Section 11 - Corporate actions

Section 11 - Corporate action principles

11.1 - Bonus Issue

A bonus issue is an issue of securities on a free-of-payment basis to existing security holders of a parent security. Securities are issued on a pro rata basis in accordance with the terms of the issue, to eligible registered holdings of the parent security as at the specified record date.

The securities issued resultant from the bonus issue may rank equally with the parent security, may or may not rank equally with the parent security or may be a separate class of security.

The new securities are issued on the same subregister (CHESS or issuer sponsored) on which the parent holding is held.

Bonus Lifecycle (Process Flow)

The following lifecycle provides an overview of the key events for a bonus and approximate times after announcement that these events occur. A more detailed procedure is provided below.

Procedure

Step

Description

Step

Description

1

Issuer announces the terms of the bonus issue. CHESS receives notifications of the relevant details of the corporate actions triggering the creation of the corporate action event in CHESS and the processing of the event.

It is at the time of the announcement that attributes such as the corporate action event identification number (a uniquely serialised 35 character number) and corporate action event type will be available. All corporate action transactions for the same event should at a minimum, carry the unique corporate action event ID and assigned corporate action event type code. In the case of a Bonus Issue the event type code is BONU.

2

The financial products resultant from the bonus issue begin trading on a deferred settlement basis from the bonus issue ex date up until close of trading on the issue date (refer to section 10.1.3). The ASX calculates the first allowable settlement date for the deferred settlement securities as being the issue date plus three business days.

3

At start of day on the ex date for the bonus issue, CHESS establishes a notional cum entitlement balance for each holding in the parent security on the CHESS subregister. When established, this balance is equal to the holding balance on the CHESS subregister. The issuer (registry) establishes similar positions for holdings on the issuer sponsored subregister. When established, these balances are equal to the holding balance.

4

During the ex period, CHESS maintains both the holding balance and the separate cum entitlement balance for each holding of the parent security. This facilitates the designation of transactions during the period between the ex date and the record date as being either cum or ex the entitlement. Default basis of movements (BOMs) apply (refer to section 10.1.2), but participants can override these when they submit transactions to CHESS.

CHESS rejects transactions with a designated override basis of movement if the settlement date is outside the ex period.

Participants should attempt to clear their entrepot accounts of cum securities by the end of record dated.

5

After the record date, CHESS reports the cum entitlement balances of holdings in the parent security on the CHESS subregister to the issuer (registry).

On the basis of the cum entitlement balances provided by CHESS, the issuer determines the number of securities to be issued to each eligible security holder.

At any time during the ex period and up until the end of the corporate action event, participants can request cum entitlement balance information from CHESS through the Cum Entitlement Balance (CEBL) process.

6

After the close of business on the record date, CHESS completes the diary adjustment process for all outstanding cum settlement transactions (refer to section 10.2). Accrual settlement instructions are generated for the securities on a free of payment basis.

CHESS notifies participants of accrued settlement instructions (refer to section 10.2).

Prior to the diary adjustment process being complete, a participant can cancel an eligible settlement instruction and submit a new settlement instruction to reflect cum/ex designation.

7

The issuer (registry) issues the financial products resultant from the bonus issue on the same subregister and the same account (HIN) in the case of CHESS holdings as the parent security holding, on the bonus issue date, through the Holding Adjustments Process with the reason code Bonus (BONU).

CHESS validates the issuer (registry) messages, updates the CHESS subregister holdings, notifies the participants and confirms completion to the issuer (registry).

Issuers have an obligation to enter securities into a CHESS subregister on or before the issue date announced to the ASX. Demand activity (e.g. transfers) in the securities may take place on the CHESS subregister from the time that they are issued.

8

ASXS sends statements to security holders on the CHESS subregister.

9

The ASX calculates the first allowable settlement date for the deferred settlement securities to be the issue date plus three business days. CHESS rejects bilateral demand settlement and unilateral settlement instructions with an earlier settlement date. 

To arrange settlement (outside CHESS) prior to the first allowable settlement date, participants should:

  1. Cancel an eligible settlement instruction (refer to section 7.8);

  2. Deliver the securities with a demand transfer (refer to section 7.2); and

  3. Pay any consideration outside CHESS.

Cancellations of a cash market transaction can only be made by AMOs on trade date.

10

If a code change or class merger is necessary on issue date + 1, CHESS changes the security code for transactions in the securities and notifies participants of the amended transactions (refer to section 10.3). Participants should check that all relevant transactions have been adjusted.

11

In the event the issue date is moved to a later date, and therefore the first settlement date for the new securities is moved to a later date for an adjusted transaction or accrual settlement instruction, CHESS notifies the participants with a rescheduled settlement instruction for the adjusted transaction or accrual settlement instruction through the Settlement Instruction Rescheduling Process.

The participants then updates their records and proceeds to settlement of the adjusted transaction or accrual settlement instruction on the amended date.

11.2 - Calls

A call is a payment of unpaid capital on partly paid securities.

There is no ex period for a call.

The last day for ASX trading in the partly paid call unpaid securities for a no liability company is set at one business day before the call payable date. The last day for ASX trading in the partly paid call unpaid securities for entities other than a no liability company is set at nine business days before the call payable date.

If ASX agrees, ASX trading in the call paid securities under both timetables commences on the business day following the last day for ASX trading in partly paid call unpaid securities on a deferred settlement basis.

Following payment date for the call, CHESS transforms the securities to an existing security code if they rank equally with an existing class or to a new security code if they rank differently, or are being issued as a new class.

CHESS automatically applies diary adjustments to any outstanding settlement transactions in partly paid securities for a limited liability company after the call due date (refer to section 10.2.1).

Diary adjustments are not applied for no-liability companies. Participants must make their own arrangements regarding the protection and payment of a call on no-liability companies and the subsequent settlement of the call paid securities.

Call Lifecycles (Process Flows)

The following lifecycles provide an overview of the key events for call payments and approximate times after announcement that these events occur. A more detailed procedure is provided below.

Limited Liability Companies

No-Liability Companies

11.2.1 - Limited Liability Companies

Holders of partly paid securities in a limited liability company have a legal obligation to meet a call payment.

Procedure - Limited Liability Company

Step

Description

Step

Description

1

Issuer announces a call on the partly paid securities. CHESS receives notifications of the relevant details of the corporate actions triggering the creation of the corporate action event in CHESS and the processing of the event.

It is at the time of the announcement that attributes such as the corporate action event identification number (a uniquely serialised 35 character number) and corporate action event type will be available. All corporate action transactions for the same event should, at a minimum, carry the unique corporate action event ID and assigned corporate action event type code. In the case of a Call the event type code is PPMT.

2

The issuer (registry) sends the first call notices to all existing security holders at least 30 business days, but not more than 40 business days, before the call payable date. The call notices sent by the issuer (registry) must advise security holders of the last day of trading partly paid securities, the call payable date and other statutory information required under the ASX Listing Rules and Appendices.

3

From the date of issue of the first call notice, participants purchasing partly paid securities may advise buying clients of the following information:

  • the last day of trading for the partly paid securities;

  • the amount of the call; and

  • the call payable date.

Diary adjustments are applied to the partly paid securities of a limited liability company. The holder of the partly paid securities of a limited liability company has a legal obligation to pay the call. Where a call dairy adjustment has been applied to a settlement instruction, the delivering participant assumes the responsibility for delivering the new securities resulting from the payment of the call (instalment) money and must pay the call money to the issuer (registry).

4

Four business days before the due date for payment the issuer (registry) sends supplementary notices (second notice) to new security holders and security holders whose partly paid holdings have changed since the issuer (registry) sent the first notice.

5

A call payment is made as directed by the issuer.

6

The last day for ASX trading in the partly paid securities is set at one business day before the call payable date.

7

ASX trading in the call paid securities begins two business days prior to the call payable date, usually on a deferred settlement basis (refer to section 10.1.3). Bilateral Settlement Instructions and unilateral settlement instructions will be rejected by CHESS if the settlement date is before first settlement date.

8

Last day for routine T+2 settlement of the partly paid securities is three business days prior to the call payable date. The subregister for the securities is closed to participant transactions at the close of business on the record date, however it remains open for participant reporting requests until it is archived.

Participants should attempt to clear their entrepot accounts of call unpaid securities by the end of record date.

9

Participants may apply demand transactions to the CHESS subregister for two more business days. At the end of the fifth business day before the call payable date CHESS closes the partly paid subregister to participant activity. Registries may continue to apply transactions (e.g. call paid transformations).

Issue of New Securities

10

Following receipt of a call payment from a participant for holdings on the CHESS subregister, the issuer (registry) performs a transformation or holding adjustment through the Holding Adjustments Process with the reason code Call Paid (PPMT), converting those holdings on whose behalf a call payment has been received from a partly paid holding to call paid.

11

CHESS updates holding records, giving effect to transformations on the subregister. If the newly transformed securities rank equally with existing securities, the existing security code is used. Otherwise, the securities are transformed to a new security code. If there are insufficient securities in a partly paid holding to cover the transformation notified by the issuer (registry), CHESS rejects the transaction.

12

CHESS notifies participants of transformation details through the Holding Adjustments Process with the reason code Call Paid (PPMT). Participants record the application of the call payment and adjust holdings under their control accordingly.

13

At any time after the issue of the first call notice until closure of the CHESS subregister for the partly paid security, participants may request a report of holdings for which the call is still outstanding through the Holding Balance (HBAL) process.

 

11.2.2 - No-Liability Companies

Holders of partly paid securities in a no liability company do not have a legal obligation to meet a call payment.

Procedure - No-Liability Companies

Step

Description

Step

Description

1

The issuer announces call on the partly paid securities. CHESS receives notifications of the relevant details of the corporate actions triggering the creation of the corporate action event in CHESS and the processing of the event.

It is at the time of the announcement that attributes such as the corporate action event identification number (a uniquely serialised 35 character number) and corporate action event type will be available. All corporate action transactions for the same event should at a minimum, carry the unique corporate action event ID and assigned corporate action event type code. In the case of a Call the event type code is PPMT.

2

The issuer (registry) sends the first call notice to all existing security holders at least 10 business days, but not more than 20 business days, prior to the call payable date. The call notice sent by the issuer (registry) must advise the security holder of the last day of trading for the partly paid securities, the call payable date and other statutory information required under the ASX Listing Rules and Appendices.

3

From the date of issue of the first call notice, participants purchasing partly paid securities may advise buying clients of the following information:

  • the last day of trading for the partly paid securities;

  • the amount of the call; and

  • the call payable date.

4

A call payment is made as directed by the issuer.

Issue of New Securities

5

Following receipt of a call payment from a participant, the issuer (registry) performs the transformation for holdings on the CHESS subregister, the issuer (registry) performs a transformation or holding adjustment through the Holding Adjustments Process with the reason code Call Paid (PPMT), converting those holdings on whose behalf a call payment has been received from a partly paid holding to call paid.

6

CHESS updates holding records, giving effect to transformations on the subregister. If the newly transformed securities rank equally with existing securities, the existing security code is used. Otherwise, the securities are transformed to a new security code. If there are insufficient securities in a partly paid holding to cover the transformation notified by the issuer (registry), CHESS rejects the transaction.

7

CHESS notifies participants of transformation details through the Holding Adjustments Process using the reason code Call Paid (PPMT). Participants record the application of the call payment and adjust holdings under their control accordingly.

8

Participants should attempt to clear their entrepot accounts of call unpaid securities by the end of record date.

On the night of record date, CHESS closes the subregister and suspends any settlement instructions targeting the subregister (refer to Settlement Instruction Suspension Overview).

Where a transaction fails to settle on the last business day, before a call for a no-liability company and both participants agree that settlement will be effected by a transfer of the resultant securities.

The settlement instructions should be cancelled by the participants and replaced with new settlement instructions with the revised details to reflect the number and class of financial products that are to be transferred as a result of the call.

9

If the suspended settlement instructions are not changed within 15 business days, CHESS housekeeping cancels the transactions and notifies both participants.

 

11.2.3 - Forfeiture

This procedure covers forfeiture.

Procedure

Step

Description

Step

Description

1

Holdings that contain partly paid securities that are not paid-up are forfeited. The issuer (registry) reduces the balance of these holdings via a holding adjustment and sends the details to CHESS through the Holding Adjustments Process with the reason code Forfeiture (FORF).

2

CHESS validates the issuer (registry) messages and if a message is invalid, or there are insufficient partly paid securities in the holding in the partly paid holding, it will be rejected. Otherwise CHESS applies the forfeiture and notifies participants of the adjustment and confirms completion to the issuer (registry).

3

Participants should check the call has not been paid and process the forfeiture.

 

11.2.4 - Archiving

Procedure

Step

Description

Step

Description

1

CHESS archives the partly paid subregister 20 business days after it has been closed and the class of Financial Products ceases to be listed. If CHESS archives the subregister, notification is provided through the Security Sub-register Status Notification Process.

 

11.2.5 - Distribution or Claim Following Forfeiture

On some occasions, the issuer sells forfeited securities and distributes the net proceeds to the security holders. Sale of forfeited securities issued by a limited liability company may result in a shortfall that may be claimed by the company from the security holder.

Such distributions and claims are made directly by the issuer (registry) to the security holder without involving CHESS.

11.3 - Capital Repayment

A capital repayment is the payment of a portion or all of the capital of that company to all eligible security holders on a specified date.

CHESS does not facilitate distribution of the funds. The issuer (registry) pays the proceeds of the capital repayment to the registered entitled security holder.

Where a capital repayment is combined with a capital reconstruction, the two corporate actions are treated separately.

If the capital repayment is a final payment because the securities cease to exist as a result of this payment, the corporate action is treated as a redemption with no ex period (refer to section 12.6.2). The issuer (registry) initiates the Holding Adjustments Process using the reason code Redemption (REDM).

11.4 - Change in a Financial Product’s Ranking

A change in a financial product’s ranking should be handled as a security code change (refer to section 10.3).

11.5 - Delisting

Delisting is the removal of an issuer from the ASX official list. Liquidation is the official winding up of a company.

Prior to delisting, ASX will have suspended quotation of the issuer’s securities. Settlement of outstanding transactions and registration of transfers may continue through CHESS after the securities have been suspended from quotation.

In some cases, the issuer may continue as an unlisted company where the register is maintained in issuer sponsored form for the unlisted security.

After the issuer is delisted, ASX Operations advise the issuer that CHESS approval for their securities is generally revoked after five business days. ASX Operations also advise all participants of the revocation of the CHESS approval. After five business days, all CHESS holdings in the issuer’s securities are converted to an issuer sponsored subregister.

Procedure

Step

Description

Step

Description

1

ASX Operations is advised that an issuer has been delisted.

2

ASX Operations advises the issuer and participants that CHESS approval of the issuer’s securities is to be revoked from five business days, or as otherwise determined by ASXS.

3

After five business days, ASX Operations may convert all CHESS holdings in the issuer’s securities to an issuer controlled subregister (refer to section 6.5) and close the CHESS subregister (refer to section 10.6).

11.6 - Distribution in Specie

Distribution in specie is a distribution of securities by an issuer, generally in lieu of a cash payment (i.e. Dividend). The treatment of an in-specie distribution for taxation purposes may incorporate franking credits or capital return amounts, participants should review the announcement for details. This may involve the distribution of securities in the distributing company or another company.

CHESS treats this corporate action as if it were a bonus issue and therefore the basis of movement is cum or ex bonus.

CHESS does not facilitate the distribution of non-CHESS approved securities, other than providing details of cum entitlement balances in the parent security, to the issuer (registry).

Procedure

Step

Description

Step

Description

1

At start of day on the ex date for the distribution, CHESS establishes a cum entitlement balance for each holding in the parent securities on the CHESS subregister. When established this balance is equal to the holding balance. The issuer (registry) establishes similar positions for holdings on the issuer sponsored subregister. When established, these balances are equal to the holding balance.

2

During the ex period, CHESS maintains both the holding balance and the separate cum entitlement balance for each holding of the parent security. This facilitates the designation of transactions during the period between the ex date and the record date as being either cum or ex the entitlement. Default basis of movements (BOMs) apply (refer to section 10.1.2), but the participant can override these when they submit the transactions to CHESS.

CHESS does not accept cum designated transactions from participants if the settlement date is outside the ex period. Participants should attempt to clear their entrepot accounts of cum securities by the end of record date.

3

On or shortly after the record date, CHESS reports the cum entitlement balances of holdings in the parent security on the CHESS subregister to the issuer (registry).

At any time during the ex period and up until the end of the corporate action event, participants can request cum entitlement balance information from CHESS.

4

After the close of business on the record date, CHESS completes the diary adjustment process for all outstanding cum settlement transactions (refer to section 10.2). Accrual settlement instructions are generated for the bonus securities on a free of payment basis.

CHESS notifies participants of accrued settlement instructions (refer to section 10.2).

Prior to the diary adjustment process being complete, a participant can cancel a parent settlement instruction and submit a new settlement instruction to reflect cum/ex designation.

5

The issuer (registry) issues the financial products resultant from the distribution in specie on the same subregister and the same account (HIN) in the case of CHESS holdings as the parent security holding, on the distribution in specie issue date through the Holding Adjustments Process with the reason code Distribution In Specie (INSP).

CHESS validates the issuer (registry) messages, updates the CHESS subregister holdings, notifies the participants and confirms completion to the issuer (registry).

6

The participant reconciles securities issued against those expected and processes the issue to completion.

7

Prior to issue, the new securities may trade on a deferred settlement basis.

Issuers have an obligation to enter bonus securities into the CHESS subregister on or before the issue date announced to the ASX.

8

The ASX calculates the first allowable settlement date for the deferred settlement securities to be the issue date plus three business days. CHESS rejects bilateral demand settlement and unilateral settlement instructions with an earlier settlement date. 

To arrange settlement (outside CHESS) prior to the first allowable settlement date, participants should:

  1. Cancel an eligible settlement instruction (refer to section 7.8);

  2. Deliver the securities with a demand transfer (refer to section 7.2); and

  3. Pay any consideration outside CHESS.

9

If a code change or class merger is necessary on issue date + 1, CHESS changes the security code for transactions in the bonus securities and notifies participants of the amended transactions (refer to Code Change and Class Mergers Overview). Participants should check that all relevant transactions have been adjusted.

10

In the event the issue date is moved to a later date, and therefore the first settlement date for the new securities is moved to a later date for an adjusted transaction or accrual settlement instruction, CHESS notifies the participants with a rescheduled settlement instruction for the adjusted transaction or accrual settlement instruction through the Settlement Instruction Rescheduling Process.

The participants then updates their records and proceeds to settlement of the adjusted transaction or accrual settlement instruction on the amended date.

11

The issuer forwards advice of any franking credit or capital return directly to the participant.

12

The participant checks the franking credit or capital return is as expected and internally allocates the credit to the relevant security holders.

11.7 - Dividend, Interest and Trust Distribution Payments

Dividend, interest and trust distribution payments are made directly from an issuer (registry) to entitled security holders as recorded on the register of members as at the record date. CHESS is limited to reporting the cum entitlement balances for holdings on the CHESS subregister to the issuer.

CHESS facilitates the provision of an investor's bank account details to the issuer (registry) of a security to enable payments from the issuer to the investor. Refer to Investor Data Overview for further details.

CHESS facilitates the lodgement of tax file numbers (TFN) and Australian business numbers (ABN) to issuer (registries). Refer to Account and Holder Creation Overview for further details.

If the diary adjustment refers to a dividend carrying a franking credit, the participant makes arrangements with the counterparty to exchange a Transfer Of Franked Dividend certificate outside CHESS.

Dividend and Interest Payment Lifecycle (Process Flow)

The following lifecycle provides an overview of the key events for a Dividend and Interest Payment and approximate times after announcement that these events occur. A more detailed procedure is provided below.

Procedure

Step

Description

Step

Description

1

The issuer announces details of the corporate action to ASX. CHESS receives notifications of the relevant details of the corporate actions triggering the creation of the corporate action event in CHESS and the processing of the event.

It is at the time of the announcement that attributes such as the corporate action event identification number (a uniquely serialised 35 character number) and corporate action event type will be available. All corporate action transactions for the same event should at a minimum, carry the unique corporate action event ID and assigned corporate action event type code. In the case of a:

  • cash dividend, the event type code is DVCA;

  • dividend with options, the event type code is DVOP;

  • dividend reinvestment plan, the event type code is DRIP;

  • scrip dividend or interest scrip dividend, the event type code is DVSC;

  • interest payment, the event type code is INTR; or

  • interest payment with principal, the event type code is PRII.

2

At start of day on the ex date, CHESS establishes a cum entitlement balance for each holding in the parent securities on the CHESS subregister. When established, this balance is equal to the holding balance. The issuer (registry) establishes similar positions for holdings on the issuer sponsored subregister. When established, these balances are equal to the holding balance.

3

During the ex period, CHESS maintains both the holding balance and the separate cum entitlement balance for each holding of the parent security. This facilitates the designation of transactions during the period between the ex date and the record date as being either cum or ex the entitlement. Default basis of movements (BOMs) apply (refer to section 10.1.2), but participants can override these when they submit transactions to CHESS.

CHESS rejects transactions with a designated override basis of movement and a settlement date outside the ex period.

Participants should attempt to clear their entrepot accounts of cum securities by the end of record date.

4

As at close of business on the record date, CHESS reports the cum entitlement balances of holdings in the parent security on the CHESS subregister to the issuer (registry).

At any time during the ex period and up until the end of the corporate action event, participants can request cum entitlement balance information from CHESS.

5

On the basis of the cum entitlement balances provided by CHESS, the issuer (registry) calculates the dividend/distribution payable (including securities to be issued in the event of valid participation in a current Dividend Reinvestment Plan/Bonus Share Plan) to each eligible security holder.

After the close of business on record date, CHESS adjusts all outstanding cum settlement transactions for the value of the payment due from the issuer (registry) (refer to section 10.2).

CHESS does not make automatic adjustments for trusts that do not declare a distribution amount until after the record date; but will apply the adjustment using an estimated rate if it is announced before record date. Should a claim be necessary these should be made outside CHESS.

6

On payment date, the issuer (registry) makes payments to all security holders and mails a detailed summary of the payments to all security holders. Where a reinvestment or similar plan applies, the issuer (registry) calculates the number of financial products to be issued. The issuer (registry) issues the financial products on the same subregister as the parent holding. For CHESS holdings the issue of securities is transmitted to CHESS using the same account (HIN) as the parent holding through the Holding Adjustments Process with the reason code Dividend or Distribution Plan Issue (DRIP), Bonus Plan Issue (BOPL) or Scrip Dividend (DVSC). The issuer (registry) must transmit the details to CHESS no more than five business days after (but not including) the payment date, for a reinvestment plan, and no more than five business days after (but not including) the record date for a bonus financial product plan.

CHESS validates the issuer (registry) messages, updates the CHESS holdings, notifies the participants and confirms completion to the issuer (registry).

If an issuer (registry) message is invalid or contains an account (HIN), which is not established in CHESS, it will be rejected to the issuer (registry).

7

Participants may wish to claim franking (imputation) credits on behalf of an Australian resident for income tax purposes (refer to section 10.8).

8

The issuer (registry) despatches Dividend/Distribution Statements to all security holders. ASXS sends statements to security holders on the CHESS subregister at the end of month.

 

11.8 - Dividend Reinvestment Plan and Bonus Share Plan Elections

An election into a Dividend Reinvestment Plan (DRP) and/or Bonus Share Plan (BSP) allows eligible security holders the opportunity to reinvest their cash dividends into additional securities. An election into a DRP and/or BSP can be submitted at any time.

In some circumstances, a feature of a financial product may be that by default, cash dividends/distributions are automatically reinvested into securities unless a security holder elects to receive cash (cash election).

CHESS DRP/BSP election and enquiry facility is available to authorised participants.

11.8.1 - Participant Initiated DRP/BSP Elections and Cancellations

A participant may initiate a DRP/BSP election through CHESS on behalf of a sponsored security holder. At the time the participant submits a DRP/BSP election, the security holder must have one or more securities (or a cum entitlement balance) in their sponsored holding for the company that the DRP/BSP election applies to.

Where a participant submits a DRP/BSP election through CHESS, the election will be passed onto the issuer (registry) for recording. The issuer (registry) will, at the time of each dividend determine whether a DRP/BSP election meets the rules of the issuers Dividend Reinvestment and/or Bonus Share Plan rules.

Should the security holder instruct the participant to cancel their participation in a DRP/BSP election, the participant may initiate a DRP/BSP election cancellation through CHESS.

CHESS is an additional mechanism for the submission and cancellation of DRP/BSP elections. The security holder may instruct the Issuer (registry) directly.

Full and Partial DRP/BSP Elections

A DRP/BSP election may be submitted:

  • in full, for the entire balance of a security holding (subject to the maximum number of participating securities in the DRP/BSP rules, if any); or

  • partially, for a nominated number of securities or a percentage of the balance of a security holding (subject to the minimum number of participating securities in the DRP/BSP rules, if any).

A previously submitted DRP/BSP election submitted for full participation cannot be changed to partial participation. The election for full DRP/BSP participation must be cancelled and an election for partial participation must be submitted.

A previously submitted DRP/BSP election for partial participation can be changed where a subsequent election with the same option type is submitted. In such cases, the participating securities of the original DRP/BSP election will be overwritten with the number of participating securities in that subsequent election.

An issuer (registry) must notify ASX of a DRP/BSP in operation to facilitate the submission of elections in CHESS.

Procedure

Step

Description

Step

Description

1

A security holder opts to participate in a DRP or BSP for a specific Issuer (where a DRP/BSP is active) and instructs their participant to effect their participation in CHESS.

2

A participant initiates the DRP/BSP election through the Controlling Participant Initiated DRP/BSP Election Process.

3

The issuer (registry) acknowledges receipt of the DRP/BSP election.

4

A security holder may cancel their participation in a DRP/BSP by instructing their participant to effect the cancellation in CHESS.

5

A participant initiates the DRP/BSP election cancellation through the Controlling Participant Initiated DRP/BSP Election Cancellation Process.

Issuers (Registries) are encouraged to use the following reason codes when identifying the reason for rejecting the DRP/BSP Election cancellation:

  • Plan Suspended or Inactive (SUSP); or

  • Other (OTHR).

The following codes should not be used:

  • Ineligible to Participate (PARX)

  • Zero Holding (NOHO)

  • Legal Entitlement (LEGL)

11.8.2 - Issuer (Registry) Initiated DRP/BSP Cancellations

An issuer’s DRP and/or BSP rules may require the cancellation of a holders participation under certain circumstances (for example, when notified of the death of a security holder or when a holding becomes nil). Where a DRP/BSP election has been submitted via a participant in CHESS (and this election is the only or most recent election received by the issuer), the issuer must notify the participant of the cancellation by submitting a DRP/BSP cancellation election in CHESS.

Procedure

Step

Description

Step

Description

1

The issuer (registry) determines a DRP/BSP election is to be cancelled.

2

The issuer (registry) initiates the DRP/BSP election cancellation through the Issuer (Registry) Initiated DRP/BSP Election Cancellation Process.

11.8.3 - Participant initiated DRP/BSP Election Enquiries

CHESS facilitates DRP/BSP election enquiries initiated by participants on behalf of their sponsored security holder, enabling them to enquire about the status of a DRP/BSP election recorded with the issuer (registry).

Procedure

Step

Description

Step

Description

1

The participant initiates the DRP/BSP election enquiry through the DRP/BSP Election Enquiry Process.

2

The issuer (registry) acknowledges the receipt of the DRP/BSP election enquiry and responds with the election details of the security holder.

 

11.9 - Entitlement Issue

For approved financial products, CHESS routinely receives notifications of the relevant details of renounceable, non renounceable and accelerated entitlement issues from ASX Reference Point ISO 20022. Information disseminated from ASX Market Data triggers the creation of the relevant corporate action event in CHESS and the processing of these events. The following table provides details as to the corporate action event type and corporate action event numbers (option number) disseminated via corporate action event notifications and are required for inclusion when submitting elections through CHESS.

Corporate Action Type

Corporate Action Event Type

Corporate Action Sub-type

Option Number (where applicable)

Corporate Action Type

Corporate Action Event Type

Corporate Action Sub-type

Option Number (where applicable)

Renounceable

RHTS

RENI

001 - Exercise

002 - Oversubscribe

999 - Lapse or no action by CHESS

Non renounceable

RHTS

NRNI

Accelerated (renounceable or non renounceable)

RHTS

RENI/NRNI

An entitlement issue is an offer made to eligible registered security holders of a parent security. An entitlement issue may either be renounceable or non renounceable. Entitlements issued pursuant to a renounceable entitlement issue are transferable and may be either traded on an approved exchange or transferred off market. Those entitlements issued pursuant to a non renounceable entitlement issue are not transferable. The entitlements are allocated to eligible security holders of the parent security as at a specified record date, on a pro rata basis.

The allotment of nil paid rights to an account (HIN) of an eligible registered security holder is managed by the issuer (registry) using the Holding Adjustments Process.

Entitlement issues are referred to as Standard pro rata issues under the ASX Listing Rules.

11.9.1 - Accelerated Entitlement Issue

An accelerated entitlement issue has two components, the institutional offer and the retail offer:

  • The institutional offer is managed outside CHESS, although settlement of the institutional offer may occur through the primary market facility (refer to section 15). Accelerated entitlement issues allow for the acceleration of this institutional component for a renounceable or non renounceable entitlements issue.

  • The retail component of the entitlement issue follows the same procedure as a non accelerated entitlement issue. Any steps within the procedures of sections 11.9.2 and 11.9.3 that are not applicable for an accelerated entitlement issue are identified within the step description.

Accelerated entitlement issues under the ASX Listing Rules are referred to and broken down into three categories:

  • Accelerated non-renounceable entitlement offers;

  • Accelerated renounceable entitlement offers and simultaneous accelerated renounceable entitlement offers; and

  • Accelerated renounceable entitlement offers with retail rights trading.

The types of accelerated entitlement issues are outlined in the table below.

Type and Code

Description

Type and Code

Description

AREO (AREO)

An accelerated renounceable entitlement offer. It is a renounceable (off-market) accelerated pro-rata issue with dual book build structure.

SAREO (SREO)

A simultaneous accelerated renounceable entitlements offer. It is an accelerated entitlement offer carried out in two tranches (offer to institutional security holders followed by the offer to retail security holders) but with “off-market renounced” entitlements (if there is any) carried out in a single book build.

PAITREO (PTRO)

A pro rata accelerated institutional tradeable retail renounceable entitlement offer. It is a variation on the AREO structure where nil paid rights-trading is available for retail security holders.

Retail security holders have the opportunity to either take up their entitlements through the offer period or sell their entitlements through the nil paid rights trading period. The nil paid rights trading period commences immediately upon lifting of trading halt.

The retail book build is the same as that of a traditional entitlement issue where retail security holders who renounce their entitlements receive the excess amount of the book build price over the issue price.

JUMBO (JMBO)

An accelerated institutional non renounceable entitlement issue followed by a retail entitlement issue. The institutional offer is conducted under an accelerated timetable, with eligible security holders receiving their entitlement in advance of the standard retail offer timetable.

RAPIDS (RPDS)

A renounceable accelerated pro rata issue with dual book build structure. A variation of the JUMBO structure that allows entitlements to be renounced off-market. Security holders who do not take up their entitlements have them sold through an institutional and retail book build and receive the value of the entitlements.

 

11.9.2 - Non Renounceable Entitlement Issue (includes the retail component of an Accelerated Non Renounceable Issue)

A non renounceable entitlement issue is an offer of a non-transferable entitlement to take up new securities upon payment of application money. It is made to existing eligible security holders of a security (termed the “parent security”). The issuer (registry) allocates the non-transferable entitlements to eligible security holders of the parent security on a pro rata basis determined as at the relevant record date. After calculating a non renounceable entitlement based on record date holdings in the parent security, the issuer forwards the disclosure document (where required) and accompanying Entitlement and Acceptance (E&A) forms to all eligible security holders. CHESS is limited to reporting the cum entitlement balances for holdings on the CHESS subregister to the issuer.

Security holders of a non renounceable entitlement have the choice of:

  • accepting the offer by payment of the application moneys; or

  • allowing the entitlement to lapse.

The above actions may apply to part or all of an entitlement.

Security holders may accept their entitlement by:

  • lodging their E&A forms together with application monies directly with the issuer (registry);

  • making BPAY payments using BPAY reference number on the E&A forms; or

  • such other means as an Offer document permits.

When a non renounceable entitlement is accepted, the new security is issued on the same subregister (CHESS or issuer sponsored) as the parent holding.

The new security may rank equally with the parent security, or may rank separately.

There are three phases in the processing of a non renounceable entitlement issue:

(a) Determination of entitlement;

(b) Acceptance or lapse of entitlement; and

(c) Issue of new securities.

Non Renounceable Entitlement Issue Lifecycle (Process Flow)

The following lifecycle provides an overview of the key events for a non-renounceable entitlement issue and approximate times after announcement that these events occur. More detailed procedures are provided in subsequent sections.

Procedure

Step

Description

Step

Description

1

Issuer announces the terms of a non renounceable entitlement issue. CHESS receives notifications of the relevant details of the corporate actions triggering the creation of the corporate action event in CHESS and the processing of the event.

It is at the time of the announcement that attributes such as the corporate action event identification number (an uniquely serialised 35 character number), corporate action event type and option numbers attributed to the voluntary event will be available. All corporate action transactions for the same event should at a minimum, carry the unique corporate action event ID and assigned corporate action event type code and option number. In the case of a non renounceable entitlement issue the event type code is RHTS with a sub-type code of NRNI, and the option numbers will be 001, Exercise, and 002 Oversubscribe. Option number 999 will result in no action by CHESS.

The new securities begin trading on a deferred settlement basis the business day after the offer closes, with settlement of occurring two business days after T+2 trading starts.

(a) Determine of Entitlement

2

At start of day on the ex date for a non renounceable issue, CHESS establishes a cum entitlement balance for each holding in the parent security on the CHESS subregister. When established, this balance is equal to the holding balance. The issuer (registry) establishes similar positions for holdings on the issuer sponsored subregister.

On announcement of an accelerated entitlement issue, a trading halt (normally two business days) is applied to the securities to allow the institutional component of the accelerated entitlement issue to be conducted.

CHESS does not establish a cum entitlement balance on ex date for an accelerated entitlement issue. Market trades dated before the trading halt and announcement of the accelerated entitlement issuer are cum.

When the trading halt is lifted trading is on an ex entitlement basis.

3

During the ex period, CHESS maintains both the holding balance and the separate cum entitlement balance for each holding of the parent security. This facilitates the designation of transactions during the period between the ex date and the record date as being either cum or ex the entitlement. Default basis of movements (BOMs) apply, but participants can override these when they submit the transactions to CHESS (refer to section 10.1.2).

CHESS rejects transactions with a designated override basis of movement and a settlement date, before ex date and after the record date.

Should a novated settlement obligation fail to settle on record date, the participant may initiate the Isolate Counterparty Process. This identifies the counterparty from whom protection may/may not be claimed. Refer to section 9.1.16 for further details.

4

On or shortly after the record date, CHESS reports the cum entitlement balances of holdings in the parent security on the CHESS subregister to the issuer (registry).

At any time during the ex period and up until the end of the corporate action event, participants can request cum entitlement balance information from CHESS through the Cum Entitlement Balance (CEBL) process.

Participants should attempt to clear their entrepot accounts of cum holdings prior to the record date. This will minimise the need to reconcile an entitlement accruing to an entrepot holding with individual security holder accounts (HINs).

For accelerated entitlement issues, at any time after the record date, participants can request holding balance information from CHESS through the Holding Balance (HBAL) process.

5

After the close of business on record date, CHESS adjusts all outstanding cum settlement transactions (refer to section 10.2). Accrual obligations are generated for the new securities.

The diary adjustment process is applied to outstanding cum settlement transactions for renounceable, non renounceable and accelerated entitlement issues.

6

The issuer (registry) determines and calculates and disseminates the Offer Documents and uniquely serialised Entitlement & Acceptance (E&A) forms to entitled (Registered) security holders. E&A forms for CHESS security holders are required to have the account (HIN) details printed on them as a reference.

(b) Acceptance or Lapse of Entitlement

7

Eligible security holders may accept their entitlement by:

  • lodging their E&A forms together with application monies directly with the issuer (registry);

  • making BPAY payments using BPAY reference number on the E&A forms; or

  • such other means as an Offer document permits.

An entitled security holder may choose not to participate in a non renounceable entitlement offer and lapse their entitlement.

(c) Issue of New Securities

8

Prior to issue, the new securities resultant from successful applications in the entitlement issue usually trade on a deferred settlement basis.

Issuers have an obligation to issue new securities to CHESS on or before the issue date announced to the ASX. Demand activity (e.g. transfers) in the new securities may take place on the CHESS subregister from the time that they are issued (refer to section 6.6).

9

On receipt of valid election and application monies the issuer (registry) issues the new securities on the issue date through the Holding Adjustments Process with the reason code Non-Renounceable Issue (NRNI). Securities are issued on the same subregister as the parent holding. For CHESS subregister holdings the issue of securities is transmitted to CHESS using the same account (HIN) as the parent account (HIN).

CHESS validates the issuer (registry) messages, updates the CHESS subregister holdings, notifies the participants and confirms completion to the issuer (registry).

If an issuer (registry) message is invalid or contains an account (HIN), which is not established in CHESS, it will be rejected to the issuer (registry).

Once securities are recorded in CHESS, they are available to the security holders.

However the issuer (registry) may reject a portion or all of the acceptance; refunding the application money to the security holder.

10

In the event the issue of new securities is to an account (HIN) that previously did not have a balance of securities and was the subject of a change in registration details, the amended security holder name and/or address will be returned to the issuer (registry) through the Account and Holder Modification Process

The issuer (registry) checks the name and address details sent by CHESS to ensure the securities have been issued to the correct security holder. It is unlikely a difference will occur with an issue of new securities. If it does occur, the issuer (registry) must reverse the issue of new securities with a further CHESS message through the Holding Adjustments Process with the reason code Non-Renounceable Issue (NRNI).

11

CHESS creates holding records for the new securities on its subregister and notifies participants of the issue. The participant reconciles the new securities issued against those accepted and internally processes the acceptances to completion.

12

The ASX calculates the first allowable settlement date for the settlement of on-market trades conducted on a deferred settlement basis and the first settlement of trades conducted on a T+2 basis as two business days after T+2 trading starts. CHESS rejects unilateral and bilateral demand settlement instructions with an earlier settlement date. 

To arrange settlement (outside CHESS) prior to the first allowable settlement date, participants should:

  1. Cancel an eligible settlement instruction;

  2. Deliver the securities with a bilateral demand transfer (refer to section 7.2); and

  3. Pay any consideration outside CHESS.

13

In the event the issue date is moved to a later date, and therefore the first settlement date for the new securities is moved to a later date for an adjusted transaction or accrual settlement instruction, CHESS notifies the participants with a rescheduled settlement instruction for the adjusted transaction or accrual settlement instruction through the Settlement Instruction Rescheduling Process.

The participants then update their records and proceeds to settlement of the adjusted transaction or accrual settlement instruction on the amended date.

14

If a code change is necessary it is done so on issue date + 1, CHESS changes the security code on the holding balances and for transactions in the new securities (refer to section 10.3.3). Participants should check that all relevant transactions have been adjusted.

15

The issuer (registry) sends allotment notices to issuer sponsored holders. ASXS sends statements to security holders on the CHESS subregister at the end of the month.

11.9.3 - Renounceable Entitlement Issue (includes the retail component of an Accelerated Renounceable Issue)

A renounceable entitlement offer is an issue of a transferable entitlement to take up new securities upon the payment of application money. It is made to existing eligible security holders of a security (termed the “parent security”). The issuer (registry) allocates the transferable entitlements to eligible security holders of the parent security on a pro rata basis determined as at the relevant record date. After calculating a renounceable entitlement based on record date holdings in the parent security, the issuer allots the relevant number of nil paid rights to the eligible security holders and forwards Entitlement and Acceptance (E&A) forms to those eligible security holders.

Security holders of a renounceable entitlement have a choice of:

  • accepting the offer by payment of application moneys for all or part of their entitlement;

  • selling (renouncing) the nil paid rights; or

  • taking no action and allowing the entitlement be lapsed.

The above actions may apply to part or all of an entitlement.

Security holders may accept their entitlement by:

  • lodging their E&A forms together with application monies directly with the issuer (registry);

  • making BPAY payments using BPAY reference number on the E&A forms; or

  • such other means as an Offer document permits.

During the nil paid rights trading period, entitlements may be traded or transferred without payment of application moneys by buyers settlement occurs in the batch settlement cycle (refer to section 9.1.7). Additionally, nil paid rights may be moved between subregisters by the standard CHESS transfer and conversion processes (refer to sections 6.3 and 6.6).

When an entitlement has been accepted the nil paid rights cannot subsequently be sold or transferred. The new securities are issued on the same subregister (CHESS or issuer sponsored) as the holding the nil paid rights were settled or transferred to (not necessarily the parent holding).

The new security may rank equally with the parent security, or may rank separately. The new securities may be issued under an existing security code if they rank equally, or otherwise to a new code. Transfers in the new security can be effected after being issued by the issuer.

There are three phases in the processing of a renounceable entitlement issue:

(a) Determination of entitlement and allotment of nil paid rights;

(b) Acceptance, renunciation or lapse of entitlement; and

(c) Issue of new securities.

Renounceable Entitlement Issue Lifecycle (Process Flow)

The following lifecycle provides an overview of the key events for a renounceable entitlement issue and approximate times after announcement that these events occur. More detailed procedures are provided in subsequent sections.

Procedure

Step

Description

Step

Description

1

Issuer announces the terms of the renounceable entitlement issue. CHESS receives notifications of the relevant details of the corporate actions triggering the creation of the corporate action event in CHESS and the processing of the event.

It is at the time of the announcement that attributes such as the corporate action event identification number (an uniquely serialised 35 character number) and corporate action event type and option numbers attributed to the voluntary event will be available. All corporate action transactions for the same event should at a minimum, carry the unique corporate action event ID and the assigned corporate action event type code and option number. In the case of a renounceable entitlement issue the event type code is RHTS with a sub-type code of RENI, and the option numbers will be 001, Exercise, and 002 Oversubscribe. Option number 999 will result in no action by CHESS.

On receipt of the announcement ASX calculates the first settlement date for the nil paid rights and the new securities. Settlement of on-market trades is conducted on a deferred settlement basis and the first settlement of trades is conducted on a T+2 basis which occurs two business days after T+2 trading starts.

(a) Determination of Entitlement and Allotment of Nil Paid Rights

2

At start of day on the ex date for a renounceable issue, CHESS establishes a notional cum entitlement balance for each holding in the parent security on the CHESS subregister. When established this balance is equal to the holding balance. The issuer (registry) establishes similar positions for holdings on the issuer sponsored subregister.

Where applicable, ASX will quote the nil paid rights (to be issued to eligible security holders) on a deferred settlement basis from market open on the ex date. ASX will calculate the first allowable settlement date for the nil paid rights trading on deferred settlement basis. Deferred settlement ceases on the despatch date (being the day that Entitlement and Acceptance forms are sent to eligible security holders). CHESS will reject settlement transactions with an earlier settlement date.

Where applicable, ASX will quote the nil paid rights on a deferred settlement basis from market open on the ex date.

Participants may internally allocate nil paid rights on ex date or the night of record date. After receiving the notification, the participant reconciles the entitlement quantity received against the quantity expected.

On announcement of an accelerated entitlement issue, a trading halt (normally two business days) is applied to the securities to allow the institutional component of the accelerated entitlement issue to be conducted.

CHESS does not establish a notional cum entitlement balance on ex date for an accelerated entitlement issue. Market trades dated before the trading halt and announcement of the accelerated entitlement issuer are cum.

When the trading halt is lifted trading is on an ex entitlement basis.

3

During the ex period, CHESS maintains both the holding balance and the separate cum entitlement balance for each holding of the parent security. This facilitates the designation of transactions during the period between the ex date and the record date as being either cum or ex the entitlement. Default basis of movements (BOMs) apply, but participants can override these when they submit the settlement transactions to CHESS (refer to section 10.2).

CHESS rejects transactions with a designated override basis of movement and a settlement date, before ex date after the record date.

Should a novated settlement obligation fail to settle on record date, the participant may initiate the Isolate Counterparty Process. This identifies the counterparty from whom protection may/may not be claimed. Refer to section 9.1.16 for further details.

4

On or shortly after the record date, CHESS reports the cum entitlement balances of holdings in the parent security on the CHESS subregister to the issuer (registry).

At any time during the ex period and up until the end of the corporate action event, participants can request cum entitlement balance information from CHESS through the Cum Entitlement Balance (CEBL) process.

Participants should attempt to clear their entrepot accounts of cum balance holdings on the record date. This will minimise the need to reconcile an entitlement accruing to an entrepot holding with individual client accounts.

For accelerated entitlement issues, at any time after the record date, participants can request holding balance information from CHESS through the Holding Balance (HBAL) process.

5

After the close of business on record date, CHESS adjusts all outstanding cum settlement transactions (refer to section 10.2). Accrual obligations are generated for the new securities.

The diary adjustment process is applied to outstanding cum settlement transactions for renounceable, non renounceable and accelerated entitlement issues.

6

On or before the issue date for the nil paid rights the issuer (registry) determines nil paid rights entitlements for holdings on all subregisters and issues the entitlements to eligible security holders on the same subregister as the parent holding, e.g. if the underlying securities are issuer sponsored then the nil paid rights will be issuer sponsored.

7

Where parent holdings are on the CHESS subregister, the issue of nil paid rights are electronically transmitted to CHESS by the issuer (registry) through the Holding Adjustments Process with the reason code Renounceable Rights Issue (RENI).

CHESS validates the issuer (registry) messages sent to CHESS, updates the CHESS holdings, notifies the participants and confirms completion to the issuer (registry).

If a issuer (registry) message is invalid or contains an account (HIN) which is not established in CHESS, it will be rejected to the issuer (registry).

8

In the event the issue of rights is to an account (HIN) that previously did not have a balance of securities and was the subject of a change in registration details, the amended security holder name and/or address will be returned to the issuer (registry) through the Account and Holder Modification Process

The issuer (registry) checks the name and address details sent by CHESS to ensure the securities have been issued to the correct security holder. It is unlikely a difference will occur with an issue of rights. If it does occur, the issuer (registry) must either amend the name and address details in their records or reverse the issue of securities with a further CHESS message through the Holding Adjustments Process with the reason code Renounceable Rights Issue (RENI).

9

The issuer (registry) determines and calculates entitlements and disseminates the Offer Documents and uniquely serialised Entitlement & Acceptance forms to entitled (Registered) security holders. E&A forms for CHESS subregister security holders are required to have the account (HIN) details printed on them as a reference.

10

The ASX calculates the first allowable settlement date for the settlement of on-market trades conducted on a deferred settlement basis and the first settlement of trades conducted on a T+2 basis occurs two business days after T+2 trading starts. CHESS rejects unilateral and bilateral demand settlement instructions with an earlier settlement date.

To arrange settlement (outside CHESS) prior to the first allowable settlement date, participants should:

  1. Cancel an eligible settlement instruction;

  2. Deliver the securities with a bilateral demand transfer (refer to section 7.2); and

  3. Pay any consideration outside CHESS.

11

In the event the issue date for the new securities is moved to a later date, and therefore the first settlement date for the new securities is moved to a later date for an adjusted transaction or accrual settlement instruction, CHESS notifies the participants with a rescheduled settlement instruction for the adjusted transaction or accrual settlement instruction through the Settlement Instruction Rescheduling Process.

The participants then updates their records and proceeds to settlement of the adjusted transaction or accrual settlement instruction on the amended date.

(b) Acceptance, Renunciation or Lapse of Entitlement

12

Eligible security holders may accept their entitlement by:

  • lodging their E&A forms together with application monies directly with the issuer (registry);

  • making BPAY payments using the BPAY reference number on the E&A forms; or

  • or such other means as an Offer document permits.

An entitled security holder may choose not to participate in a renounceable entitlement offer and lapse their entitlement.

13

Settlement for on-market transactions where security holders are buying or selling nil paid rights will be effected during CHESS batch settlement (refer to section 9.1.7).

Nil paid rights may be transferred or converted to the issuer sponsored subregister (refer to sections 6.5 and 6.6.3).

Issuer sponsored security holders may transfer nil paid rights to another person, in an off-market transaction, in this case a standard renunciation and transfer form should be obtained from the issuer (registry). The completed renunciation and transfer form should be accompanied by confirmation of payment or cheque and lodged with the issuer (registry) prior to applications close for the issue.

14

On failure to deliver rights securities by end of day on applications close date, CHESS adjusts any outstanding nil paid rights transactions for the applicable application money (refer to section 10.2). The changed obligation reflects a settlement obligation in the new security.

15

Clients who purchase nil paid rights have the option of paying application money as part of the purchase. Clients that do not accept this option must receive a standard rights acceptance form along with their tax invoice.

If nil paid rights are transferred to the issuer sponsored subregister, details of the transferee holding must be included on the acceptance form to assist reconciliation by the issuer (registry).

(c) Issue of New Securities

16

Prior to issue, the new securities resultant from successful applications in the entitlement issue usually trade on a deferred settlement basis.

Issuers have an obligation to issue new securities to CHESS on or before the issue date announced to the ASX. Demand activity (e.g. transfers) in the new securities may take place on the CHESS subregister from the time that they are issued (refer to section 6.6).

17

On receipt of valid election and application monies the issuer (registry) issues the new securities on the issue date through the Holding Adjustments Process with the reason code Renounceable Rights Issue (RENI). Securities are issued on the same subregister as the parent holding. For CHESS subregister holdings the issue of securities is transmitted to CHESS using the same account (HIN) as the parent account (HIN).

CHESS validates the issuer (registry) messages, updates the CHESS subregister holdings, notifies the participants and confirms completion to the issuer (registry).

If an issuer (registry) message is invalid or contains an account (HIN), which is not established in CHESS, it will be rejected to the issuer (registry).

Once securities are recorded in CHESS, they are available to the security holders.

However the issuer (registry) may reject a portion or all of the acceptance; refunding the application money to the security holder.

18

In the event the issue of nil paid rights is to an account (HIN) that previously did not have a balance of securities and was the subject of a change in registration details, the amended security holder name and/or address will be returned to the issuer (registry) through the Account and Holder Modification Process

The issuer (registry) checks the name and address details sent by CHESS to ensure the securities have been issued to the correct security holder. It is unlikely a difference will occur with an issue of nil paid rights. If it does occur, the issuer (registry) must reverse the issue of securities with a further CHESS message through the Holding Adjustments Process using the reason code Renounceable Rights Issue (RENI).

19

The ASX calculates the first allowable settlement date for the settlement of on-market trades conducted on a deferred settlement basis and the first settlement of trades conducted on a T+2 basis occurs two business days after T+2 trading starts. CHESS rejects unilateral and bilateral demand settlement instructions with an earlier settlement date. 

To arrange settlement (outside CHESS) prior to the first allowable settlement date, participants should:

  1. Cancel an eligible settlement instruction;

  2. Deliver the securities with a bilateral demand transfer (refer to section 7.2); and

  3. Pay any consideration outside CHESS.

20

In the event the issue date is moved to a later date, and therefore the first settlement date for the new securities is moved to a later date for an adjusted transaction or accrual settlement instruction, CHESS notifies the participants with a rescheduled settlement instruction for the adjusted transaction or accrual settlement instruction through the Settlement Instruction Rescheduling Process.

The participants then update their records and proceeds to settlement of the adjusted transaction or accrual settlement instruction on the amended date.

21

If a code change is necessary it is done so on issue date + 1, CHESS changes the security code on the holding balances and for transactions in the new securities (refer to section 10.3.3). Participants should check that all relevant transactions have been adjusted.

22

The final settlement date of nil paid rights occurs two business days prior to applications close date. At the end of application close date the nil paid rights subregister is suspended and further activity from participants ceases (i.e. demand transactions).

23

The issuer (registry) sends allotment notices to issuer sponsored holders. ASXS sends statements to security holders on the CHESS subregister at the end of the month.

(d) Lapsed Nil Paid Rights

An entitled security holder may choose not to participate in a renounceable entitlement offer and lapse their entitlement.

24

Following the issue of new securities resultant from successful applications in the entitlement offer, the issuer should remove the remaining (lapsed) nil paid rights from those entitled security holders who did not accept into the entitlement offer.

Generally, CHESS will archive the nil paid rights subregister 20 business days after it has been closed and the security ceases to be listed through the Security Sub-register Status Notification Process.

25

In the event a payment (for example a retail premium payment) is to be made for those lapsed nil paid rights, the issuer (registry) will make that payment directly to security holders. There is no processing within CHESS.

 

11.10 - Non Pro Rata Offer

A non pro rata offer is a corporate action suitable for priority issues, or any other corporate action that requires only an ex date and record date.

An offer may be made to security holders of an existing security (termed the “parent security”) to take up new securities in a float or an issue of new securities in the parent or other entity on an application basis rather than a pro-rata basis (of the existing holding in the parent security). Security holders of the parent security are given an entitlement to apply for a number of the new securities as determined by the issuer.

An ex period is established allowing participants to view non pro rata balance transaction details via CHESS reporting and enables registries and participants to obtain or be provided with cum entitlement balance reporting via CHESS. Whilst no entitlement accrues via CHESS, this corporate action allows reporting of notional cum entitlement balances.

The following conditions apply to non pro rata offers in CHESS:

  • They can only apply to corporate action events where an ex period is supported. 

  • CHESS will not complete any diary adjustment processing. Where an application process for new securities occurs other than on a pro rata basis CHESS cannot complete diary adjustments.

  • Non pro rata balance entitlements cannot be sold or transferred to another party.

Eligible security holders may:

  • Accept the offer and take up the new securities by lodgement of an application form and payment of application moneys to the issuer (registry); or

  • Take no action.

The new securities are issued on the subregister selected by the applicant (i.e. CHESS or issuer sponsored subregister, depending on which subregisters are supported by the issuer). Trading in the new securities does not commence until after the issue date unless a pre-quotation market has been established.

There are three phases in processing a non pro rata entitlement:

(a) Allocation of entitlement;

(b) Application; and

(c) Issue of new securities.

Non Pro Rata Offer Lifecycle (Process Flow)

The following lifecycle provides an overview of the key events for a non pro rata offer and approximate times after announcement that these events occur. A more detailed procedure is provided below.

Procedure

Step

Description

Step

Description

1

Issuer announces the terms of the non pro rata offer. CHESS receives notifications of the relevant details of the corporate actions triggering the creation of the corporate action event in CHESS and the processing of the event.

It is at the time of the announcement that attributes such as the corporate action event identification number (an uniquely serialised 35 character number) and corporate action event type will be available. All corporate action transactions for the same event should at a minimum, carry the unique corporate action event ID and assigned corporate action event type code. In the case of a non pro rata offer the event type code is PRIO with a sub-type code of PRNP.

(a) Allocation of Entitlement

2

At start of the day on the ex date for the non pro rata offer, CHESS establishes a notional cum entitlement balance for each holding in the parent security on the CHESS subregister. When established, this balance is equal to the holding balance. The issuer (registry) establishes similar positions for holdings on the issuer sponsored subregister.

CHESS does not apply diary adjustments for non pro rata events.

3

During the ex period, CHESS maintains both the holding balance and the separate cum entitlement balance for each holding of the parent security. This facilitates the designation of transactions during the period between the ex date and record date as being either cum or ex the non pro-rata balance. Default basis of movements (BOMs) apply (refer to section 10.1.2) but participants can override these when they submit the transactions to CHESS.

Should a novated settlement obligation fail to settle on record date, the participant may initiate the Isolate Counterparty Process. This identifies the counterparty from whom protection may/may not be claimed. Refer to section 9.1.16 for further details.

4

On or shortly after the record date, CHESS reports the cum entitlement balances of holdings in the parent security on the CHESS subregister to the issuer (registry).

At any time during the ex period and up until the end of the corporate action event, participants can request cum entitlement balance information from CHESS (refer to Cum Entitlement Balance (CEBL)).

Participants should attempt to clear their entrepot accounts of cum balance holdings prior to the record date. 

5

After the close of business on the record date, CHESS reports the cum entitlement balances of holdings in the parent security on the CHESS subregister to the issuer (registry).

6

The issuer (registry) disseminates the Offer Documents and application forms to entitled (Registered) security holders.

(b) Application

7

Security holders submit their application form and application money directly with the issuer (registry).

(c) Issue of New Securities

8

On receipt of valid election and application monies the issuer (registry) issues the new securities on the issue date through the Holding Adjustments Process with the reason code Non Pro Rata Issue (PRNP). Securities are issued in accordance with application details submitted. 

CHESS validates the issuer (registry) messages, updates the CHESS subregister holdings, notifies the participants and confirms completion to the issuer (registry).

If a issuer (registry) message is invalid or contains an account (HIN), which is not established in CHESS, it will be rejected to the issuer (registry).

9

In the event the issue of new securities is to an account (HIN) that previously did not have a balance of securities and was the subject of a change in registration details, the amended security holder name and/or address will be returned to the issuer (registry) through the Account and Holder Modification Process

The issuer (registry) checks the name and address details sent by CHESS to ensure the securities have been issued to the correct security holder. It is unlikely a difference will occur with an issue of new securities. If it does occur, the issuer (registry) must reverse the issue of new securities with a further CHESS message through the Holding Adjustments Process with the reason code Non Pro Rata Issue (PRNP).

10

Unless arrangements have been made for a pre-quotation market, trading in the new securities does not begin before issue date.

Demand participant activity (e.g. transfers) occur from the time the new securities are issued in CHESS.

11

The ASX calculates the first allowable settlement date for the settlement of on-market trades conducted on a deferred settlement basis and the first settlement of trades conducted on a T+2 basis occurs two business days after T+2 trading starts. CHESS rejects unilateral and bilateral demand settlement instructions with an earlier settlement date. 

To arrange settlement (outside CHESS) prior to the first allowable settlement date, participants should:

  1. Cancel an eligible settlement instruction;

  2. Deliver the securities with a bilateral demand transfer (refer to section 7.2); and

  3. Pay any consideration outside CHESS.

Cancellations of a cash market transaction can only be made by AMOs on trade date.

11.11 - Note Conversions and Option Exercises

These procedures cover conversion of company-issued convertible securities (typically convertible notes and convertible preference securities) and the exercise of company issued options.

As a result of conversion of notes or exercise of options, a different class of securities will be issued to security holders of such notes or options. The security issued may rank equally with an existing security on issue, or may be a new security.

Some conversions or exercises may be initiated on an ad hoc basis at the request of the holder of the notes, while others may be initiated only at specific times in accordance with the terms of the original issue of the options or convertible securities. There is a specified final date for conversion or exercise. These include:

  • periodic conversion/exercise.

  • ad-hoc conversion/exercise: If the terms of an options issue/note conversion enable option holders to exercise at any time, the ad-hoc conversion/exercise process is initiated by the holder without any prior notification from the issuer.

  • final conversion/exercise.

The last day for trading in options and convertible notes is the fifth business day prior to and inclusive of the expiry date. Where a batch settlement instruction does not settle in full by the end of day on the last day that CHESS will process transfers, and both settlement participants agree that settlement will be effected by a transfer of the financial products that result from the conversion/exercise, then each settlement participant cancels the original transaction and creates a new settlement instruction reflecting the revised details. A deferred delivery market in the new security issued resultant from the conversion or exercise may be initiated by ASX.

Security holders convert notes or exercise options by notifying the issuer (registry) directly (and making a payment if appropriate). CHESS does not facilitate this.

New securities are issued on the same subregister as the existing holding (i.e. CHESS or issuer sponsored).

For note conversion and options exercise, the normally accepted use of ex is that ex signifies trading without an attaching entitlement accrued (e.g. ex bonus, ex dividend). In the case of option expiry, convertible note conversion and convertible preference securities conversion, no attaching entitlement accrues. In these cases ex right of exercise /conversion signals that the securities are trading without the right to require the seller to exercise the options on behalf of the buyer (i.e. without the protection afforded under ASX Settlement Operating Rules).

For consistency with the generally understood ex processing regime, the ex period for options and convertible notes has been removed. As an alternative, a flag has been implemented so that these securities can be traded in the knowledge that mandatory protection under ASX Settlement Operating Rules is unavailable. A “PU” (Protection Unavailable) flag at trading level achieves this.

The conversion or exercise is recorded for holdings on the CHESS subregister using transformation messages initiated by the issuer (registry).

11.11.1 - Periodic Option Exercise or Note Conversions

This procedure covers periodic note conversions and the exercise of periodic options.

Procedure

Step

Description

Step

Description

1

If required, the issuer (registry) requests balances of notes holdings from the CHESS subregister through the Holding Balance (HBAL) process. The issuer (registry) prepares the exercise/conversion notices for all security holders, including those on the CHESS subregister.

Before a periodic exercise/conversion date, the issuer sends a notice to note/option holders advising them of the opportunity to convert.

2

Participants execute the form of exercise/conversion and send payment and the exercise/conversion document to the issuer (registry) in accordance with directions on the notice. There is no provision to notify exercise or conversion through CHESS.

3

For holdings on the CHESS subregister, the issuer (registry) performs the conversion from the notes/options to the target security through the Holding Adjustments Process with the reason code Option Exercised (OPTE) or Convertible Note Conversion (CONV). This is done on the basis of valid exercise/conversion notices and payment if applicable being received.

4

CHESS validates the issuer (registry) messages, updates the CHESS holdings, notifies the participants and confirms completion to the issuer (registry). If an issuer (registry) message is invalid, or there are insufficient units in the holding, it will be rejected to the issuer (registry).

CHESS updates holding records, giving effect to transformations on the subregister. If the newly transformed security ranks equally with an existing security, the existing code is used. Otherwise, the security is moved to a new security code. If there are insufficient securities in a nominated option/note holding to cover the transformation notified by the issuer (registry), CHESS rejects the transaction.

5

Once securities are recorded in CHESS they are available to the security holders.

6

The issuer (registry) sends allotment notices to issuer sponsored holders whose notes/options have been converted. ASXS sends statements to security holders on the CHESS subregister at the end of the month.

 

11.11.2 - Option Exercise or Note Conversions Prior to Final Expiry

This procedure covers option exercise and note conversions in accordance with their final expiry.

Procedure

Step

Description

Step

Description

1

If required, the issuer (registry) requests balances of notes holdings from the CHESS subregister through the Holding Balance (HBAL) process. The issuer (registry) prepares the exercise/conversion notices for all security holders, including those on the CHESS subregister.

The issuer must send final expiry exercise notices to option holders on or before the 20th business day prior to the expiry date. Exercise notices for CHESS security holders must include the HIN.

2

From no later than the 20th business day before the expiry date, participants should advise buyers of convertible notes of the following information:

  • last trading day;

  • expiry date; and

  • exercise price per note.

Trading in the convertible notes ceases on the fifth business day prior to, and inclusive of, the expiry date.

3

CHESS closes the subregister for option exercise and note conversions on record date/maturity date for the event.

Where a batch settlement instruction does not settle in full by the end of day on the last day that CHESS will process transfers, and both settlement participants agree that settlement will be effected by a transfer of the financial products that result from the call, then each settlement participant cancels the original transaction and creates a new settlement instruction reflecting the revised details.

4

Participants execute the form of expiry/conversion and send documents to the issuer in accordance with directions on the notice.

5

For holdings on the CHESS subregister, the issuer (registry) performs the conversion from the notes/options to the target security through the Holding Adjustments Process with the reason code Option Exercised (OPTE) or Convertible Note Conversion (CONV). This is done on valid exercise/conversion notices and payment if applicable being received.

6

CHESS validates the issuer (registry) messages, updates the CHESS holdings, notifies the participants and confirms completion to the issuer (registry). If the newly transformed security ranks equally with an existing security, the existing code is used. Otherwise, the security is moved to a new security code.

If an issuer (registry) message is invalid, or there are insufficient units in the holding, it will be rejected to the issuer (registry).

7

CHESS notifies participants of transformations applied to their CHESS holdings.

8

Outstanding transactions are suspended by ASXS at their discretion on a case-by-case basis.

9

The issuer (registry) sends allotment notices to issuer sponsored holders whose notes/options have been converted. ASXS sends statements to security holders on the CHESS subregister at the end of the month.

 

11.11.3 - Options or Convertible Note Ad Hoc Exercise

This procedure covers the ad hoc exercise of an option or convertible note.

Procedure

Step

Description

Step

Description

1

Participants execute the form of exercise/conversion and send payment and the document to the issuer.

2

For holdings on the CHESS subregister, the issuer (registry) performs the conversion from the notes/options to the target security. This is done on the basis of exercise/conversion notices received.

3

CHESS applies the transformation and notifies participants of the transformations applied through the Holding Adjustments Process with the reason code Option Exercised (OPTE) or Convertible Note Conversion (CONV).

4

CHESS validates the issuer (registry) messages, updates the CHESS holdings, notifies the participants and confirms completion to the issuer (registry). If the newly transformed security ranks equally with an existing security, the existing code is used.

If an issuer (registry) message is invalid, or there are insufficient units in the holding, it will be rejected to the issuer (registry).

5

The issuer (registry) sends allotment notices to issuer sponsored holders whose notes/options have been converted. ASXS sends statements to security holders on the CHESS subregister at the end of the month.

 

11.11.4 - Lapse on Expiry

This procedure covers the lapse of an option on expiry.

Procedure

Step

Description

Step

Description

1

CHESS closes the subregister to participant transactions on expiry date. The subregister remains open for participant reporting requests until it is archived.

2

When options holdings in the CHESS subregister lapse on expiry, the issuer (registry) notifies CHESS by reducing the balance of those options that have not been exercised and thus lapsed through the Holding Adjustments Process with the reason code Option Lapsed (OPTL).

3

Outstanding transactions are suspended by ASXS at their discretion on a case-by-case basis.

11.12 - Reorganisation of Capital - Security Consolidation or Split

A reconstruction (share split or share consolidation) is an alteration of the capital structure of a company. This process may include a repayment of capital to security holders (refer to section 11.3).

New securities are issued to eligible entitled registered security holders as at the record date as announced by the Issuer.

New securities are issued on the same subregister (CHESS or issuer sponsored) as the existing holding.

There is no ex trading period for a reconstruction. Pre-reconstructed securities will continue to be processed by the issuer (registry) until the close of business on record date.

Two business days after the Effective date, post reconstruction securities commence trading on a deferred settlement basis, with the deferred settlement date being Issue date + three business days.

Reconstruction Lifecycle (Process Flow)

The following lifecycle provides an overview of the key events for a reconstruction and approximate times after announcement that these events occur. A more detailed procedure is provided below.

Procedure

Step

Description

Step

Description

1

The issuer announces the reconstruction. CHESS receives notifications of the relevant details of the corporate actions triggering the creation of the corporate action event in CHESS and the processing of the event.

It is at the time of the announcement that attributes such as the corporate action event identification number (a uniquely serialised 35 character number) and corporate action event type will be available. All corporate action transactions for the same event should at a minimum, carry the unique corporate action event ID and assigned corporate action event type code. In the case of a reconstruction the event type code is SPLF for a share split or SPLR for a share consolidation.

2

At the end of day on the record date, CHESS ceases to process transactions for the existing securities. CHESS either suspends the subregister through the Security Sub-register Status Notification Process if the code is to be re-used after the reconstruction or closes the subregister if the old code is to be discontinued (refers to section 10.4 and 10.5).

3

On record date, the participant should internally apply the reconstruction formula. There is no trigger from CHESS for this process.

4

On record date, CHESS applies the consolidation diary adjustment formula to any unsettled transactions (refer to section 10.2.1). This includes amending the security code to a deferred delivery security code and the settlement is rescheduled to the deferred settlement date, calculated by CHESS, as being issue date + three business days. Transactions received after the Record Date will be scheduled to settle on the First Settlement Date on a Post-Reconstruction basis.

Participants should attempt to clear their entrepot accounts of cum balance securities by the end of record date.

CHESS notifies participants of the amended transactions. The participant checks the calculation and confirms all unsettled transactions have been amended.

5

In the event the issue date is moved to a later date, and therefore the first settlement date for the new securities is moved to a later date for an adjusted transaction or accrual settlement instruction, CHESS notifies the participants with a rescheduled settlement instruction for the adjusted transaction or accrual settlement instruction through the Settlement Instruction Rescheduling Process.

The participants then updates their records and proceeds to settlement of the adjusted transaction or accrual settlement instruction on the amended date.

6

Using a single holding adjustment message for the net difference between the pre and post reconstructed balances an issuer (registry) may adjust the balance of the security on the account (HIN) from pre-reorganised securities into post-reorganised securities at any time from the record date until the issue date through the Holding Adjustments Process with the reason code Share Split (SPLF) or Share Consolidation (SPLR).

It is important that the reconstruction is achieved through the processing of one message per holding so that any subpositions (for collateral) that are associated with the holding are reconstructed in the same proportion as the CHESS holding at the time that the transaction is processed. If the reconstruction is processed using two transactions, the subpositions will not be maintained.

7

CHESS validates the issuer (registry) messages and if an issuer (registry) message is invalid, or there are insufficient units, the message will be rejected to the issuer (registry). Otherwise CHESS applies the adjustment and notifies participants and confirms completion to the issuer (registry).

8

The participant reconciles the issue of securities against those expected and internally processes the reconstruction to completion.

 

11.13 - Security Purchase Plan

A security purchase plan is a capital raising event that provides eligible security holders the ability to apply for up to (typically) $30,000 of securities at either an application price defined at the time the offer is made or a price derived in a defined period during the 30 days before either the date of the offer or the date of the issue.

Security holders may accept a security purchase plan by:

  • lodging their Acceptance forms together with application monies directly with the issuer (registry);

  • making BPAY payments using BPAY reference number on the Acceptance forms; or

  • such other means as an Offer document permits.

Security Purchase Plan Lifecycle (Process Flow)

The following lifecycle provides an overview of the key events for a security purchase plan and approximate times after announcement that these events occur. A more detailed procedures is provided below.

Procedure

Step

Description

Step

Description

1

The record date for identifying which security holders may be eligible to participate in the security purchase plan.

As the record date is prior to the announcement date for the security purchase plan, CHESS does not support the dairy adjustment process for outstanding cum settlement transactions.

At any time after the record date, participants can request holding balance information from CHESS through the Holding Balance (HBAL) process.

2

Issuer announces the terms of the security purchase plan. CHESS receives notifications of the relevant details of the corporate actions triggering the creation of the corporate action event in CHESS and the processing of the event.

It is at the time of the announcement that attributes such as the corporate action event identification number (an uniquely serialised 35 character number), corporate action event type and option numbers attributed to the voluntary event will be available. All corporate action transactions for the same event should at a minimum, carry the unique corporate action event ID and assigned corporate action event type code and option number (where appropriate). In the case of a security purchase plan the event type code is PRIO, and option numbers will be will be reflective of the various consideration parcels available to security holders and will be numbered between 001-999.

(a) Acceptance

3

Eligible security holders may accept a security purchase plan by:

  • lodging their acceptance form together with application monies directly with the issuer (registry);

  • making BPAY payments using the BPAY reference number on the acceptance form (where available); or

  • or such other means as an Offer document permits.

An entitled security holder may choose not to participate in a security purchase plan.

(b) Scaleback

4

After the close date for the security purchase plan, the issuer (registry) completes the reconciliation of valid acceptances received to the target acceptance levels announced by the issuer for the security purchase plan.

Should acceptances exceed the target acceptance level, the issuer may decide to scaleback applications or increase the target acceptance level at their discretion.

If a scaleback is entered into, security holders will receive fewer securities than the value they applied for and will receive a refund for the balance.

(c) Issue of New Securities

5

Issuers have an obligation to issue new securities to CHESS on or before the issue date announced to the ASX.

6

On receipt of valid election and application monies the issuer (registry) issues the new securities on the issue date through the Holding Adjustments Process with the reason code Share Purchase Plan Issue (SHPP). Securities are issued on the same subregister as the parent holding. For CHESS subregister holdings the issue of securities is transmitted to CHESS using the same account (HIN) as the parent account (HIN).

CHESS validates the issuer (registry) messages, updates the CHESS subregister holdings, notifies the participants and confirms completion to the issuer (registry).

If an issuer (registry) message is invalid or contains an account (HIN), which is not established in CHESS, it will be rejected to the issuer (registry).

Once securities are recorded in CHESS, they are available to the security holders.

7

In the event the issue of new securities is to an account (HIN) that previously did not have a balance of securities and was the subject of a change in registration details, the amended security holder name and/or address will be returned to the issuer (registry) through the Account and Holder Modification Process

The issuer (registry) checks the name and address details sent by CHESS to ensure the securities have been issued to the correct security holder. It is unlikely a difference will occur for a security purchase plan. If it does occur, the issuer (registry) must reverse the issue of securities with a further CHESS message through the Holding Adjustments Process with the reason code Share Purchase Plan Issue (SHPP).

8

The issuer (registry) sends allotment notices to issuer sponsored holders. ASXS sends statements to security holders on the CHESS subregister at the end of the month.