The 1.8 million British Gas shareholders will be asked to vote on the demerger plan scheduled for next year. This would split the existing company into two separate parts – British Gas Energy and TransCo. And before that, 227,000 small shareholders in Hanson will have to decide on that group’s plan to split into four companies. Q : Why do companies want to demerge?
A: There can be a variety of reasons.

One idea is that demerging will make the stock market see hidden value in the new companies, according to Philip Ryland of Investors Chronicle. The value of the separate companies may be higher in total than the share price of the single company. In addition, separate companies may be more tightly focused.Q: What are the plans for Hanson?A: The proposals are at an early stage, but the plan is to create two new companies on 30 September: one covering Hanson’s chemical interests; the other covering tobacco. A few months later, a demerger covering energy interests will take place. So there will be three new companies plus the remaining Hanson company covering building materials and equipment.Q: What do investors have to do?A: An extraordinary general meeting will take place a month or so before each of the demerger dates.

About one month before that meeting, shareholders will receive the documentation setting out the proposals and a proxy voting form. They will, of course, be able to attend the meeting in person rather than vote by proxy. Assuming approval is given, share certificates for the new companies will be sent out soon after each demerger takes place.Q: What is in the demerger for Hanson’s shareholders?A: One effect of the demerger will almost certainly be a cut in dividend, according to James Richie of stockbrokers BZW. The consequence of this could well be a falling share price – not good news for a shareholder.