KARACHI, April 17: Rules regarding collection and disbursement procedure in relation to corporate action handling under CFS trading were approved by the Board of Directors of the Karachi Stock Exchange posted on the KSE website on Tuesday.

A notice to the members stated the following:

GENERAL: (a) CFS trades shall not be forced released for its rollover on ex-benefit basis. However, the same shall remain locked from the date of start of spot trading till the date of commencement of the ex-date (book closure);

(b) During the period company is traded on spot basis, no CFS release or open market CFS session will be allowed;

(c) All exposure margins and mark-to-market differences shall remain applicable as per the new RMS regime;

(d) Members shall be responsible for settlement of dividend/bonus shares/right issue with the clearing house of the exchange on behalf of their clients including institutions, corporate and foreign clients;

(e) KSE shall prepare a per scrip list of all CFS financiers and financees at the end of trading day position one day prior to ex-date;

(f) The broker financier will be responsible for all his IDS transactions and delivery of bonus shares from financier to NCCPL for its onward submission to KSE;

(g) the broker financier shall be responsible to transfer the bonus shares from blocked account to KSE main Account No.00984;

(h) The KSE shall collect cash dividends from financier and shall distribute dividend amount so received to the financees accordingly;

(i) Right Allotment Letters received by financier will be collected by the KSE and will be distributed to financees accordingly; and

(j) in case of fraction of bonus shares as well as right shares in odd lots required to be split, the exchange shall sell such odd lots/transaction lots into the market and disburse the amount proportionately to concerned members, in order to settle the entitlement particularly of odd lots of rights.

DIVIDEND: (a) The rate of dividend as presently worked out by the Trading Affairs Department for adjustment of opening rate of the company on the ex-date shall be based for determining the dividend impact. However, no deduction of Zakat will be made. The dividend shall be recovered from financier after deducting applicable tax for its onward payment to financees;

(b) Dividend amount to be recovered from/paid to members would be determined as per their net outstanding position in CFS as on the close of trading on the day prior to the commencement of book closure notified by companies.

(c) Dividend amount shall be collected from/paid to the concerned members along with the Laga, CVT and other taxes through the payment order issued by the clearing house of the bourse for physical settlement;

(d) The dividend amount shall be adjusted upon receipt of confirmation from the respective companies regarding dispatch of dividend warrants, irrespective of the fact whether the financier has received dividend warrant or not;(e) No claim of whatsoever nature in respect of claiming exemption of Zakat and tax shall be entertained; and

(f) Members dealing on account of institutions through IDS shall be responsible for all the payments in respect of dividends and other benefits to the exchange.

RIGHT ISSUE: (a) Upon receipt of confirmation from the companies regarding issuance of unpaid letters of rights and commencement of its trading on the bourse, all financier members will be required to surrender the unpaid letters of Right as per the entitlement on their outstanding CFS position (determined by the respective companies and also reconciled by the exchange) as on the day prior to commencement of Book Closure date. The financier members shall surrender the letter of right in marketable lots and duly verified signature of the holder/registered shareholder; and

(b) In case of failure to surrender the letter of rights to the exchange within 15 days from the date of dispatch of the letters of right, the exchange shall square-up the quantity of failed delivery of letters of right through square-up-market on account and at the risk and cost of defaulting members. The methodology of this execution shall be as per the approved procedures of the exchange relating to squaring up of failed deliveries.

BONUS: (a) CDC shall allow transfer of bonus shares by financier from their ‘CFS Blocked Account’ to NCCPL in case of non-broker Clearing member and to the KSE in case of member financier, which shall be distributed by KSE to the relevant CFS financees; and

(b) The exchange upon receipt of complete credit of bonus shares from CDC in case of member financier and from NCCPL in case of non-broker clearing member shall distribute the bonus shares to all the financee members.