Corporate Action

Corporate actions are part of position management in the securities area. They can also influence transaction management deals such as Forward Securities Transactions (FST) and Total Return Swaps (TRS). You can use this function to display changes made by the issuer to the capital structure for classes in your position. On the SAP Easy Access screen, choose Start of the navigation path Accounting Next navigation step Financial Supply Chain Management Treasury and Risk Management Transaction Manager Securities Accounting Corporate Actions End of the navigation path (transaction FWK0).

Prerequisites

You have made the following settings for Securities in Customizing for the Transaction Manager.

You have determined number ranges by choosing Position Management Corporate Actions Define Number Ranges for Corporate Actions .
In addition to the default corporate action categories, you have created individual corporate action types and assigned them number ranges by choosing Position Management Corporate Actions Define Types of Corporate Actions .
You have created three update types for the corporate action and assigned them to usage 0004 Corporate Action by choosing Transaction Management Update Types Define Update Types and Assign Usages .
Note
SAP provides the following default update types for corporate actions:
- CA0001 Corporate action: Position increase – units/nominal
- CA0002 Corporate action: Position decrease – units/nominal
- CA0003 Corporate action: Issue currency changeover
End of the note.
You have made your settings by choosing Position Management Corporate Actions Update Types Assign Update Types to Corporate Action Categories .

Note
For the issue currency changeover, you assign only the update type CA0003 Corporate Action: Issue Currency Changeover.

End of the note.

Features

Standard functions are available for the following capital changes:

Stock split
When a stock is very expensive the issuer can decide to split the stock e.g. in the ratio 4:1. By this the number of stocks in each securities account is multiplied by 4, i.e. for each stock a stock holder gets 3 stocks for free (the value of a position is not changed as the market price usually is split by the inverse ratio.)
Stock Swap
Capital reduction
If a company is in a bad financial situation it can decide to reduce its capital and to reduce its number of issued stocks. In this case a stock position of 100 stocks is reduced to a new number of e.g. 10 stocks, i.e. the capital reduction is reflected by position decrease flow of 90 stocks.
Capital increases from retained earnings
If a company has a lot of free capital it can decide to make a capital increase, i.e. to issue new free stocks to the stock holders. As with a stock split each position will have a quantity increase in a given ratio.
Transfer new stock
Within the process of an ordinary capital increase new stocks are given to the stock holders. The new stocks have an own security ID which differentiates them from the existing “old” stocks. This is needed because in many cases the dividend for the new stocks is lower than the dividend for the old stocks. At a given date (decided by the issuer) the new stocks are transferred into old stocks, i.e. we have a quantity decrease of the new stocks and a quantity increase in a specified ratio in the old stocks (like in the case of a stock swap).
Posting Subscription Rights
Issue Currency Changeover

You can use the manually-generated corporate actions function for capital changes that are not supported by the standard functions offered in the securities management area.

Status	Description	Remarks
0	Planned	The corparte action has status 0 once you have created and saved it in the system. You can change, delete or activate the corporate action. You cannot post the corporate action.
1	Activated (No flows exist)	This status enables you to transfer a planned corporate action (status 0) or one you have just created by choosing Corporate action Activate. You can post the corporate action. Deactivate resets the corporate action to status 0.
2	Activated (Posted flows exist)	At least one company code contains posted flows.
3	Activated (Posted and reversed flows exist)	At least one company code contains posted flows. At least one company code contains reversed flows.
4	Activated (Reversed flows exist)	You can transfer the corporate action to status 5 using the deactivate function.
5	Reversed	The corporate action is deactivated and all flows are reversed. You can no longer post the corporate action.

Activities

You must execute the following steps for a corporate action

Creating Corporate Actions
You create corporate actions for all company codes. When you create a corporate action, the system does not update any positions or generate general and sub ledger documents.
Activate
If you activate the corporate action (status 1), you can then post it in each company code. See also: Editing Corporate Actions
Position Indicator
You create securities account position indicators for new positions.
Posting a Corporate Action
You post corporate actions for each company code. This updates the company code positions and generates the FI documents (posting log), where applicable. If the corporate action is within the term of a FST/TRS the deal is updated. The corporate action is automatically assigned status 2 and 3.
- After you have carried out a corporate action, you cannot change position-changing business transactions to the positions of the relevant securities before the corporate action key date, because the function sets a lock. If, however, you have to subsequently make a change, you must first reverse the corporate action.
- If you have carried out a stock split, you must change the nominal value of the stock in the class data. On the SAP Easy Access screen, choose Accounting Financial Supply Chain Management Treasury and Risk Management Transaction Manager Securities Master Data Class ( transaction FWZZ).
Reversing a Corporate Action

More Information

For more information, see also Corporate Actions for Total Return Swap.