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Question

How may purchase costs be affected by Corporate Actions?

Answer

Corporate Actions affect your account in several ways.  As a result of a Corporate Action you will be given something, either in exchange for an existing holding or in addition to an existing holding.  The purchase cost will be affected depending on the type of Corporate Action.

New Stock Received in Place of Old Holding:
The purchase cost for the old holding is transferred to the new holding.

Bonus Issue of the Same Stock:
The existing purchase cost will remain the same although the quantity of the holding will increase. This will effectively reduce the purchase cost of each individual share.

Rights Issues and Open Offers:
When additional shares are purchased from the company at a reduced price, through a Rights Issue or an Open offer, the purchase price is combined with the existing purchase cost for the new holding quantity.

Bonus Issue of Different Stock:
When a shareholder receives shares in another company as well as keeping the existing shareholding the original purchase cost is split between the two holdings. Barclays Stockbrokers within 5 working days of the split announcement will update the purchase cost of the portfolio holdings.

Demerger:
A demerger will result in a shareholder receiving shares in either one demerged company or several new companies, to replace the existing holding.

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