WCA Event Glossary & Useful Terms

AGM/EGM/CGM/SGM 

Annual General meeting of shareholders is held once a year, usually after the end of the financial year. EGM – Extraordinary General Meeting. SGM – Special General Meeting. CGM – Court Ordered Meeting.

Change in the Agency of a security eg. Depository, registrar, lead manager

Change in contact details of the Agency.

An intent of the company to have Corporate Action which may affect the shareholder’s value. The intent may or may not materialise into an event.

Arrangement General term referring to any complex reorganisation of a company, its capital or a group of companies.

Absorption of a new issue of shares into the parent shares. The original shares, normally issued mid year, did not rank for full year’s dividend (Non Pari Passu) while the parent share is entitled to full year’s dividend. Upon assimilation, the assimilated shares rank Pari Passu with the parent share.

When a company’s net worth goes below the country’s stipulated guideline. There could be several stages in the Bankruptcy process. Hence, one sees several announcements over a period of time. The end result of Bankruptcy could be revival, sale, re-organisation, liquidation etc.

Changes in the constituents or shares in basket of the Basket Warrant.

Changes in the terms of the Basket Warrant.

Changes in the Outstanding Value of the Bonds due to redemptions.

To allow cleaning of bond static data due to improper information flows.

Issue of FREE securities to the shareholders of the Company by capitalising the reserves of the company. Security being issued can be an instrument other than Equity Share.

A Bonus issue with tradable rights attached. Effectively, a mixture of Bonus and Rights.

Offer by the company to purchase its own securities from the company’s reserves. The securities bought back by the company are subsequently cancelled.

Where the issue price of a security in an offer (Eg. Rights, IPO, further offerings) is split in such a way that the shareholders have to pay the issue price in installments. Until the full issue price is received by the company the security remains as Partly Paid. A call is a demand to pay an installment.

Write off of existing Equity Capital of a company by either reducing the par value and/or by cancelling a certain number of shares or capital. If a cash payment is involved then it is described as Return of Capital.

Physical exchange of existing certificates for another set of certificates. This may be done in case of sub-division, lot change, name change, exchange of one type of security for another type of security.

Increase in the Face/Nominal Value of the security. Company’s Equity Capital remains the same but the shares in issue reduces. Opposite of Sub-Division.

Issuer offers cash payment to the bond holders for their acceptance of the proposed changes.

Details of individual Conversions of a convertible security (Eg. Preference Share, Convertible Bond).

Changes in the terms of the Covered Warrants.

Changes in Credit Rating of a Fixed Income Security.

Change in Security’s Capital Currency Eg. French Franc to Euro. This may also result in a Par Value change.

Separation of a portion of company A’s operations/assets into Company B. Shareholders of Company A receive free shares of Company B.

Changes in the ratio or underlying security of the Depository Receipt.

Issue of FREE shares of Company B to the shareholders of Company A. There is no transfer of operations/assets of Company A to Company B. The shareholder continues to hold shares in both Company A and Company B. Hence, the event is distinct from De-merger or Bonus.

One or more Shareholders of a company offering whole or part of its holding to the existing shareholders of company at a price.

Distribution of a company’s profits for a of a given period to the shareholders in cash and/or Stock.

Non-renounceable & non-tradable issue of shares. Is the right to purchase new shares at the specific price. The allotment of shares will usually be in the same company.

Change in accounting year-end of the company.

Changes in FRN interest rates and margins during the tenure of the bond.

Change in the Country of Incorporation of the Issuer.

Periodic payment on debt by the borrower to the lender at a pre-defined interest rate.

Changes in the frequency of interest payment during the bond’s tenure.

Changes in Coupon rates of interest bearing securities.

International Code Change
A change in any of the international codes in the system. For a security the International codes will be common across countries.

Change in the name of the Issuer.

Only for the US. Disclosure by a company for any significant lawsuit filed against the company.

A process by which a bankrupt company is sold off as per the Liquidators’ guidelines. The shareholders of the company may receive payment from the liquidation proceeds

Change in the Listing Status of a security, namely Suspension, Delisting or Resumption of trading. All securities are assumed to be traded unless the listing status is changed.

Any changes in the local codes in the system. Local codes are exchange specific.

Changes in Minimum trading lot/size of the security.

Changes in the final maturity date of a fixed income security.

Coming together of two or more companies to form a new company. Shareholders of all the old companies have to exchange their holding for shares of the new company. The original companies cease to exist. E.g. AOL Inc. & Time Warner Inc. merged to form AOL Time Warner Inc.

A new listing is when a security lists on an exchange for the first time.

Write up or write down of Par Value where shares outstanding remains the same BUT the Equity Capital changes.

Offer to the shareholders of Company A to buy securities of Company B on a preferential basis. This offer is a reserved portion of a public offer of Company B. Both companies are normally part of the same group.

Company A has managerial control of Company B. Company A decides to increase its stake in Company B by offering to buy shares from the shareholders of the Company B. Company B will continue to exist.

Change in accrual day count for the calculating the interest payable. This generally happens due to Euro conversion.

Details of individual redemption of a redeemable security eg. Preference Share, Bond

Amount that is redeemed at the time of scheduled redemption.

Changes in bond’s denomination which is due to part redemption, amortisation or euro conversion.

Change in the Registered Office address of the company.

The company decides to return a portion of the equity capital in form of cash. It is often a result of Capital Reduction.

Rights Issue is an offer to existing shareholders to subscribe to further securities in proportion to their holding, at a fixed price, made by means of the issue of an renounceable letter which may be traded for a period before payment for securities is due. The allotment of shares will usually be in the same company.

Changes in a Security’s agency and/or its relationship.

Change in the security description.

Company reclassifying Security A as Security B or exchanging one security for another. Hence, it happens within the company. Eg. Bearer Shares to Registered Shares. This event is distinct from Security Swap.

An exchange of securities of Company A with those of Company B. Eg. Hong Kong companies changing to Bermudan companies prior to British handover to China

Change in the SEDOL code.

Changes in number of shares outstanding of a company.

Reduction in the Face/Nominal Value of the security. Company’s Equity Capital remains the same but the shares in issue increases. Opposite of Consolidation.

Company A takes over the managerial control of Company B. Both companies may continue to exist. A Takeover may result in Compulsory Acquisition if the country’s trigger limit of minimum public shareholding is breached.

An installment of an existing bond issue.

Change in the name of the Umbrella Programme

Conversion of a Unit Trust into an OEIC.

Changes in Warrant Exercise options

Changes in the terms of a Warrant

There are several events which may seem similar but in reality are quite different.

In all cases the Shareholder continues to hold original securities PLUS the free securities that it receives.

• An intra company distribution of FREE securities is a Bonus while inter company is a Distribution.

• A De-merger results in part of assets/liabilities of Company A being hived off to Company B. As a result the shareholders of Company A are compensated for the transfer of Company A’s assets by getting shares of Company B.

Par Values can change due to any one of these events. Capital Reduction, Consolidation, Currency Redenomination, Par Value Redenomination and Sub-division.

• In a Merger Company A and Company marry to form Company C. Both A and B cease to exist.

• Takeover results in managerial control of Company B passing to Company A. Both companies may continue to exist.

• In a Purchase Offer Company A (which already has managerial control of company B) increases its stake in Company B.

In both cases it is an exchange of securities i.e. old securities are surrendered for new ones.

Security Swap is inter Company while Security Reclassification is intra company.

Both are "mutual funds". IT is close ended while UT is open ended. IT is a company which issues shares while UT is fund which issues units. IT is governed by company laws while UT is governed by Trust laws. Number of shares of IT are fixed while for UT unit issue changes daily based on redemptions/demand. IT is quoted on an exchange whose price varies from the underlying NAV. UT calculates NAV once a day and issues/redeems units based on the NAV with certain entry/exit loads.

Fixed income and preference securities can be redeemed by any one of the above mechanisms.

Call-Put Option merely records the dates on which these options can be exercised. On exercise the actual Redemption, Conversion or Exchange are recorded in the relevant tables

Master table of the Agencies involved in a security transaction. Eg. Registrar, Custodian, Depository, Guarantor, Secured by, Bond Manager, Paying Agent etc.

Fields: Registrar Name, City, Country

Attributes of a basket warrant

Fields: Issuer, Call/Put, Expiration Date, Ratio, Exercise Price, Exercise style, Exercise into stock or cash and list of all underlying securities along with their weightages.

Attributes of a Fixed Income security.

Fields: Issuer, Security, ISIN, Local Code, Maturity/Redemption Terms, Interest Terms, Bond Type, Currency, Par Value, Credit Rating, Strips (if any) etc.

Call/Put Options for a fixed income security.

Fields: Issuer, Security, ISIN, Local Code, Call/Put, Exercise Period, Notice Period, Mandatory/Optional.

Credit rating of a Fixed Income Security.

Fields: Issuer, Security, ISIN, Local Code, Rating Agency, Rating, Date, Watch List

Attributes of a covered warrant

Fields: Issuer, Underlying Issuer & Security, Call/Put, Expiration Date, Ratio, Strike Price, Exercise style and Exercise into stock or cash.

Master table of the countries.

Fields: ISO Country Code, Country Name, Currency Used

Registrar of a security in a country.

Fields: ISO Country Code, Registrar Name, Registrar Address

Currency master table

Fields: ISO Currency Code, Currency name

Attributes of the Depository Receipt

Fields: Underlying Issuer, underlying security, ratio

Rules devised or provided for calculating the RD, EXD or PD. These rules along with weekly holidays and exchange holidays will be applied to calculate the above dates.

Master table of the Exchanges

Fields: Name, Country

Exchange holiday list. Useful in calculating RD, EXD or PD based on the dividend date rules.

Fields: Exchange, Date, Occasion

Name of a company, an organisation, an institution etc.

Fields: Name, Country of Incorporation

Attributes of a Preference Share

Fields: Issue Date, Maturity Date, Interest Rate, Interest Frequency, Redeemable, Convertible, Cumulative Security Details of an instrument issued by the Issuer to raise funds from the capital markets. Eg. Shares, Warrants, Bonds, Preference Shares etc.

Fields: Description, Type, Primary Exchange of Listing, Currency, Par Value, ISIN, US Code, Exchange, Marketable Lot, List Date, Local Code, SEDOL, Shares Outstanding

A Link table between the Agency and the security.

Fields: Issuer, Security, ISIN, Local Code, Exchange, Agency, Agency Contact details, Service provided.

Basic static information of the Umbrella Programme.

Fields: Issuer, Umbrella Programme Name, Securities which form part of the Umbrella Programme.

Basic static information about unit trusts.

Fields: Issuer, Fund Name, SEDOL, ISIN, US Code, Listing Date, Accumulation/Income, Dividend Frequency, Unit Trust/OEIC

A warrant normally has tenure. This tenure could result in redemption or expire. The exercise terms are set out in this table. It is a subset of the Warrant Terms table.

Attributes of a Warrant

Fields: Issuer, Expiration/Redemption Date, Resultant security on exercise, Ratio, Currency, Exercise Price, Exercise Style

Witholding Tax is a tax that the company would deduct from the Gross dividend payable to the shareholder. This tax is subsequently paid by the company to the respective tax authority in that country. We are limiting ourselves to the Witholding Tax Rate of a Resident Individual.

Fields: Country, Effective Date, Tax Rate

A Basket Warrant is a synthetic derivative issued mainly by a financial institution that enables the investor to invest in a basket (portfolio) of underlying securities. Composition of the basket is determined by the issuer. It allows the holder the right, but not an obligation to buy or sell the underlying securities, during, or at the end of the specified time period.

A Covered Warrant is a synthetic derivative issued by a financial institution that allows the holder the right, but not an obligation, to buy or sell the underlying security at a specified price, during, or at the end of a specified time period. The issuer is not the company but a financial institution which issues the warrants and hedges its position in traded options or the underlying shares i.e. they are third party warrants. By this distinct nature covered warrants do not create new shares in issue.

A depository receipt is a negotiable certificate that usually represents a company's publicly traded equity or debt in a foreign country. One depository receipt may represent a fixed number, or fraction, of the deposited securities. Eg. ADR – American Depository Receipt, GDR – Global Depository Receipt.

Shareholders are the owners of the company. It is entitled to a dividend and is the lowest in the creditor’s pecking order.

Quoted companies which invest in the shares of other companies. They are closed ended funds. The market price could differ from the net asset value of the Trust.

These are in reality debt issues by a company, which (usually) pays a fixed dividend. They may carry some voting rights. On expiry the security can be converted into another security of the same issuer (Convertible Share) or redeemed. They rank ahead of ordinary shares in the creditor’s pecking order, but behind debentures, bonds or loan stock.

An open ended investment fund investing in diversified range of investments. Units are issued, rather than shares, at a fixed price for an initial period after which units are cancelled and created depending on redemption or demand. NAVs are calculated daily at a time set by the Fund Manager. The price of units is determined by the asset value of the underlying investments.

Warrant

A security entitling the holder to buy a proportionate amount of a stock at some specified future date at a specified price. This "warrant" is then traded as a security, the price of which reflects the value of the underlying stock. Warrants are usually issued as a "sweetener" bundled with another class of security to enhance the marketability of the latter.

Litmus test for understanding if the security should be included in WCA is that the security should be in the above list of securities covered AND the security should either be listed OR traded on at least one stock exchange in the world.

The exception to this test are Fixed Income instruments falling under the broad category of Bonds/Notes. All Fixed Income securities are proposed to be covered in WCA whether listed or not. The reason is that majority of these instruments are privately placed and are not listed on any exchange.

The shareholders on the official list of the company as on this date are entitled to receive the benefit. Several events require a Record Date.

The date on which benefit(s) due on a Security is not available to the purchaser of that security. Several events have an ex-date.