Corporate actions

What is a corporate action?

On occasion, some companies that you have invested in will propose an event that could affect your investment. The event is also known as corporate action.

In some cases you’ll be able to choose to participate and in other times it’ll be mandatory.

How do I respond to a corporate action?

To respond to the corporate action, you’ll need to log on to your account and select ‘Corporate actions’ and then ‘Notifications’.

If you have any questions regarding corporate actions please read our FAQs as we’ve included the answers to the questions you ask us most.

  • The TUI rights issue offer:

    • 25 ‘Nil Paid Rights’ for every 29 existing TUI shares (you must have held TUI shares at 8am on the ex-entitlement date of 8th January 2021).
    • Each Nil Paid Right entitles the holder to subscribe for 1 New TUI Ordinary share (at a price of EUR 1.07 per share).
    • As our transactions are in pounds sterling (£) and TUI is raising money in Euros (€) we’ll need to complete a currency conversion on your behalf. You can find the indicative amount in GBP on our Corporate Action Notifications, however please be aware this may change due to the exchange rate.

    When you receive your Nil Paid Rights you’ll have the following options:

    Option 1 – Take up your rights

    If you choose to take up your rights and buy your full allowance of additional shares, these will be added to your account once the offer has completed and we’ve received the new shares to distribute.

    Option 2 – Partial take up of the rights

    You don’t have to take up all your rights, you can choose to only take up some instead. These new shares will be added to your account once the offer has completed and we’ve received the new shares to distribute. Please note, any rights you don’t take up will lapse and there will be no lapsed payments.

    Frequently Asked Questions

    • Selling your rights on the open market: If you wish to sell your rights on the open market you can do this either online or by telephone during normal trading hours, this way you’ll receive a live quote for your rights. The last day on which you will be able to sell your Rights via our share dealing platform will be 21st January 2021. Our advice date for elections will also be 21st January 2021. There will be no late elections accepted.

    • There is no excess facility on this offer: You are unable to take up any additional rights other than what you have been issued by TUI.

    • How will payment be made? You need to fund your Share Dealing Account or ISA with sufficient cash by 21st January 2021 23:59. The best way to fund your account is by debit card. You can do this immediately using the “Fund and Withdraw” page online which can be found under ‘Account Management’.

      If you’re adding money into your account to take up your rights you’ll need to make sure it’s within the same account where the rights are held, e.g. if you have rights you want take up in your Share Dealing Account then that account will need to have the available cash.

    • If you’ve used your full ISA allowance You can sell your rights or you can move all of your rights to your Share Dealing Account. You will need to call us on 0345 606 0560 to carry this out.

    • What happens if I do nothing? If you do nothing your rights will lapse. There will be no lapsed proceeds on this event.

    • Why does my book cost change? The book cost of your underlying TUI Ordinary shares will be adjusted to reflect the crediting of the Rights to your account.

      A portion of your book cost will be removed from your Ordinary shares and allocated to your Rights for taxation purposes. The percentage of book cost allocated to the Rights will be calculated based on the ratio of Rights to Ordinary shares and the opening prices of both the Rights and the Ordinary shares on the day the Rights commence trading on the LSE.

      Should you elect to take up some or all of your Rights, the book cost apportioned to those Rights, together with the payment made to take up those Rights, will be added back to the book cost of your Ordinary shares when the New Ordinary shares are credited. Should you choose to sell some or all of your Rights, or allow them to expire, the book cost apportioned to those Rights will be removed when the Rights are removed from your account.

How to give your instructions

 

How to get company information

 

What happens after you give your instruction

 

Main types of corporate actions

1. Rights issues
 

  • When a rights issue takes place, shareholders have the option to purchase additional shares at a discounted price.

    If you choose to action these rights then you'll be allocated new shares on receipt of your payment and completion of the event. These shares will then become ordinary shares and will be tradeable at the current market price.

  • By choosing not to action these rights you will not lose any shares, rights are offered by a company at a discounted price in addition to your existing shares.

    Please note: While you won’t lose any existing shares your share holding will become more diluted as there will be more shares on a stock market.

  • When a company announces a rights issue, holders of the stock will be issued ‘nil paid rights’ which each represent a ‘right’ to buy a new share.

    As these ‘nil paid rights’ are tradable on the stock market, they are allocated a value using the book cost of your total share holding.

    When choosing to take up your ‘rights’ and purchase additional shares, the new shares will be given a book cost which includes both the discounted offer price you paid and the stock market value of the nil paid rights.

2. Stock splits

  • A company may decide to split its stock into new shares to increase its liquidity on the market, this usually happens when the share price is very high and makes it harder for smaller investors to buy into the company. Companies will usually use a 2-for-1 or 3-for-1 ratio which means for every share you had before you would receive 2 or 3 shares.

  • If a company wants to attract new shareholders but feels that its share price is too high they can arrange a stock split to lower the stock’s price, making shares more affordable.

3. Mergers

4. Spin-off

Corporate action takeaways

  • A corporate action is an event carried out by a company that impacts its stakeholders.
  • Common corporate actions include the payment of dividends, stock splits, tender offers, and mergers and acquisitions.
  • Corporate actions are normally approved by a company's shareholders and board of directors.

Important legal information

The Lloyds Bank Direct Investments Service is operated by Halifax Share Dealing Limited. Registered Office: Trinity Road, Halifax, West Yorkshire, HX1 2RG. Registered in England and Wales no. 3195646. Halifax Share Dealing Limited is authorised and regulated by the Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN under registration number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.

Important share dealing information