The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Wolters Kluwer Financial Services Unveils Top 10 Corporate Actions of 2010

Wolters Kluwer Financial Services has released its annual Top 10 Corporate Actions, a list of the most challenging corporate actions from the past year.

The tax and legal experts at Capital Changes, a part of Wolters Kluwer Financial Services that provides corporate action reporting, tax information and analysis, compile the annual listing to alert taxpayers and their financial and tax advisors to corporate actions that have complex or unusual tax consequences.

Corporate actions in the US indicated signs of a somewhat improving economy in 2010, as some companies emerged from reorganisation and presented common shareholders with distributions.

“Corporate reorganisations can be structured in different ways and for different reasons,” said John Kareken, senior analyst for Capital Changes at Wolters Kluwer Financial Services. “However, they occasionally take a surprising twist that presents special challenges. And sometimes even simple events may include unexpected complications.”

One form of corporate reorganisation that continues to raise special concerns is the spinoff, or demerger as it’s known outside the United States. In nontaxable spinoffs, the key question is how to allocate basis between existing shares and the shares of the new company received as part of the event. Answering this question becomes particularly critical in 2011 as the new cost basis reporting law has now taken effect.

The cost basis reporting law also presents challenges for US taxpayers invested in foreign companies.

“US investors holding non-US companies have always had to contend with special tax rules that apply to cross-border transactions, but the cost basis reporting law is one of the newest concerns,” said Lainey Duggan, senior analyst for Capital Changes at Wolters Kluwer Financial Services. “Many foreign companies don’t provide information on how a corporate event should be taxed under the US Internal Revenue Code, which presents challenges for US financial services firms that are now responsible for reporting basis on foreign corporate actions.”

The Top 10 List for 2010 was selected based on voting by Capital Changes subscribers and corporate actions professionals, as well as other criteria, such as how widely held the affected security was and how complex the tax issues were. That analysis shows the following companies’ corporate actions were especially noteworthy:

Top US transactions:

Burlington Northern Santa Fe Corp

Weyerhaeuser Co

Coca-Cola Enterprises Inc

Verizon Communications Inc

General Growth Properties Inc

Top international transactions:

Royal Dutch Shell plc

Brasil Telecom SA

Cable & Wireless plc

Allied Irish Banks plc

Accor SA

Related content

WEBINAR

Recorded Webinar: A new way of collaborating with data

Digital transformation in the financial services sector has raised many questions around data, including the cost and volume of reference data required by each financial institution. Firms want to pick and choose the reference data they need to fulfil their requirements. Emerging solutions with the potential to decrease the cost of data and increase flexibility...

BLOG

A-Team Group Introduces 2021 Innovation Awards

Here at A-Team Group we have been working hard on plans to celebrate innovative projects and teams with the launch of our A-Team Innovation Awards. The awards are designed to reward teams that have found innovative ways to make use of new and emerging technologies to solve challenges at financial institutions in capital markets. The...

EVENT

Briefing: ESG Data Management – A Strategic Imperative

This breakfast briefing will explore challenges around assembling and evaluating ESG data for reporting and the impact of regulatory measures and industry collaboration on transparency and standardisation efforts. Expert speakers will address how the evolving market infrastructure is developing and the role of new technologies and alternative data in improving insight and filling data gaps.

GUIDE

Regulatory Data Handbook 2020/2021 – Eighth Edition

This eighth edition of A-Team Group’s Regulatory Data Handbook is a ‘must-have’ for capital markets participants during this period of unprecedented change. Available free of charge, it profiles every regulation that impacts capital markets data management practices giving you: A detailed overview of each regulation with key dates, data and data management implications, links to...