the Corporate Income Tax (IS), or the Tax on Income of Non-Residents (IRNR), regardless as to whether those receiving the shares operate through a permanent establishment in Spain or not. Similarly to the aforementioned, the delivery of new shares is not subject to tax withholding or payment.

The purchase price, both of new shares and shares coming from them, will be determined by dividing the total cost over the number of shares, both old shares and the corresponding bonus shares. The age of these bonus shares will be the corresponding age of the shares coming from them.

Consequently, for a subsequent transaction, the income from this will be calculated using this new price as a reference.

Yes, the total income from the transaction will be considered as capital gains subject to tax withholding.

If shareholders sell their free-of-charge allocation rights on the market, specifically for this program, the total from the market transaction of these rights will be covered by the tax system described below:

For personal income tax and income tax of non-residents with no permanent establishment in Spain, the amount obtained from the sale of free-of-charge allocation rights on the market will be given the same tax treatment as pre-emption subscription rights. Consequently, the proceeds from selling the free-of-charge allocation on the market will be considered a capital gain for the seller who are IRPF (Personal Income Tax) taxpayers or IRNR (Non-Resident Income Tax) taxpayers without a permanent establishment in Spain. The capital gain shall be subject to IRPF (Personal Income Tax) withholding at the rate that is applicable at that time. This IRPF (Personal Income Tax) withholding shall be performed by the corresponding depositary institution (and, in its absence, by the financial intermediary or the notary public involved in the transfer of these rights). The above without prejudice to the possible application to non-resident taxpayers with no permanent establishment in Spain of the double taxation treaties signed by Spain to which they may be entitled as well as the exemptions foresee by the IRNR legislation.

For corporate income tax and income tax of non-residents with a permanent establishment in Spain, since a full commercial cycle is closed, it will be taxed according to the applicable accounting standards and, where appropriate, any special tax regimes applicable to the shareholders subject to the taxes indicated.

Yes. The same case as for additional payments or dividend payments in cash.

The system applicable to the total of the sale to REPSOL of the free-of-charge allocation rights held as a shareholder will equivalent to any ordinary REPSOL dividend.