Takeover and Mergers (Notifications)

Note: BGL do not provide accounting or taxation advice. The following is designed to act as a guide for Simple Fund 360 users. It is not designed to be accounting or tax advice and should not be taken as a strict guideline. Other methods that are more suitable may be used instead of these steps. 

Overview

When there is a takeover or merger, the arrangements usually involve an exchange of shares.

As a result, capital gains tax (CGT) obligation may arise if the fund is required to dispose of the existing shares or the existing shares are cancelled.

In certain circumstances, if the fund acquires new shares in the takeover or merged company, the fund may be able to defer the CGT obligation. This will happen if the arrangement qualifies for the scrip for scrip rollover.

Refer to the ATO website for more information on takeovers and mergers.

Each takeover or merger arrangement will be different, subject to the terms specified in the scheme of arrangement. Refer to the respective scheme of arrangement and ATO Class Ruling for more details.

Simple Fund 360 provides an automated process for most takeovers and mergers where the parent security is listed on the ASX.

In certain scenarios, where the tax treatment of the merger or takeover differs from the standard process or if the parent security is not listed on the ASX, a manual process is required. See Takeovers/Mergers (Manual)

If you are processing the Westfield Merger and Acquisition, see:

Acquisition by Unibail-Rodamco of Westfield Corporation and OneMarket demerger (ASX: WFD)

Navigation

From the Main Toolbar, go to Investments.
Select Corporate actions from the list.

Process a Takeover/Merger

This Takeover/Merger is an example only

 

1. From the Corporate Actions screen, view the Type column. Confirm Takeover/Merger appears under the column before proceeding.
   
2. Select Process under the Action column.
   
3. The Head Security will be automatically selected.
   
   
4. Takeover/Merger will display as the Corporate Actions Type.
   
   
5. Select the account for the corporate action (for example, 77600/BHP.AX).
   
6. The Ex / Balance Date (Corporate Action Ex-Date) and the Corporate Action Date (Transaction Date) will be selected. Simple Fund 360 will create a demerger transaction in the Transaction List based on the corporate action date that was entered and parcels dated prior to the Ex / Balance date will be affected by the action.
   
7. The Current Units on Hand for the head entity will display.

8. Select the new security.

   Field	Explanation
   Select Securities	Select a fund security from the list (the list will display only securities for this fund). The security you select is the new entity.
   Add New Investment	If the fund does not have the new entity set up in the chart of accounts, select Add New Investment. See Investment Accounts for instructions.

   

9. Complete the Unit Details.

   Units in New Investment	Units of the new security received from the Takeover/Merger
   Total Market Value of Shares Received	The Market Value of the new security as at the Corporate action date
   Total Cash Proceeds	Amount of any Cash received from the Takeover/Merger if applicable (does not include any Dividends Received)

10. Select YES or NO for Script-for-Script Rollover

    	The new security will be deemed to have been acquired on the Purchase date of the original security for CGT purposes.
    	The new security will be deemed to have been acquired on the Takeover/Merger date for CGT purposes.

11. Complete the Dividend details. Enter any dividend amounts that were received as a result of the Takeover/Merger
    
12. The Corporate Action Summary will detail the Takeover/Merger transaction. It will display the Units on hand for each entity before and after the demerger; as well as the numerical effect on the cost base of the head entity (reduction) and demerged entity (increase). Any Capital Gain or Loss as a result of the corporate action will also be displayed. Review these details and once confirmed, select

How to delete a Takeover/Merger

If you are required to change a corporate action, you can delete and re-process the action from the Corporate Action screen.

From the Main Toolbar, go to Investments.
Select Corporate actions from the list.

Alternatively, you can access the Corporate Actions screen from the Transaction List:

Locate the corporate action to delete. Select the checkbox located next to the transaction and Delete. 

If disposals have been processed after the corporate action date for the investment it is recommended to delete the disposal first from the Transaction List.