Latvian Central Depository Rules No.8
“On payment of dividends, coupons, principal and other cash
proceeds.”
(Unofficial translation)
Approved
by Latvian Central Depository Council Meeting
On January 23, 2004
Amendments on
November 9, 2005
August 6, 2008
November 19, 2013
Latvian Central Depository (hereinafter - LCD) Rules No.8 ”On payment of
dividends, coupons, principal and other cash proceeds” (hereinafter - Rules) have
been drafted pursuant to the provisions of Article 94, part two, item five of the
Financial Instrument Market Law (hereinafter - Law).
1. Terms used in the Rules
1.1
Terms and concepts used in the present Rules that have not been
explained specifically have been used in the same meaning as in the Law
and LCD Rules No. 1 and 2.
1.2
LCD account – a LCD cash account in TARGET2-Latvija (settlement in
euro) or a credit institution (for settlement in a currency other than euro)
that is used for payment of dividends, coupons, principal and other cash
proceeds.
1.3
Record date – a date specified by Issuer, as of end of which the owners of
financial instruments who are recorded on the list are entitled to
dividends, coupons, principal or other cash proceeds.
1.4
Payment date – a date when Issuer transfers the moneys to be distributed
as dividends, coupons, principal or other cash proceeds to LCD account.
1.5
Full list – information about all the persons who own or hold financial
instruments at the end of the day on a certain date.
2. General provisions
2.1 The Rules describe the procedure how a LCD participant in the status of issuer
(hereinafter – "Issuer") shall pay dividends, coupons, principal or other cash
proceeds to the owner of financial instruments and/or nominee holders.
2.2 Any exchange of information (notifications on dividend and other proceed
payments etc.) between LCD and LCD participant shall be conducted electronically
and pursuant to the procedure described in LCD Rule No.11 “On data exchange”.
3. Procedure of payments
3.1 Issuer shall transfer the entire amount of cash payable as dividends, coupons,
principal and other cash proceeds to the LCD account by 14:00 on the payment
date.The payment order shall specify the name of the financial instrument and
ISIN code, as well a the amount payable per one financial instrument.
3.2. Where an Issuer has failed to comply with the requirements set out in Item
3.1, LCD shall do one of the following:
3.2.1. where an Issuer has transferred the amount of cash payable as
dividends, coupons, principal or other cash proceeds to LCD before the payment
date, LCD shall revert the amount to the Issuer’s account wherefrom it was
transferred, and the Issuer shall repeat the transfer on the payment date;
3.2.2. where an Issuer, by 14:00 on the payment date, has transferred a
part of the amount of cash payable as dividends, coupons, principal or other cash
proceeds to LCD, LCD shall immediately advise LCD participants and the Issuer
thereof, and revert the partially transferred amount to the Issuer’s account
wherefrom it was transferred;
3.2.3. where an Issuer, by 14:00 on the payment date, has failed to
transfer the amount of cash payable as dividends, coupons, principal or other
cash proceeds to LCD, LCD shall immediately advise LCD participants and the
Issuer thereof.
3.3. LCD shall transfer, no later than by the end of the day when received, all
cash amounts to be disbursed as dividends, coupons, principal or other cash
proceeds received from an Issuer to LCD participants according to the number of
financial instruments on corresponding accounts as of record date and by taking
into account the information about taxes withheld, as provided by Issuer in
accordance with Items 4.8 and 5.6 of these Rules.
3.4 LCD participant, within one business day after receiving the money from LCD,
shall transfer the dividends, coupons, principal and other cash proceeds to the
owner of financial instruments and/or nominee holders in proportion to the
number of financial instruments held on the account as of record date, and by
taking into account information provided by Issuer about withheld taxes.
3.5 In case the cash amount payable per one financial instrument has been
calculated with exactness to a fraction of the smallest unit of the respective
currency, LCD shall transfer to LCD participant the amount of cash payable as
dividends, coupons, principal and other cash proceeds following the algorithm
described in Item 3.6. LCD participant shall transfer to owners of financial
instruments the amount of cash payable as dividends, coupons, principal and
other cash proceeds following the algorithm described in Item 3.6. The said
algorithm shall not be applied in cases if cash proceeds are paid from which
Issuer has withheld tax, and the cash proceeds shall be divided according to
information provided by Iissuer about an amount of cash proceeds payable to a
particular person
3.6 Only the final amount payable to the owner of financial instruments as
dividends, coupons, principal and other cash proceeds shall be rounded. The
amount is rounded to the smallest unit of the respective currency following
common approaches for rounding used in mathematics.
3.7 No changes in the structure of financial instrument owners after the record
date shall affect a person’s eligibility to dividends, coupons, principal and other
cash proceeds, including in case of failure to transfer dividends, coupons,
principal and other cash proceeds on the payment date.
4. Payment of dividends and other cash proceeds
4.1. Issuer’s authorised supervision authority shall set record date of dividends or
other cash proceeds related to the rights confirmed in capital securities
(hereinafter referred to as other cash proceeds). Dividend and other cash proceed
record date shall be set not earlier than the tenth business day from a meeting of
Issuer’s management body where the decision on payment of dividends or other
proceeds has been passed.
4.2. Dividend and other cash proceed payment date shall according to the
following requirements:
4.2.1 in case Issuer is obliged to withhold tax from the dividends or other
proceeds payable, the payment date shall be set not earlier than the fifth
business day and not later than the tenth business day from the record date;
4.2.2 in case Issuer is not obliged to withhold tax from the dividends or
other proceeds payable, the payment date shall be set not earlier than the second
business day and not later than the fifth business day from the record date.
4.3. Issuer shall submit the following documents to LCD within two business days
after passing the decision about dividend or other cash proceed payment:
4.3.1. Notification in writing about expected dividend or other cash
proceed payment by specifying:
1) name and code of the financial instrument;
2) dividend or other cash proceed record date and payment date;
3) dividend or other cash proceed amount per one financial instrument;
4) the basis for dividend or other cash proceed payment.
4.3.2. Request for compilation of the Full list for the purposes of dividend
or other cash proceed payment as of the end of the day on the record date
record date, to be prepared in accordance with the requirements set in LCD Rules
No. 7 “On Identification of Owners of Financial Instruments”. Request on
compilation of the full list must not be submitted in case, if Issuer has no
obligation to withhold the income tax from payable cash proceeds in accordance
with the requirements of legal acts.
4.4. LCD shall, within one business day after receiving Issuer’s request in writing,
issue an instruction and transfer it to all LCD participants by specifying:
4.4.1. name and code of the financial instrument;
4.4.2. dividend or other cash proceed record date and payment date;
4.4.3.
instrument.
dividend
or
other
cash
proceed
amount
per
one
financial
4.5. LCD participant shall, within one business day after receiving the instruction
from LCD about dividend or other cash proceed payment, and pursuant to the
provisions of a concluded custody agreement, notify the owners and holders of
financial instruments the information indicated in Items 4.4.1 to 4.4.3 herein.
4.6. In case Issuer, pursuant to the provisions of legislation, is obliged to
withhold tax from dividends or other cash proceeds, and Issuer has requested Full
list from LCD, LCD participant shall, by the end of the next business day following
the record date specified by LCD, send information to LCD about owners of
financial instruments as of the end of the business day on dividend or other cash
proceed record date. In case, if a customer of LCD participant is the nominee
account holder, LCD participant shall request information from the nominee
account holder about the owners of financial instruments to the extent and in
accordance with the procedure provided for in LCD Rules No. 7 "On Identification
of Owners of Financial Instruments”.
4.7. LCD shall, not later than on the third business day after record date, send
the Full list to Issuer where LCD has summarised the information received from
LCD participants about owners and holders of financial instruments, enclosing the
information from the IR or the register maintained by LCD about the owners of
financial instruments.
4.8. Issuer shall, not later than one business day before dividends or other cash
proceed payment date, send LCD the list of the financial instrument owners to
LCD from whom the income tax has been withheld from dividends or other cash
proceeds. Issuer shall specify the following in the said list:
4.8.1. data identifying the person;
1) for natural persons – name and the surname, the personal
identification code, or another identity feature;
2) for legal entities – company (name), registration number and
date.
4.8.2. the number of financial instruments belonging to each person;
4.8.3. amount of dividends or other cash proceed calculated for a person
before tax (in cash);
4.8.4. (interest) rate of income tax withheld from a person;
4.8.5. amount (cash) of income tax withheld from a person;
4.8.6. amount (cash) of dividends or other cash proceed payable to a
person after income tax.
4.9. LCD shall, within one business day after receiving of information from Issuer
as indicated in Item 4.8, inform LCD participants in writing, from customers of
whom the income tax has been withheld from payable dividends or other cash
proceeds, by sending information about relevant customer of LCD participant as
indicated in Items 4.8.1 to 4.8.6 herein.
4.10. For the persons whose financial instruments as of record date are in the IR,
the dividends or other proceeds shall be accumulated in a LCD account. The
persons whose financial instruments as of record date are in the IR as shall
receive dividends or other proceeds as per agreement between the LCD and the
respective Issuer
4.11. The persons whose financial instruments as of dividend or other proceeds
record date are in the IR, shall receive dividends after the deregistration of the
financial instruments
4.12. On each first business day of the week, LCD shall transfer dividends or
other cash proceeds to LCD participants for the financial instruments deregistered
during the previous week, which were in the IR as of dividend of other proceeds
record date.
4.13. LCD participant shall, within one business day after receiving the cash
transfer from LCD, transfer the dividends or other cash proceeds payment for
deregistered financial instruments to the cash account of a beneficiary.
4.14. In case, if Issuer who has paid dividends or other cash proceed has been
liquidated, accumulated dividends or other cash proceeds shall be paid to the
persons registered with the IR or the register maintained by LCD in accordance
with the procedure provided for in Section 4 of LCD Rules No. 10 “On
Deregistration of Financial Instruments”.
5. Disbursement of coupon
5.1 Coupon record and disbursement dates shall be specified in the issue
prospectus for the debt securities or in issue rules.
5.2 Issuer shall set the coupon disbursement date following the below
requirements:
5.2.1 in case, pursuant to legal provisions, Issuer is obliged to withhold tax from
the coupon to be disbursed, Issuer shall set the payment date not before the fifth
and not later than the tenth business day following the record date;
5.2.2 in case Issuer need not withhold tax from the coupon to be disbursed,
Issuer shall set the payment date not before the second and not after the fifth
business day following the record date.
5.3 Issuer shall five business days before coupon record date submit to LCD:
5.3.1 a notification in writing, specifying:
1) name and ISIN code of the financial instrument;
2). coupon record date and payment date;
3) coupon amount per one financial instrument in money terms;
4) the reason for coupon payment.
5.3.2 a request for Full list as of the end of the day on record date, to be
prepared according the the provisions of LCD Rules No. 7 "On Identification of
Owners of Financial instruments". The request for Full list need not be submitted
in case the legislation does not oblige the Issuer to withhold tax from the
proceeds to be disbursed.
5.4 In case legislation obliges Issuer to withhold tax from the coupon to be
disbursed, and Issuer has requested LCD Full list, LCD participant shall, by the
end of the next business day following the record date specified in the LCD
instruction, provide LCD information about the owners of financial instruments as
of the end of the day on coupon record date. In case the customer of LCD
participant is nominee holder, LCD participant shall request from it information
about the owners of financial instruments in the scope and order specified in LCD
Rules No. 7 "On Identification of Owners of Financial instruments".
5.5 LCD shall send Full list to Issuer not later than on the third business day
following the record date, combined the information received from LCD
participants about owners and holders of financial instruments, with that from IR
and the register maintained by LCD about owners of financial instruments.
5.6 Issuer shall, not later than one business day before the coupon payment date
provide to LCD the list of the financial instrument owners from whom income tax
on coupon has been withheld. The list shall contain:
5.6.1 data allowing identifying the person:
1) for natural person – name, surname, personal code or other identification
data;
2) for legal entity – company name, registration number and date.
5.6.2 number of financial instruments owned by the person;
5.6.3 total pre-tax coupon amount pertaining to the person in money terms;
5.6.4 rate of the withheld income tax in percentage terms;
5.6.5 income tax withheld in money terms;
5.6.6 coupon amount for disbursement in money terms after tax withheld.
5.7 On coupon and principal payment date LCD shall issue an instruction to LCD
participants, specifying:
5.7.1 name and code of the financial instrument;
5.7.2 coupon record date and payment date;
5.7.3 coupon and principal amount per one financial instrument.
5.8 In case Issuer has withheld tax from the coupon to be disbursed, LCD shall,
simultaneously with he instruction referred to Item 5.7 of the present Rules,
advise in writing those LCD participants whose customers were affected by the
tax withholdings, by sending the information about the customer as specified in
Items 5.6 1 -5.6.6 of these Rules, that has been earlier provided by Issuer.
5.9 LCD participant shall, pursuant to the provisions of custody agreement, notify
the owners of financial instrument and/or nominee holders, specifying:
5.9.1 name and code of the financial instrument;
5.9.2 coupon record date and payment date;
5.9.3 coupon and principal amount per one financial instrument.
5.10 For persons whose financial instruments as of the record date were in the IR
or the register maintained by LCD, coupon will be accumulated in a LCD account.
5.11 Persons whose financial instruments as of the coupon record date were in
the IR or in the register maintained by LCD, become eligible to coupon proceeds
after deregistration of financial instruments. For persons from whom income tax
has been withheld by Issuer pursuant to legislation, shall be disbursed the coupon
net of income tax withheld.
5.12 On each first business day of the week, LCD shall transfer dividends or other
cash proceeds to LCD participants for the financial instruments deregistered
during the previous week, which were in the IR or the register maintained by LCD
as of coupon record date.
6. Redemption of principal and cancellation of debt financial instruments
6.1 For debt financial instruments the principal is redeemed in the cases and on
the dates specified in the issue prospectus or issue rules of the debt financial
instruments.
6.2 Five business days before the redemption of the principal Issuer shall provide
LCD a written notification, stating:
6.2 1 the name and code of the financial instrument;
6.2.2 the date when the principal is to be redeemed;
6.2.3 the reason for redemption of the principal
6.3 LCD participant shall, after receiving from LCD the amount to be redeemed as
principal, immediately cancel the debt financial instruments from its accounts.
6.4 LCD shall, after transfer of the cash to LCD participants and to financial
instrument owners, whose debt financial instruments are in the IR or in the
register maintained by LCD, immediately cancel the debt financial instruments
from LCD accounts.
Transitional provisions
1. Issuers whose debt securities have been entered into LCD accounts by the date
when the present amendments specifying a new order for disbursement of
coupon payment for debt securities take effect, shall pay the coupon and principal
according to the rules effective prior to these rules take effect, however, the
owners of financial instruments eligible to coupon or principal are identified as of
the end of the record date.