AECSD Role in Corporate Actions John Woodhouse Director

AECSD Role in Corporate Actions John Woodhouse Director Capital Markets, Thomas Murray

CSD Role in Corporate Actions Contents § Definitions § Corporate Actions Developments in the Last Two Years § Planned Corporate Actions Developments § Asset Servicing Risk Rating Page 2 PRIVATE AND CONFIDENTIAL © 2009 Thomas Murray Ltd.

CSD Role in Corporate Actions § Corporate Actions: è Event initiated by a public company’s board of directors that gives an entitlement to holders of the company’s securities. § Asset Servicing: è Service provided by custodians or CSDs related to securities administration activities such as processing corporate actions, proxy voting and tax reclaims. Page 3 PRIVATE AND CONFIDENTIAL © 2009 Thomas Murray Ltd.

CSD Role in Corporate Actions Mandatory Corporate Actions: è Definition: event initiated by a company’s board of directors that affects all the shareholders and does not require any further directives from them. è Types: l l Interests l Page 4 Dividends Redemptions PRIVATE AND CONFIDENTIAL © 2009 Thomas Murray Ltd.

CSD Role in Corporate Actions Voluntary Corporate Actions: è Voluntary CAs: event initiated by a company’s board of directors wherein shareholders have the choice to participate or not, and must make a directive as to their choice. è Types: l l Merger, Demerger l Split, Reverse Split l Capital Repayment l Page 5 Right Issues Tender Offers PRIVATE AND CONFIDENTIAL © 2009 Thomas Murray Ltd.

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CSD Role in Corporate Actions Developments in the Last Two Years • Information Processing: • • Egypt: MCDR has been granted the ISO certification for its Information Security Management System which paves the way for implementing the e-signature and therefore help automate existing paper-based communication. • Turkey: The CRA and Takasbank integrated the SWIFT system for dissemination of CAs. • Turkey: The stock exchange launched a web-based public information platform to improve the efficiency of gathering CAs information. • Page 7 Canada: CDS implemented SWIFT MT 568 narrative message which provides a more efficient and secure way to of distributing CAs information. Israel: TASECH introduced a new function on its website which provides CAs information in English. PRIVATE AND CONFIDENTIAL © 2009 Thomas Murray Ltd.

CSD Role in Corporate Actions Developments in the Last Two Years • Instruction Processing: • • Kuwait: The KCC has changed the calculation of CAs entitlements and now calculates them on record date based on traded positions. This eliminates market claims arising from incorrectly calculated positions. • Page 8 Nigeria: The market regulator (SEC) launched an e-dividend system to automatically and directly credit dividends into shareholders’ accounts. Participation in the system is mandatory. Switzerland: The SIS will soon introduce ‘Record Date’ for CAs as well as the full automation of the data flow from companies to SIS. This will reduce market claims and potential processing errors due to manual re-keying of information. PRIVATE AND CONFIDENTIAL © 2009 Thomas Murray Ltd.

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CSD Role in Corporate Actions Developments in the Last Two Years • Proxy Voting: • • Taiwan: TDCC launched an e-voting platform (only available in Chinese at this stage). • Taiwan: Split voting for Foreign Investors has been approved and is meant to increase participation in voting. • Thailand: TSD implemented e-registration and e-voting to facilitate the registration of meeting attendance and the voting process. • Page 10 Korea: e-voting has been approved by the Government. When implemented, shareholders will be able to vote through KSD’s website instead of physically attend the meetings. E. U: The transposition to the Shareholders' Rights Directive intends to harmonise the whole E. U. region in terms of voting practices by improving voting procedures and including more voting media; hence, meeting results will © 2009 Thomas Murray Ltd. PRIVATE AND CONFIDENTIAL become more reflective of shareholder opinion.

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CSD Role in Corporate Actions Planned Corporate Actions Developments • Asia Pacific • • Thailand: Project to introduce e-proxy voting and e-dividend which would allow SWIFT messages and same-day credit. • Page 12 Vietnam: VSD is to implement an electronic link for connecting with participants. This will allow the electronic dissemination of CA information. Singapore: SGX is to increase the capacity of SGXNet for collection of CAs information. PRIVATE AND CONFIDENTIAL © 2009 Thomas Murray Ltd.

CSD Role in Corporate Actions Planned Corporate Actions Developments • America • • Canada: CDS is planning to introduce a Corporate Actions Liability Management Service (CALMS), a service that will automate the CA tracking service when a corporate event is pending. • Page 13 Brazil: The market regulator has proposed to introduce POA in listed companies’ meetings and the information to be disclosed to shareholders prior to the meetings. This is expected to enhance shareholders’s participation in the decision making process. USA: As part of a multi-year CA reengineering project, DTCC is to automate the survivor option instruction process (optional redemption feature) and to upgrade its Elective Dividend Service (EDS) and Stock Loan Payment Order (SLPO) functions. PRIVATE AND CONFIDENTIAL © 2009 Thomas Murray Ltd.

CSD Role in Corporate Actions Planned Corporate Actions Developments • Western Europe (including E. U) • • Italy: A working group has been formed to review the CA operational model in order to improve the processes. The focus will be initially on right issues but is expected to be extended to all the CA events. • E. U: The transposition to the Shareholders' Rights Directive intends to harmonise the whole E. U. region in terms of voting practices by improving voting procedures and including more voting media; hence, meeting results will become more reflective of shareholder opinion. • Page 14 Romania: CDSA is to create a centralised payment system of dividends for listed and non-listed companies to enhance efficiency and speed of dividend distribution. Belgium, France, Netherlands, UK, Ireland, Sweden, Finland: Following approval by the registration bodies, Euroclear is to introduce a new set of ISO 20022 messages for processing CA information and instructions. This will increase STP as paper-based messages and proprietary messages will be eliminated. PRIVATE AND CONFIDENTIAL © 2009 Thomas Murray Ltd.

CSD Role in Corporate Actions Asset Servicing Risk Definition: • The risk that a participant may incur a loss arising from missed or inaccurate information provided by the depository, or from incorrectly executed instructions, in respect of corporate actions and proxy voting. Page 15 PRIVATE AND CONFIDENTIAL © 2009 Thomas Murray Ltd.

CSD Role in Corporate Actions AAA AA+ AA AAA+ A ABBB BB B CCC Page 16 PRIVATE AND CONFIDENTIAL © 2009 Thomas Murray Ltd.

CSD Role in Corporate Actions Rating Asset Servicing Rating Market Comparisons Rating AAA AA+ AA AA AA- A+ A+ A A A- A- BBB BB BB B B CC CC C Page 17 Absolute Rating - Highest Rating Public CSD Average Rating - Highest Rated Regions Average Rating - Eurasia TM Rating of 7 Eurasian CSDs C Gap between top and bottom rated Eurasian CSDs PRIVATE AND CONFIDENTIAL © 2009 Thomas Murray Ltd.