Corporate actions glossary
When processing corporate actions, Upvest adheres to standard market definitions and practices. The following definitions outline the terminology relevant to the Upvest scope of services.
C
Cash option
The alternative in connection with an choosable corporate action where the end user receives cash instead of another alternative.
Custodian default option
The alternative for an choosable corporate action that is applied by the Upvest custodian if no instruction is received from Upvest or the end user.
D
Dividend
The payment that an investor receives for his investment in a share and which is paid out of the company's profits.
E
Effective date
The date on which a corporate action is to take effect.
Example
An example is a merger; on the effective date, the two companies officially merge.
However, the effective date may be different from the date on which the corporate action is actually settled (i.e. the payment date (see below)).
Eligible holdings
Holdings of a user that are entitled to participate in a corporate action. These are all holdings that were acquired before the ex-date of a corporate action, i.e. through a trade by the user.
Entitlement management
Upvest calculates the eligible holdings for each end user (and aggregates for all end users of a client) based on the prevailing position data (including account transfers) and pending trades.
Ex date
The date up to which a particular share is eligible for the upcoming corporate action. In general, eligibility is determined by the execution of orders placed before the ex-date.
Example
If a buyer purchases a share on the ex-date, the buyer is not eligible to participate in the upcoming corporate action.
In this case, the seller is still authorised to participate. In this example, the buyer would still be entitled to participate in the corporate action if the purchase transaction had taken place on ‘ex date - 1’.
G
Golden Record
The most current and accurate data for a specific corporate action.
The Golden Record is constantly maintained and updated and serves as the basis for the entire customer processing of a corporate action.
I
Interim ISIN
The temporary, non-tradable ISIN assigned to user portfolios for certain Corporate action events.
M
Mandatory corporate actions
Mandatory corporate actions are transactions in which shareholders must participate, even if they do not have a choice.
These measures are initiated by the company's Executive Board and carried out automatically without the shareholders having to be actively involved.
Examples
Examples of mandatory corporate actions include
- stock splits
- mergers
- acquisitions
where the company's board of directors makes decisions that affect the company's structure and share value.
-> See also Voluntary corporate actions.
N
No action
The alternative in which the end user does not participate in a voluntary corporate action.
Notification
A message used to communicate the details of a corporate action to an end user along with the possible elections or choices available to the end user.
P
Payment date
Cash-based
The date on which the payment for a cash-based corporate action is made.Securities-based
For securities-based corporate actions, the payment date is the date on which the payment for securities is made (e.g. the securities resulting from a merger).
R
Record date
The record date is the date on which the issuer checks its records to identify its eligible shareholders. The authorised shareholders are those who are affected by the respective corporate action.
Rights
A temporary holding paid to users on certain Corporate action events and usually exchanged for cash or shares.
S
Sell option
The alternative for a choosable corporate action in which the end user sells the intermediate securities allocated to it instead of another alternative.
V
Voluntary corporate actions
A voluntary corporate action is an event in which shareholders have the opportunity to participate. This is in contrast to mandatory corporate actions, where shareholders do not have to do anything, as the event takes place regardless of their participation.
In these measures, shareholders must decide whether they wish to participate.
Examples
Examples include
takeover bids
voluntary dividends
rights issues
Shareholders must respond to the company's offer in order to participate in the action.
Depending on the respective corporate action, additional user input and corresponding instructions are required (e.g. for re-purchase offers (BIDS)).
-> See also Mandatory corporate actions.