Determining the Proper Platform
It is imperative to ensure that distributions are processed within the correct platform. Determining the appropriate
method of distribution will ensure allocations are made to entitled holders. Distributions may be based upon
presentation of the securities or record date.
A mandatory corporate action event is based on an effective date and requires the surrender of all outstanding
securities. If the distribution is based upon a record date, the distribution will be processed through DTCC’s
Dividend Platform. However, distributions based upon an effective date are handled by DTCC’s Reorganization
Department.
Record Date vs. Effective Date
Record date is the date recognized by the issuer, their paying agent, and the courts as the date the holder must be
registered on the agent’s books and records in order to receive the distribution. If a distribution is based upon a
record date, no presentation of the securities is required in order to receive either the cash payment or issuance of
new securities. Payment will automatically be made on the payable date, the date declared by the issuer when the
distribution will be paid. Since surrender of the securities is not required, DTCC will maintain an outstanding
balance and the inventory will not be reduced. When the distribution is deemed final, but is based upon a record
date, DTCC requests that a null, void and worthless letter be provided for security deletion.
Effective date is the date the corporate action event occurs. If a distribution is based upon an effective date,
current holders of the security will receive the entitlement, and the distribution will require the surrender of the
old securities. In certain cases, DTCC assigns an escrow CUSIP number to represent participant positions allowing
for the potential of future distributions. Escrow CUSIPs, created as a result of a mandatory corporate action event,
are coded as PREM eligible enabling participants to remove positions off their books and records if desired.
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Record Date
Holders as of a set date are entitled to receive
payment.
No mandatory presentation is required.
Inventory is maintained at DTCC.
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Effective Date
Current holders of the security are entitled to
receive payment.
Mandatory presentation is required.
Inventory is surrendered for cancellation.
To determine the proper platform for the event, the following questions should be addressed.
 Will the distribution be based upon surrender of the old securities or a record date? Are the old securities
to be presented for cancellation in order to receive the entitlement?
 Is this a final payment? Is there a possibility of future distribution and/or issuance? If there are
subsequent distributions, will they be based on the same date?
 Has the exchange been notified (for equity issues)?
Notification Process
Upon availability, DTCC requires that an official notice to be provided to the Reorganization group mailbox at
[email protected] within 5 business days prior to the effective date or payment date in
cases of bankruptcy distributions. The notice should state all the pertinent details of the event which include the
following: old issue name, old CUSIP number, new issue name, new CUSIP number (if applicable), exchange or cash
rate, effective date or record date (as applicable) and the transfer agent’s contact information. The notice should
also state whether the payment is considered final or if there is a possibility of future payments. If the issuance of
new securities or distribution of cash results from bankruptcy, DTCC requests that all supporting court
documentation be supplied at that time as well.