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CORPORATE ACTIONS

Mandatory Events:
The processing of mandatory events (eg. bonus issues), being those where no decision is required on the part of the client or its investment managers.

Mandatory Events

Voluntary Events:
The processing of voluntary events (eg. rights issues, takeovers), being those where a decision is required on the part of the client or its investment managers. This can be very demanding and must be tightly managed. Errors and omissions can lead to significant losses, so reliability and accuracy are crucial.

Voluntary Events

Proactive Sub-custodian Data Feed:
The service provider sets high expectations for each sub-custodian to be fully aware of all forthcoming corporate action events and to provide early, accurate and unambiguous advice. Any exceptions are investigated fully, and procedures revised accordingly, to avoid recurrences.

Proactive Sub-custodian Data Feed

Multiple Data Sources:
Additional independent, reliable and comprehensive sources of information (in the form of multiple third party securities data vendors) are used by the service provider. Data from all sources is matched to validate the core information. Exceptions are investigated and resolved promptly.

Multiple Data Sources

Classification of Events:
The service provider classifies event data to distinguish between 'straightforward' (where there is no doubt as to the consequences for all asset owners) and 'ambiguous' (where there is need for interpretation or further information to understand the consequences). This provides for complete confidence over the large majority of the validated data and highlights all events requiring further investigation.

Classification of Events

Proactive Investigation:
For all events requiring further investigation, the service provider works with the corresponding sub-custodian to obtain clarification of the event with the issuing company at the earliest opportunity.

Proactive Investigation

Proactive Stance with Issuers:
The service provider, working with each sub-custodian, takes a proactive stance to press all issuers to take responsibility for clear communication of the corporate actions information they disseminate and the communiation channels used.

Proactive Stance with Issuers

Automated Processing:
The process of matching validated events data to a client's holdings and tracking each event through to receipt and settlement is automated, with manual effort focused on resolving exceptions.

Automated Processing

Pre-matching of Entitlements:
The process includes pre-matching of client entitlements (whether or not this is standard market practice) with exceptions pursued vigorously as settlement date approaches.

Pre-matching of Entitlements

Voluntary Events: Clarity:
Voluntary events (eg. rights issues, takeovers) can be considerably more demanding than mandatory events (eg. bonus issues) and must be tightly managed. Because errors and omissions can lead to significant losses, the service provider acts proactively to be sure of reliable and accurate notification of all voluntary events to the client. The options available, which may be non-standard, are communicated clearly and promptly.

Voluntary Events: Clarity

Voluntary Events: Responsiveness:
Certain events (such as a hotly-contested takeover) may entail a client making their decision at the very latest opportunity. The service provider is pro-active and able to act in a short time-span. Deadlines are set according to the nature of the event and, as expiration of the deadlines approaches, there is a series of communications: reminders, warning messages, telephone follow-up and, ultimately, escalation within the client organization.

Voluntary Events: Responsiveness

Class Actions: Notification:
The service provider, holding assets for its clients in nominee names, has an information and reporting system to identify a class action which is proposed or initiated and notifies its clients accordingly. There are occasions when investors have cause to launch a "class action" (where a number of investors join together in launching a legal prosecution against a company and perhaps its directors). An example is when securities fraud (perhaps accounting irregularities) is alleged. Investors will wish to be recompensed for any loss suffered. Certain classes of investor, such as pension plans, will have a fiduciary duty to their participants to press the companies in which they invest to deliver shareholder value.

Class Actions: Notification

Class Actions: Proactive Stance:
The service provider acts on behalf of its clients, communicating with the key parties in the process leading up to a prosecution being initiated and communicating during the legal process.

Class Actions: Proactive Stance

Class Actions: Claims:
The service provider claims its client's share of a settlement arising from a class action. Where several of its clients are funding legal fees, the service provider co-ordinates payment of the share of costs attributable to its clients.

Class Actions: Claims

Online Announcements:
Clients are provided with electronic access (via dedicated line, the Internet or otherwise) to corporate action announcements.

Online Announcements

Online Instructions:
Clients can notify the service provider of their decisions electronically (via dedicated line, the Internet or otherwise).

Online Instructions

Contractual Corporate Actions:
This is a cash management tool: cash components (for some or all categories of corporate action with a cash component) are applied to the client's cash account on the due date for settlement, in place of when the securities component actually settles. This can greatly assist clients in managing available funds.

Contractual Corporate Actions

Market coverage for this service...

Proactive Market Claims:
The late receipt of entitlements may give rise to financial penalties or indirect costs (such as the loss of interest on funds). Many markets have an established mechanism for making a claim (a "market claim") so that the owner receives compensation for some of the associated costs. The service provider makes these market claims and actively pursues unpaid claims.

Proactive Market Claims