Canada: Enhancement to the current processing of distributions with options - Revision

Note: This Announcement, originally published on 30 April 2015, is now updated to include additional information regarding the tax debit procedure. Changes are highlighted.

Effective

1 June 2015

all distributions with options events will be notified to holders as described below in order to align with local market practice.¹

Corporate action notifications and confirmations

Current situation

The distributions with options for equities and investment funds for the Canadian market are notified as a “cash dividend”. These events are reported to holders either as a mandatory event or a mandatory event with options as shown below:

Future situation

As of 1 June 2015, Clearstream Banking² will start announcing and processing all new distributions with options for the Canadian market as received from the market for all instruments. These events will be reported to holders as mandatory events with options as shown below:

Important notes:

• Only events allowing Clearstream and holders to instruct will be notified; and
• On the Canadian market, the distributions with options events are processed without rights distribution (22F::CAEV//RHDI), i.e. the whole distribution is handled via a single event.   

Instruction options for shareholders   

The distributions with options will include the following options:

• CASH, to receive the cash proceeds. If applicable, a currency option to receive the cash proceeds in another currency will be created in addition as a separate option. 
• SECU, to receive the shares as a result of a new share capital creation in exchange for the dividend (i.e. dividend with option) or as a result of a cash reinvestment in the market by the issuer into additional shares of the issuing company (i.e. dividend reinvestment).

The cash option (CASH) will be the default option in the event that no instruction has been received from holder by the deadline.

Tax debit date

Canada Revenue Agency requirements state that non-resident withholding tax funds are to be declared and received on the announced cash payable date. Therefore, the tax on both cash and stocks, will be always debited on the cash payment date.

Important note: Whenever the date on which the securities posting occurs (within 3 weeks from the cash payment date), the tax consideration will be booked (debited from holders account), on the cash payment date.

Reporting and instructions messages formats   

Refer to the Connectivity Manuals available from the Clearstream website under Key Documents > ICSD > Connectivity Manuals.

Fees

Refer to the International Fee Schedule – 2015, section 4. “Custody Administration fees” available on the Clearstream website under Key Documents > ICSD > Fees schedule. 

Further information

For further information, please contact Clearstream Banking Client Services or your Relationship Officer.

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1. The distributions with options events that have been notified before 1 June 2015 will be subject to the current processing.
2. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500, and Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248.