Subscription Rights (SAP Library

Subscription Rights

Definition

Subscription rights grant the stockholder the option of retaining the old share of capital stock when the company performs capital increases (against cash contributions and certain capital increases).

They are implemented as a class in the system.

Structure

You create a subscription right for a stock as a class (see below) once in the system.

Integration

You only require subscription rights for an (ordinary) capital increase. You perform a capital increase in several steps, which are represented in the system as follows:

Overview: Capital Increase

You can use the following functions to perform the individual steps within this process:

Function	Prerequisites	Result
Post subscription right ( Corporate Actions)	You must have performed a Period-End Closing for the old stock. You must have created the subscription right as a Class (Reference!) You must have created the Position Indicator for the subscription right.	The subscription rights that are issued from the old stocks are in the position. The old stocks position is marked down and the subscription rights position is posted. See graphic below.
Purchase/sell subscription rights, if required		The required number of subscription rights is in the position.
Exercise subscription right ( Exercising Security Rights)	You must have performed a Period-End Closing for the subscription right. Create the new stock as a Class. Create the Position Indicator for the new stock.	The new stocks are in the position.
Transfer new stock ( Corporate Actions)	You must have performed a Period-End Closing for the new stock.	When you transfer the new stock, it is automatically assigned the ID number of the old stock. ® New stock position.

The total value of a securities account position does not change as a result of the capital increase. The subscription rights that result from the capital increase simply shift the proportional share value.

The value of the subscription right for accounting purposes differs from the theoretical value if the book value of the old stock is lower than its market value. In this case, you have to determine the accounting value of the subscription right by matching its theoretical value to the book value of the old stock.

The book value of the old stocks is, on the one hand, reduced by the amount of the accounting value of the subscription rights, and on the other hand, the subscription right is posted to the position by the same amount. This means that the total value of the positions before and after the capital increase is the same.

The adjustment flows required for the book value markdown in the old stocks position are generated automatically.

Calculation of the theoretical and accounting values of the subscription right

See also:

Creating a Subscription Right