Corporate Action Life Cycle - Mandatory with Choice/Voluntary Corporate Action

 Corporate Action Life Cycle - Mandatory with Choice/Voluntary Corporate Action

 

Above chart is process flow Mandatory with choice Corporate Action/Voluntary Corporate Action(Elective CA) Life cycle. Before explaining of above process flow, let us understand Mandatory with choice Corporate Action/Voluntary Corporate action meaning.

Voluntary Corporate Action is the corporate event in the market where share holder have choice to participate in the event. Here shareholder affected with price change in shares after completion of Corporate Action Life cycle for some of CA events.

Let us understand above process flow in details.

In above process flow, there are three arrows. Arrow 1(In yellow) denote for Corporate Action event Notification flow , Arrow 2(in Green) denotes for Corporate Action Election flow and Arrow 3(In Orange) denoted for Corporate Action Payment flow.

1. First step of Corporate Action event Life Cycle is to flow of Notification Announcement from the issuer to Agent. Issuer nominate specialized merchant banker as agent

2. Second step of CA event Life cycle is to flow notification announcement from agent to sub custodian/depository.

3. Third step of CA event Life cycle is to flow Notification announcement from sub custodian/depository to all custodians

4. Fourth step of CA event Life cycle is to flow notification announcement from custodian to Investment managers or portfolio manager

5.Fifth and last step of CA event Life cycle is to flow notification announcement from Investment manager or portfolio manager to End client or Share holder

Once Notification reaches from issuer to End client, one part of Voluntary Corporate Action cycle completes.

Now, its time for second part of Voluntary Corporate action Life cycle which is Election in the event or participation in the event.(Reverse flow)

1. First step of voluntary CA event second part involves election from the End client /Shareholder to Investment Manager.

2. Second step of voluntary CA event second part involves election from the Investment Manager to Custodian

3. Third step of voluntary CA event second part involves election from the Custodian to Sub custodian/Depository

4.Fourth step of voluntary CA event second part involves election from the Sub custodian/Depository to Agent.

5. Fifth step of voluntary CA event second part involves election from the Agent to Issuer/Company.

Once election reaches from End client to Issuer, second part of voluntary Corporate Action completes.

Now, its time for Third part of Voluntary Corporate action Life cycle which is payment of Corporate action event.

1. First step involves payment from Issuer to Agent

2. Second step involves payment from Agent to Sub custodian/Depository

3. Third step involves Payment from Sub custodian/Depository to Custodian Bank

4. Fourth step involves payment from Custodian bank to Investment manager or Portfolio Manager

5. Fifth step involves payment from Investment manager(IM) or Portfolio Manager to End client or Shareholder.

Once 3rd part completed, Voluntary Corporate action cycles completed.