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Manual Corporate Actions - Buy Back, Capital Call, Capital Return, Code Change, Rights Exercise, Rights Lapse, Spin off or Demerger, Split or Consolidation, Takeover or Merger, Hybrid Security Reinvestment

 

This article teaches you how to create a range of different Corporate Actions manually:

Before creating a Corporate Action manually you should always check the Corporate Actions Console at Fund Level or Business Level to see if it is available to be processed from console. 

Buy Back

A buy-back is an offer a company makes to shareholders to buy-back some of its shares from investors either off-market or on-market.

Before creating a Corporate Action manually you should always check the Corporate Actions Console at Fund Level or Business Level to see if it is available to be processed from console. 

Navigate to Fund Level > Transactions > Investment - Corporate Action > Buy Back

Enter data into all the mandatory fields of the screen as indicated below.

  1. Enter Investment Account
  2. Enter Book Close Date, Effective Date &Payment Date
  3. Enter Participating Quantity
  4. Enter various components as required
  5. Click Submit to complete the transaction

Capital Call

A capital call will increase the cost base of an Investment. 

Before creating a Corporate Action manually you should always check the Corporate Actions Console at Fund Level or Business Level to see if it is available to be processed from console. 

Navigate to Fund Level > Transactions > Investment - Corporate action > Capital call

  1. Enter Investment Account
  2. Enter Call Date & Payment Date
  3. Enter Call Amount
  4. Enter Participating Quantity
  5. Click Submit to complete the transaction

Capital Return

A Capital Return will reduce the cost base of the investment.

Before creating a Corporate Action manually you should always check the Corporate Actions Console at Fund Level or Business Level to see if it is available to be processed from console. 

Navigate to Fund Level > Transactions > Investment - Corporate action > Capital return

  1. Enter Holding Account
  2. Enter Recorded Date & Payment Date
  3. Enter Participating Quantity
  4. Select Payment Currency
  5. Enter Payment Amount
  6. Click Submit to complete the transaction

If the Capital Return relates to a managed fund or FIIG, then the amount should be processed via Distribution - Cash and then classified as a Capital Return in the Distribution - Tax Statement event.
Refer this article for more details: How to process Capital Return for FIIG?

Code Change

A code change will change the investment code to a new code and migrate the historical cost base details to the new security code.

Before creating a Corporate Action manually you should always check the Corporate Actions Console at Fund Level or Business Level to see if it is available to be processed from console. 

Navigate to Fund Level > Transactions > Investment - Corporate Action > Code Change

  1. Enter Source Investment Account
  2. Click on Update Parcelling to update the parcels
  3. Enter Target Investment Account
  4. Enter Action Date
  5. Click on Update Details
  6. Click Submit to complete the transaction

Rights Exercise  

This is a two-step process, firstly create the rights with the quantities the entity is entitled to receive then exercise the rights.

Before creating a Corporate Action manually you should always check the Corporate Actions Console at Fund Level or Business Level to see if it is available to be processed from console. 

Navigate to Fund Level > Transactions > Investment - Corporate Action > Rights Exercise/Lapse

  1. Enter details as per screenshot below
  2. Click on Update Parcelling to update the parcels
  3. Update Exercised Quantity, Payment/Premium & Quantity Received
  4. Click on Update Details

  5. Click Submit to complete the transaction

Rights Lapse

This is a two-step process, firstly create the rights with the quantities the entity is entitled to receive then lapse the rights.

Before creating a Corporate Action manually you should always check the Corporate Actions Console at Fund Level or Business Level to see if it is available to be processed from console. 

Navigate to Fund Level > Transactions > Investment - Corporate Action > Rights Exercise/Lapse

  1. Enter details as per screenshot below
  2. Click on Update Parcelling to update the parcels
  3. Update Lapsed QuantityLapsed & Payment/Premium
  4. Click on Update Details

  5. Click Submit to complete the transaction

Spin off or Demerger

This event is used where a new holding is split out of an existing holding.

Before creating a Corporate Action manually you should always check the Corporate Actions Console at Fund Level or Business Level to see if it is available to be processed from console. 

Depending on whether the transaction is eligible for tax relief under Division 125 ITAA 1997 (Demerger Relief) you can process one of two ways:

Eligible for Demerger Relief

Navigate to Fund Level > Transactions > Investment - Corporate action > Spin Off of Demerger 

NOTE: This event will automatically apply Demerger Relief. The Target Holding Account will retain the original CGT Date from the Source Holding Account parcels.

  1. Select Source Holding Account, enter Date of Spin off or Demerger & Description
  2. Enter Target Holding Account, Target Quantity & Percentage of Source > Click Apply
  3. Click on Update Parcelling to update the parcels
  4. Click on Update Results
  5. Click Submit to complete the transaction

In the example above,

  • Target Book Cost is calculated as Percentage of Source * Source Book Cost = 5.2% * $2,500 = $130
  • Target Unadjusted Tax Cost is calculated as Percentage of Source * Source Unadjusted Tax Cost = 5.2% * $2,500 = $130

The Percentage of Source applies to both the accounting cost and unadjusted tax cost. Unadjusted tax cost is the cost base for CGT purposes before applying any cost base adjustments. This number can be different from accounting book cost if the investment has gone through transitional CGT relief.

Not Eligible for Demerger Relief

If the Spin/Off or Demerger event is not eligible for Demerger Relief you will need to process below steps. This will ensure that the CGT Date is the date of the new purchase. 

  1. Capital Return for the Source Holding Account - this was covered earlier in this User Guide article, you can click the link to be directed back to the relevant section
  2. Process the acquisition of Target Holding Account. Navigate to Fund Level > Transactions > Investment - Buy
  3. Match Steps 1 & 2 business events against each other via Match Transactions screen

Split or Consolidation

A split "increase in units" or consolidation "decrease in units".

Before creating a Corporate Action manually you should always check the Corporate Actions Console at Fund Level or Business Level to see if it is available to be processed from console. 

Navigate to Fund Level > Transactions > Investment - Corporate action > Split or consolidation

  1. Enter details as per screenshot below
  2. Click Submit button to complete the transaction

Consolidation cannot be processed with nil New Quantity, in order to avoid Period update error: A quantity adjustment for XXX on XX.XX.20XX cannot be matched".

Takeover or Merger

A Takeover or Merger event involves a new holding replacing an existing holding.

Before creating a Corporate Action manually you should always check the Corporate Actions Console at Fund Level or Business Level to see if it is available to be processed from console. 

Navigate to Fund Level > Transactions > Investment - Corporate action > Takeover or merger

  1. Enter details as per screenshot below
  2. Click on Update Parcelling to update the parcels
  3. Select With Rollover Relief or Without Rollover Relief
    *See Notes below for definition
  4. Click Submit to complete the transaction

With Rollover Relief: The rollover allows you to defer paying CGT until a later CGT event happens (for example you later dispose of the shares you acquired in the takeover). The rollover relief doesn't apply if the parcel will make a capital loss.

Without Rollover Relief: When this option is chosen, the system will realise the capital gain or loss as a result of the transaction. The shares you receive in exchange for the takeover/merger event is taken to be acquired on the Action Date at the market value of those shares on the Action Date. 

Hybrid Security Reinvestment

A Hybrid Security Reinvestment corporate action event involves a new Hybrid Security replacing an existing Hybrid Security with the CGT date being the date of reinvestment.

All Hybrid Security Reinvestment corporate actions from 1 July 2022 are support at the Business Level via Corporate Action Console for bulk processing as well as Fund Level via Browse Corporate Actions. Hybrid Security Reinvestment prior to 1 July 2022 can be processed manually as below.
Example : CGFPA reinvested in to CGF on 25 May 2021.

Update Parcelling button for the Hybrid Security Reinvestment corporate action has been automated.

Navigate to Fund Level > Transactions > Investment - Corporate action > Hybrid Security Reinvestment.

  1. Enter Source Investment Account
  2. Enter Target Investment Account (Click on Create Investment Account to create if not found)
  3. Enter Action Date (This is the date when the reinvestment occurred)
  4. Enter Target Quantity equal to Source Quantity
  5. Enter Target Market Value (This is the proceed amount for the Source Investment Account)
  6. Click Submit to complete the transaction

 

What's Next?

We will teach you the difference between using or not using rollover relief for a Takeover or Merger corporate action here; Processing Scrip for Scrip Rollover Relief.

For worked examples see:

 

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