Issue

Issue is a corporate action when new securities are issued based on the ownership of another security.

The issue corporate action creates as many transactions as there are open purchase lots in the position the issue is based on, and keeps track of the original purchase dates.

Security*

The security the issue is based on (for example the security issuing the subscription rights). The amount of this security in the portfolio together with the ratio will determine the amount of the transaction created.

Issued security*

The issued security (the security received from the issue).

Run based on*

An option to run a corporate action based on:

Ex-date. Define the ex-date and run the corporate action for all portfolio positions (settled and unsettled) that have transaction date on the selected date or earlier.
Record date. Define the record date and run the corporate action for settled portfolio positions that have settlement date on the selected date or earlier.

Issue date*

(The field is shown if you choose to run the corporate action based on the ex-date). The ex-date of the issue. The issue is calculated based on the position amount (settled and unsettled) in portfolios on the morning of the specified date. The issue date will become the transaction date of the transaction created.

Issue record date*

(The field is shown if you choose to run the corporate action based on the record date). The issue record date. The issue is calculated based on the settled position amount on the morning of the record date. This date will become the transaction date of the transaction created.

Price / unit

The unit price of the issued security (or leave as 0 if the issue is of no charge). The unite price will become the unit price of the transaction created.

Issue ratio

The issue ratio (for example 1:2). The ratio determines how many new securities are received per one original security (for example, if with one security you will receive two subscription rights, ratio would be 1:2).

Transaction type*

The transaction type for the transactions to be created (if recording subscription rights issues, select "Subscription rights issue" or similar).

A new corporate action is created with the OK button below the corporate action information. Remember to run the corporate action to your portfolio(s) in order to create appropriate transactions to your portfolios.

Handle rights issues

Rights issue consists of the following phases:

Registration of Subscription Rights
Exercise Subscription Rights by subscribing for shares (either company shares directly or Interim Shares)
If Interim Shares are used, exchange the interim shares for company shares

This document details the different ways the rights issues can be handled in FA platform using corporate action functionalities.

The rights issues can be handled differently depending on taxation. The key difference is whether the subscription rights are considered having some purchase value. For example, in some jurisdictions private person taxation requires subscription rights not having purchase price while company taxation requires the purchase price.

The example case used here is Enedo Plc's Rights Issue in 2021. In that rights issue the key details were the following:

Shareholders will receive three subscription rights for every one share owned (1:3 ratio). The ex-rights date is 12 March.
Subscription rights holders are entitled to subscribe one offer share for one subscription right (1:1 ratio) during the subscription period, from 18 March to 1 April.
Interim shares represent offer shares until 9 April, when the interim shares are exchanged for company shares.

Before proceeding, make sure you have created the securities (company share, subscription right and interim share (if used)) in the system. In the example case used here they would be ENEDO FH (the regular company share of type Equity), ENEDOU01 FH (the subscription right of type Entitlements) and ENEDON01 FH (the interim share of type Equity).

Registration of subscription rights

This step can be done as either Issue or Exchange type corporate action, depending on how you want to handle purchase values of the subscription rights.

If you don't want to have purchase value on on the subscription rights, or you want to valuate the subscription rights with their calculated value, use corporate action of type Issue with the following details:

Security: The security bearing subscription rights (for example, ENEDO FH)
Issued security: The Subscription Right (for example, ENEDOU01 FH)
Issue date: Ex-rights date (for example, 12 March)
Price/unit: Calculated price of the subscription right, or 0 if you don't want to have purchase value on the subscription rights. Note that the given purchase value reduces the purchase value of the original purchase lot of the share.
Subscription ratio: The ratio with which you will receive subscription rights for every share you own (e.g. 1:3)
Transaction type: Subscription rights issue (C), SRIC, if you had purchase value, or Subscription rights issue, SRI, if you didn't have purchase value

If you want to valuate the subscription rights as percentage of original purchase lot's purchase price, use corporate action of type Exchange with the following details:

Removed security: The security bearing subscription rights (for example, ENEDO FH)
Exchange date: Ex-rights date (for example, 12 March)
Transaction type: Subscription rights issue (C), SRIC
New security: The Subscription Right (for example, ENEDOU01 FH)
New security Exchange ratio: The ratio with which you will receive subscription rights for every share you own (e.g. 1:3)
New security Share: The percentage of the original purchase lot's purchase price you want to use for the purchase price of the subscription right. For example, if you have a purchase lot with purchase value of 2000 EUR and input 10 as the percentage, the subscription rights assigned to that purchase lot get the total purchase value of 200 EUR and the purchase value of the original lot is reduced to 1800 EUR.

Subscribe for shares

Create a new corporate action of type Subscription with the following details:

Security: The Subscription Right (for example, ENEDOU01 FH)
Issued security: The Interim Share (for example, ENEDON01 FH), or the company share, if no interim shares are used
Subscription/Payment date: Self explanatory (for example, 1 April)
Subscription price: Self explanatory (for example, 0.2)
Subscription ratio: The ratio with which you will receive shares for every subscription right (for example, 1:1)
Transaction type: Exercise subscription right (C),SUBSC or Exercise subscription right, SUBS, depending on whether you selected SRIC or SRI in the earlier step

Exchange interim shares

This step is only needed if the interim shares are used. If the subscription rights were exchanged directly for the company shares, you can skip this step.