Michael Simmons & Elaine Dalgleish 
Corporate Actions 
A Guide to Securities Event Management

Corporate actions are events that affect large corporations through
to the individual investor – even those that own a single-share!
All organizations that hold equity and debt securities for
themselves and/or on behalf of others are affected when the issuer
of a security announces an income or corporate action event. The
successful management of the array of different event types
requires understanding of the inherent risks, and tight controls at
critical points in the event lifecycle. The management of income
and corporate action events are important and essential parts of
the securities industry business. Written by authors with many
years experience within this sector, Corporate Actions: A Guide to
Securities Event Management sets out to demystify the subject and
provides a thorough, step-by-step introduction to corporate actions
and income events.

Corporate Actions is a comprehensive source for understanding a
major component of operational processing. The individual
components and their relation to each other within the corporate
actions lifecycle are explained in detail, through which the reader
will gain a clear and thorough understanding of the lifecycle
together with potential processing risks and the strategies to
mitigate

Corporate Actions is essential reading for all those involved in
the securities industry, from new recruits to those involved in
both the day-to-day operations process and those within executive
management. It will also prove invaluable to those providing
consultancy and software solutions to the securities
industry.

Corporate Actions is the first major work on this subject. Many
people within the securities industry have heard of corporate
actions – many people know they can be highly risky – many
organizations have lost vast sums of cash in attempting to process
them – very few understand them!

Table of Content

Introduction xvii

Acknowledgements xxi

About the Authors xxiii

PART I INTRODUCTORY ELEMENTS 1

1 Basic Corporate Action Concepts 3

2 Event Description and Classification 9

3 The Securities (and Corporate Actions) Market Place 23

4 Static Data 37

5 Securities Position Management 49

PART II MANDATORY EVENTS 57

6 Overview of the Generic Corporate Action Lifecycle 59

7 Straight Through Processing 63

8 Event Terms Capture and Cleansing 67

9 Determining Entitlement 79

10 Communication of Event Information 113

11 Calculation of Resultant Entitlements 123

12 Passing of Internal Entries 139

13 Collection/Disbursement of Resultant Entitlements 151

14 Updating of Internal Entries 161

15 Examples of Mandatory Events 167

PART III EVENTS WITH ELECTIONS 185

16 Concepts of Events with Elections 187

17 Management of Mandatory with Options Events 193

18 Management of Voluntary Events 219

PART IV MULTI-STAGE EVENTS 233

19 Concepts of Multi-Stage Events 235

20 Management of a Rights Issue 247

21 Example of a Rights Issue 261

22 Concepts of Takeover Events 275

23 Management of Takeover Events 285

PART V TAXATION 299

24 Concepts and Management of Taxation 301

25 Management of Income Tax 307

PART VI ISSUER NOTICES 331

26 Concepts and Management of Issuer Notices 333

PART VII OBJECTIVES AND INITIATIVES 341

27 Objectives and Initiatives 343

Glossary of Terms 353

Index 383

About the author

MICHAEL SIMMONS has spent the majority of his working life
within the operational areas of international investment banks,
most notably within the S.G. Warburg group in London. Having gained
a detailed understanding of various back office tasks through many
years of hands-on experience, he assumed managerial responsibility
for a number of operational areas.

In recent years, Michael has worked as head of business consultancy
within a global computing services firm, and is now an independent
analyst and trainer. Michael’s areas of expertise include all
aspects of the fixed income and equity trade lifecycle and related
activities, including operational risks and controls. Recent
assignments include the offshoring of operational activities to
India and operational risk analysis (the Sarbanes Oxley act). In
addition, he creates and delivers training courses on the workings
of the securities industry and associated operational aspects to
audiences around the world.

Michael is author of Securities Operations: A Guide to Trade and
Position Management published by John Wiley & Sons, which
describes the fundamental components of operational activities from
a first-principles perspective.

ELAINE DALGLEISH has spent her working life within the
operational areas of investment banking and stock broking, working
directly for international banking firms and financial software
providers. Elaine’s hands-on experience spans various middle
and back office operational disciplines in multiple markets. Whilst
working directly in investment banking and stock broking, this has
ultimately included the managerial responsibility for a number of
operational areas.

The focal point of Elaine’s working history is the consistent
involvement with Corporate Actions operations, initially with the
manual processing of events as a custodian, and subsequently
working as a Senior Business Analyst, specialising in Corporate
Actions, analysing client requirements, and consulting in process
re-engineering for Tier 1 and 2 investment banks.

As a consequence, Elaine has both observed and been directly
involved in the evolution of global market practices of Corporate
Actions operations and the move to automation.