Scope - Clearstream

MARKET PRACTICE BOOK - CORPORATE ACTIONS
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3.2.
3.2.1.
3.2.1.1.
In addition to these classifications and in an effort of harmonisation undertaken on local
European markets/Central Securities Depositories, the International Organization for
Normalization (ISO) regrouped all corporate action events under three broad categories.
These are based on what happens to the underlying securities of the holder:
• Distribution: an event when the issuer delivers security proceeds to the holders of the
security. The event does not affect the holdings;
• Reorganisation: an event when the issuer replaces all, or some, of an underlying
security with one or more different resource(s); and
• General: an event where there is typically no movement of proceeds. The event could
be for information purposes only, or may require some action on the part of the holders
of a security
The combination of these two classifications can be presented in the following matrix:
Voluntary Event Mandatory Event Mandatory with Options
Distribution n/a Y Y
Reorganisation Y Y Y
General Y Y Y
Information provision flow
Corporate action information
For ICMA constituency: please also refer to the ICMA Guidance Note (see Annex 2).
Information description
According to the event type, detailed information needs to be provided to end investors:
• to announce the start of an event, especially in case when instructions are required,
• to notify a change or update to an events original conditions, or,
• to notify the outcome of an event.
The information content will vary according to the event type: it is either provided at
issuance in the issue T&C for predictable events (see Annex 6A), and/or during the life
cycle of the issue as described in Annex 6B for predictable events and Annex 6C for
unpredictable events.
The Issuer, together with its LM/Dealers/Legal Counsel, will ensure that all corporate action
events are defined in an easily analysable and comprehensible form in the T&C and/or
relevant ancillary documentation. This documentation will include a detailed description
of the applicable regime, procedures and any restrictions relating to the corporate action
events, together with details relating to any relevant forms 4 requiring completion to effect the
event (e.g. form of conversion notice).
4 Please note that forms are sometimes not included in the documentation but stated to be “In any form acceptable
to Euroclear/Clearstream”. Paper forms are discouraged in the international market since electronic instruction
methods and content prevail.