What is a corporate action in shares investing? How should you respond to a corporate action request?


What Is a Corporate Action?

A corporate action impacts a company and its shareholders. Corporate actions may be mandatory or require a response from its shareholders. Examples of corporate actions are payment of dividends, stock splits, tender offers, and mergers and acquisitions.

There are 4 primary types of shares corporate action which are:

  • conversion request,
  • redemption to cash,
  • dividend reinvestment plan and rights subscription, and
  • acceptance of take over offer.

#1: Conversion Request (Two Types; Conversion near to maturity & Early Conversion)

Description: The conversion of Warrant Shares, Preference Shares, and Loan Stock to Ordinary Shares.

How: Conversion to Ordinary Shares (Conversion near to maturity/expiry date of securities)

  1. Client to subscribe the corporate actions for conversion with the condition that Warrant Shares, Preference Shares, and Loan Stock must be ready and available in CDS Account.
  2. Hereby confirm that after the submission of this Notice of Conversion to the Company, I/We (shareholder) shall not dispose, transfer, charge or in any way deal with the ICPS intended for the conversion rights herein, until the conversion is completed by the debiting of the ICPS from my/our (shareholder) CDS Account or the conversion is rejected by the Company, whichever shall be applicable.

How: Conversion to Ordinary Shares (Early Conversion)

  1. Client to give manual written instructions to for conversion request with the condition that Warrant Shares, Preference Shares, and Loan Stock must be ready and available in CDS Account.
  2. Hereby confirm that after the submission of this Notice of Conversion to the Company, I/We (shareholder) shall not dispose, transfer, charge or in any way deal with the ICPS intended for the conversion rights herein, until the conversion is completed by the debiting of the ICPS from my/our (shareholder) CDS Account or the conversion is rejected by the Company, whichever shall be applicable.

#2: Redemption to Cash (Redemption near to maturity/expiry date of securities)

Description: The redemption of Stock to Cash.

How: Redemption to Cash (Redemption near to maturity/expiry date of securities)

Client to subscribe the corporate actions at platform for redemption with the condition that Loan Stock must be ready and available in CDS Account.

How: Redemption to Cash (Early Redemption)

Client to give manual written instructions to notify for redemption request with the condition that Loan Stock must be ready and available in CDS Account.

 

#3: Dividend Reinvestment Plan & Rights Subscription

Description: Dividend reinvestment allows shareholders to use declared dividends to purchase additional Shares in the company. Rights Subscription allows shareholders to acquire additional or new shares which often takes place in the form of a stock split.

How: Dividend Reinvestment Plan/Rights subscription will be available at “Corporate Action Subscription” page at member’s web site.

#4: Acceptance of Take Over Offer

Description: In a merger, two (or more) companies to form a new company whereby existing shareholders of a merged company will own shares in the new company. In an acquisition, the acquirer takes over the target company whereby the takeover company ceases to exist but acquires assumes the target.

How: Take Over Offer will be available at “Corporate Action Subscription” page at member’s web site.

Application Process

How to apply

  1. Email notification to require client to act/subscribe at “Corporate Action Subscription” page at member’s web site.
  2. Client to act/subscribe at member’s page website.

Things to note

  1. Deadline is stated in both email notification and “Corporate Action Subscription” page at member’s website. The Registrar Deadline can be found in Corporate Announcement on Bursa Malaysia’s website.
  2. Application must be submitted before the Deadline to sufficient processing time.
  3. Broker shall not be responsible for any claims/losses incurred if the client:
  • Fails to notify or give instructions
  • Fails to submit application before Deadline

 

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