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Corporate Actions
Corporate actions mean all the resolutions made by the general assembly of the issuing company
Types of corporate actions:
Payments of dividends
How the service is provided:
• The issuing company will notify MCDR of the resolutions of the general assembly regarding dividends distribution within fifteen days as a maximum from the date the resolution is issued. The issuing company’s letter shall include the payment date, value of the coupon, number of the coupon and maturity date.
• MCDR notifies the issuing company with the account number where the total dividends will be transferred in addition to the banks participating in the dividend payment system.
• The issuing company shall add the value of the due dividends at least three working days before the payment date so that MCDR will be able to transfer those amounts to the paying banks.
• In case the company failed to add the coupon value in the designated date, no payments will be effected (whether through payment outlets or through bank transfer). In this case a relevant notification should be sent to the Capital Market Authority.
Pledged securities: -
In case the balance of the securities is owned by one of the issuing company’s shareholder, the dividend will be paid directly to the Pledging party, where the coupon value will be due to Pledging party.
In case that an agreement is made to pay the dividend to the original customer instead of Pledging party, the client shall submit documents indicating this agreement (the Pledge contract - a letter from the issuing company approving payment for the client).
Deposits settled after maturity date:
In case securities are deposited after maturity date, the value of the due coupons will be added as soon as the deposit is settled. In this case, the client will be able to cash the value of the due coupon at any time after adding the deposited shares to his account at the bookkeeping company.
Payments of bond coupons
How the service is provided
• MCDR will notify the issuing company of the bond yield maturity date 21 days before of the maturity date.
• The issuing company will send an official letter to the MCDR indicating the maturity date, the payment date, coupon number and value (the value should be identified as an amount and not as a percentage).
• MCDR will notify the issuing company with the account number where the bond yield will be remitted.
• The issuing company shall remit the value of the due dividends at least three working days before payments date, so that MCDR will be able to transfer those amounts to the paying banks.
• In case the company failed to remit the amount due in the designated date, no payment will be effected (whether through payment outlets or through bank transfer). In this case a relevant notification should be sent to the Capital Market Authority.
Capital amendment:
Increase of Capital
Increase of Nominal capital while maintaining the same number of shares:
Example
Number of Shares X Nominal Value = Capital 1000 100=10X Before increment 10000 100= 1000X after the increment
How the service is provided:
• The issuing company sends an official letter to MCDR indicating increase of capital, the issuing company will prepare all the documents required for registering the increase in the Central Depository.
• A memo will be sent to the MCDR’s registration committee to determine the date of registering the securities at the Central Depository
• After the approval, the nominal value of the share in the issuing companying database at MCDR will be amended without changing the number of the issued shares.
Increasing the number of shares to the same nominal value (issue of bonus shares)
How the service is provided:-
• The issuing company shall notify MCDR on the resolutions of its general assembly regarding dividends distribution within fifteen days as a maximum from the date the resolution is issued. The issuing company’s letter shall include the maturity date, payment date and percentage of bonus shares for each share. The issuing company shall also follow all the procedures to complete the documents required for registering the capital increase at the central depository.
• A memo shall be presented to the company’s registration committee at the MCDR to determine the date of registering the security at the central depository.
• The issuing account will be incremented by the added share or a separate account will be opened in case of any different between original; shares and addition shares.
• MCDR will distribute the addition share to the shareholder in their account at the bookkeeping company according to the percentage designated by the issuing company and according to the following procedures:
1. To prepare a list of shareholders at the maturity date.
2. In the payment date, MCDR will add the bonus shares according to the balances in the shareholder list that is prepared for this purpose. The addition shall be made through transferring the shares of each client to his account at the bookkeeping company holding the pledged securities.
• In case the balance of the securities is owned by one of the issuing company’s shareholder, the bonus shares will be directly transferred to the Pledging party.
• In case of agreement that bonus shares will be distributed to the original client instead of Pledging party, the client shall submit any documents supporting this agreement (the Pledge contract and a letter from the company approving payment to the client).
Deposits settled after maturity date:-
In case of securities deposit after maturity date, the bonus shares will be added to the client whenever the deposit is settled. In case of fractions of shares it will be processed in the following manner:
• Distribution of the resultant fractions to a group of shareholders as specified in the letter of distribution of bonus shares (shareholders who own a certain small number of shares - specifying certain names to distribute fractions on them).
• The issuing company may decide to sell the resulting fractions, in this case the procedure will be as follows:-
1. The issuing company will make a code for a client in the stock exchange (fractions share of ….. company) after the approval of the Capital market Authority on the procedure of distribution the fractions on the stock.
2. The issuing company will notify MCDR of the name of the bookkeeping company to which total fraction will be transferred to and will designate the broker who will carry out sales of this fraction in the stock exchange.
3. MCDR will notify the issuing company with a letter indicating the quantity of the fraction shares resulting from distribution and the date of transferring them to the bookkeeping company designated by the issuing company.
4. The Brokerage company will execute the sale transaction after receiving a sale order from the issuing company.
5. After completing the settlement process of bonus fraction shares, the brokerage company will transfer the revenue of this sale to MCDR, which will distribute the sales revenue on the clients according to the resulting fraction due for each client. A cheque with the total amount of fractions of the client of each bookkeeping company will be issued in order to be distributed to the clients.
Capital Reduction
Capital reduction while keeping the number of shares:
Number of shares X nominal value = capital 1000 100=10X Before reduction 100 100 =1 X after reduction
How the service is provided: -
• The issuing company will notify MCDR with the resolution of the general assembly regarding capital reduction within 15-days as a maximum from the date the resolution is issued. The letter of the issuing company shall include the date of reduction. The issuing company will get all the documents required for capital reduction.
• After the approval, the nominal value of the shares will be changed in the company’s basic data of MCDR, without alteration to the number of the issued shares.
Reduction of shares number while maintaining the nominal value of the shares:
Example:
Number of shares X nominal value = capital 1000 100=10 X Before reduction 100 10 =10X after reduction.
How the service is provided:
• The issuing company will notify MCDR with the resolution of the general assembly regarding capital reduction within 15-days as a maximum from the date the resolution is issued. The letter of the issuing company shall include the date of reduction. The issuing company will have all the documents required for capital reduction.
• The data of the reduction and percentage will be loaded on the system of MCDR.
• A list of the shareholders will be prepared in the date the alteration is approved. (The date the stock exchange approves the change).
• MCDR executes the process of capital reduction, the balance of every client will be reduced in proportionate to the capital reduction percentage. This will be effected through transferring the reduced amount to the issuing account, then the issuing account will be reduced by the total reduced amount.
• In case that shares are deposited after the reduction date, the balance of the client will be reduced by the same proportion.
Alteration of the nominal value
Example
Number of securities X nominal value = Capital 1000100= 10 X 10 before reduction= 100 X1000 after reduction.
How the service is provided: -
• The issuing company will notify MCDR with the resolution of the general assembly regarding reduction of number of shares within 15-days as a maximum from the date the resolution is issued. The letter of the issuing company shall include the percentage of nominal value increase (share reduction). The issuing company will have all the documents required for capital reduction.
• The percentage of reduction of number of shares shall be loaded on the MCDR system.
• A list of share owners will be prepared in the date the alteration is approved. (The date the stock exchange approves the change). The share's nominal value shall be increased in the basic data in the issuing company and as registered in the MCDR’s database.
• MCDR executes the process of shares reduction; the balance of every client will be reduced in proportionate to the increase in the nominal value. This will be effected through transferring the reduced quantity to the issuing account, then the issuing account will be reduced by the total reduced quantity.
• In case that shares are deposited after the reduction date, the balance of the client will be reduced by the same proportion.
Reduction of nominal value while increasing the number of shares (split)
Example:
Number of shares X nominal value = capital 1000 100 =10 X Before reduction 1000 1000 =1 X after reduction
How the service is provided:
• The issuing company will notify MCDR with the resolution of the general assembly regarding increase of number of shares while reducing the nominal value within 15-days as a maximum from the date the resolution is issued. The letter of the issuing company shall include the percentage of nominal value decrease (increase of number of shares). The issuing company will have all the required documents.
• The percentage of increase of number of shares will be loaded on the MCDR system.
• A shareholders’ list of share owners will be prepared in the date the alteration is approved. (The date the stock exchange approves the change). The share's nominal value shall be decreased in the basic data in the issuing company and as registered in the MCDR data base.
Merger and acquisition:
Merger:
• The issuing company will submit all the required documents for the merger of two companies into one new company.
• A memo will be prepared and submitted to the companies’ registration committee to approve the merger.
• In case of the merger of two companies in a new company, the balances of the shareholder in both companies will be transferred from the accounts of shareholder at the bookkeeping companies to the issuing accounts of both companies at the MCDR.
• After that the issuing account of the merged companies will be closed, a new issuing account will be opened for the new company, the balance of shareholders are then transferred to their records according to the proportion of shares in the capital of the new company.
• The merged Companies and the new company shall be recorded in the central registry.
Acquisition:
How the acquisition is effected
• The issuing company will submit all the required documents for the acquisition process.
• A memo will be prepared and submitted to the committee of companies’ registration to approve the acquisition.
• In case of the acquisition of company by an issuing company, the balances of the shareholder in the sold company will be transferred to the MCDR through transfer from bookkeeping companies where the issuing account of the sold company will be closed, the issuing account of the acquiring company will be increased, the shareholders balance of the sold company are then transferred to their records on proportion of shares of the sold company in the capital of the acquiring company.
Alteration of the ownership structure - privatization
How the service is provided: -
1. The company to be sold should be registered in the Central Depository system of the MCDR.
2. The holding company owning the affiliated company to be sold shall deposit the securities in one of the bookkeeping companies to feed the account of the broker who will effect the sale. In case there are no certificates for the securities or no interim ones, one certificates should be issued for the total amount of the securities.
3. The sale transactions will be executed in the stock exchange.
4. MCDR will settle the transaction for cash and securities (using the same previously mentioned sale procedures). |
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