Corporate Actions and Events Guide

Corporate Actions and Events Guide
for Market Capitalisation Weighted

Indexes
v2.9
This document applies to any index series where the guide is

specifically referenced in the index methodology documents.
ftserussell.com March 2017

Contents
1.0 Purpose of the Guide ........................................................... 3
2.0 Timing of Corporate Actions and Events
3.0 The use of Dummy Lines in FTSE Russell Indexes
4.0 Treatment of Index Events................................................... 8

4.1 Splits (sub-division) / Reverse splits (consolidation)
4.2 Ordinary Dividends, Special Dividends and Capital Repayments
4.3 Unknown Ordinary Dividends and Corrections
4.4 Special Dividends - Tax Adjustments
4.5 REIT Conversions
4.5 Non-Ranking for Dividend Lines
4.7 Scrip issues & Stock Distributions
4.8 Compulsory Partial Share Buy Back
4.9 Rights Issues/Entitlement Offers
4.10 Mergers, Acquisitions and Tender Offers
4.11 Voluntary Exchange Offeres
4.12 Spin-Offs
4.13 Tracker Stocks
4.14 Stock Conversions
4.15 Deletions
4.16 Suspended Companies
5.0 Share and Float Updates

5.1 Share and Float Updates - FTSE Indexes
5.2 Share Updates - Russell 3000E and Russell Global Index Series
Appendix A: Further Information .............................................. 27

FTSE Russell
FTSE Russell is a trading name of FTSE International Limited (FTSE), Frank Russell Company (Russell),
FTSE TMX Global Debt Capital Markets Inc. and FTSE TMX Global Debt Capital Markets Limited (together,
FTSE TMX) and MTSNext Limited. FTSE, Russell and FTSE TMX are each benchmark administrators of
indexes. References to FTSE Russell should be interpreted as a reference to the relevant benchmark
administrator for the relevant index.
FTSE Russell | Corporate Actions and Events Guide for Market Capitalisation Weighted Indexes, v2.9, March 2017 2 of 28
Section 1
Purpose of the Guide

1.0 Purpose of the Guide
1.1.1 This document sets out guidance for the treatment of corporate action and events and assumes the
reader is already familiar with the basic concept of index calculation and treatment of share price
adjustments caused by such developments. Because of the complexities involved in some cases,
these guidelines should not be construed as definitive rules that will determine FTSE Russells
actions in all circumstances. FTSE Russell reserves the right to determine the most appropriate
method of implementation for any corporate event which is not covered here or which is of a
complex nature.
FTSE Russell defines a corporate action as an action on shareholders with a prescribed ex date,
e.g. rights issue, special dividend, stock split. The share price and indexes in which the company is
included will be subject to an adjustment on the ex date. This is a mandatory event.
FTSE Russell defines a corporate event as a reaction to company news (event) that might impact
the index depending on the index rules. For example, a company announces a strategic shareholder
is offering to sell their shares (secondary share offer) this could result in a free float weighting
change in the index. FTSE Russell will decide whether there is an index adjustment or not and the
timing of the change.
FTSE Russell will determine the appropriate treatment by reference to the Statement of Principles
which summarise the ethos underlying FTSE Russells approach to index construction. The
Statement of Principles is reviewed annually and any changes proposed by FTSE Russell are
presented to the FTSE Russell Policy Advisory Board for discussion before approval by the FTSE
Russells Governance Board.
The Statement of Principles can be accessed using the following link:
Statement_of_Principles.pdf
1.2 This document should be read in conjunction with the Ground Rules or the methodology of those
index series to which this guide applies.
1.3 This document will be subject to regular review (at least once a year) by FTSE Russell.
1.4 FTSE Russell Indexes are recalculated whenever errors or distortions occur that are deemed to be
significant. Users of the indexes are notified through appropriate media.
For further information please refer to the FTSE Russell Recalculation Policy and Guidelines
document which can be accessed using the following link:
FTSE_Russell_Index_Recalculation_Policy_and_Guidelines.pdf
Section 2
Timing of Corporate Actions and Events

2.0 Timing of Corporate Actions and Events
2.1.1 FTSE Russell applies corporate actions and events to its indexes on a daily basis, both to reflect the
evolution of securities and to ensure that the indexes remain highly representative of the global
equity markets. A companys index membership and its weight in the index can be impacted by
these corporate actions and events. FTSE Russell uses a variety of public sources to determine
when an event is final, including a companys press releases and regulatory filings; local exchange
notifications; and official updates from other data providers. Prior to the completion of a corporate
event, FTSE Russell estimates the effective date on the basis of the same above sources. As new
information becomes available, FTSE Russell may revise the anticipated effective date and the
terms of the corporate event, before confirming its effective date.
2.1.2 Depending upon the time an event is determined to be final, FTSE Russell either (1) applies the
event before the open on the ex-date or (2) applies the event providing appropriate notice if it is
deemed to be actionable for passive index managers. The timing of when corporate actions and
events are applied is critical for accurate market representation, and how it impacts tracking for
passive managers. FTSE Russell believes this methodology strikes the best balance between the
two. The impact of the event and the effective date will be communicated to clients on a regular
schedule, via the daily corporate actions and events deliverables.
2.1.3 If FTSE Russell has confirmed the completion of a corporate event, scheduled to become effective
subsequent to a rebalance or index review; the event may be implemented in conjunction with the
rebalance to limit turnover, providing appropriate notice can be given. Example: Company ABC is
scheduled to be added or continue as an existing member at rebalance. A tender offer is confirmed
to be completed two days following the rebalance effective date. FTSE Russell will provide
appropriate notice of this index change per our normal procedures and will remove company ABC at
the rebalance effective date.
2.1.4 The FTSE Russell Indexes recognize a minimum two day notice requirement for actionable
corporate event implementation such as mergers and acquisitions. This provides an appropriate
window for Global managers to receive a notification of intended index treatment and consequently
act upon it. An exception exists within the Russell 3000E and the US component of the Russell
Global Index, as detailed below:
If FTSE Russell is able to determine the status of the event to be final prior to 1:00 p.m.
Eastern Standard Time: These events will be applied after the close of the current day. Deletes
will be removed at the last traded price if an active market exists, and the shares outstanding of
the acquiring company will be adjusted simultaneously per the M&A terms when the transaction
involves stock of an index member. If the target company has halted, the target will be removed
from the index at a price based on the M&A terms at the close of that day.
If FTSE Russell is able to determine the status of the event to be final after 1:00 p.m.
Eastern Standard Time: These events will be deemed a delayed action and will be applied
after the close of the following day. A synthetic position of the company will remain in the index
for one day, and a calculated closing price for the acquired entity or merged entity will be
established. The calculated price is determined by the terms of the action and based on the last
traded price of the acquiring company. For real-time calculations, intra-day trading will reflect a
stale price for the acquired entity. If the merger involves an election, the default terms will be
used to calculate a synthetic position.
Section 3
The use of Dummy Lines in FTSE Russell

Indexes
3.0 The use of Dummy Lines in FTSE Russell Indexes

3.1.1 Dummy lines are non-tradable instruments which have been temporarily created by FTSE Russell in
order to reflect a corporate event.
3.1.2 The use of dummy lines is normally determined on an ad hoc basis and typically results from
complexities surrounding a corporate event.
3.1.3 Where the use of dummy lines is necessary FTSE Russell provides advance notification either via
an Informative Notice published on the FTSE Russell website, or via the Russell Corporate Action
Calendar. Dummy lines will also be visible within the standard corporate action deliverables when
they are being utilized.
3.1.4 Dummy lines are generally used in order to ensure the index reflects the investor experience or in
order to facilitate index replication by index funds.
Section 4
Treatment of Index Events

4.0 Treatment of Index Events
4.1 Splits (sub-division) / Reverse Splits (consolidation)
A pro-rata distribution of shares (split) or a pro-rata consolidation (reverse split) of shares held by
existing shareholders. No company market capitalisation change. Shares and share price adjusted
according to terms.
Event Type Index Divisor Adjustment Adjustment Factor Timing of application
Split / Reverse No Number of shares held Ex date
Split before issue
Number of shares held

after issue
Example 1: Split (sub-division) Example 2: Reverse Split (consolidation)
Terms: 1 into 5 Terms: 5 into 1
Current Price = USD 300 Current Price = USD 300

Shares in Issue = 100m Shares in Issue = 100m
Ex-Split Price = USD 60 Ex-Reverse Split Price = USD 1500

Ex-Split Shares in issue = 500m Ex-Reverse Split Shares in = 20m
issue
Adjustment factor = 100/500 = 0.2 Adjustment factor = 100/20=5
4.2 Ordinary Dividends, Special Dividends, and Capital Repayments
Regular cash dividends are those paid to shareholders out of a companys profits or reserves. These
cash dividends impact the total return and are reinvested across the index on the dividend ex-date.
In addition to paying regular dividends, a company may at times pay special cash dividends. These
are normally paid outside a companys regular dividend schedule and can occur for a variety of
reasons, such as a major litigation win, the sale of a business or liquidation of an investment. For
special cash dividends, the price of the stock is adjusted to deduct the dividend amount before the
open on the ex-date. Special cash dividends are not included within the Total Return Index
calculation.
FTSE Russell deems a dividend to be special if the distributing company describes it as such.
However, in cases where a company pays a special cash dividend in a recurring cycle (e.g. monthly,
quarterly, semi-annually, or annually) on more than three consecutive occasions which are not
deemed to be extraordinary, FTSE Russell will normally consider any further such cash distributions
as ordinary dividends.
Capital Repayments are paid to shareholders as a return of capital, and are generally applied with a
price adjustment unless company policy is such that regular dividends are reported in this way
(common in Switzerland).
Total Return
Dividend Type Capital Index Divisor Adjustment Notes xd Adjustment
Cash Ordinary No Reinvested on ex date Yes
Cash -with Scrip No. Same as Cash Ordinary Any additional shares Yes
option issued will be reviewed per
the share update section of
the applicable index series.
Scrip with a No. Same as Cash Ordinary Any additional shares Yes
cash option with the following exceptions: issued will be reviewed in
These dividend types paid by index line with the share update
constituents with a listing on the section (Section 5).
Johannesburg Stock Exchange will be
treated as Stock Scrip only; and
Scrip dividends issued by Spanish
companies that may include a tradable
right for a cash alternative will be
treated as Stock Scrip only.
Stock - Scrip No Applied as Scrip Issue of Same No
only Stock in 4.7
Capital Yes Example of price No

Repayment adjustment detailed below
Special cash Yes unless recognised as ordinary Example of price No
adjustment detailed below
Example: Repayment of Capital/Special Dividend
Current Price = USD 100

Shares in Issue = 300m
Terms: USD 20 capital repayment per share
Ex-Capital Repayment Price = USD 80

Ex-Capital Repayment Shares in issue = 300m
Adjustment factor = 80 / 100 = 0.8
4.3 Unknown Ordinary Dividends and Corrections
If a company distributing an ordinary dividend subsequently announces a retraction (i.e. dividend

is no longer being paid), FTSE Russell will apply a corrective negative adjustment with T+1
notice.
Where dividends that have been confirmed or estimated by the company prior to the XD date,
the confirmed or estimated value is applied on the XD date. For dividends that are confirmed or
estimated by the company after the XD date, a further positive or negative XD adjustment will be
applied on the next business day following the receipt of data.
Where the dividend remains undetermined on the XD date, FTSE Russell will apply the dividend
amount paid from the same period in the previous year (adjusted by any capital change) on the
XD date. If there was no dividend paid from the same period in the previous year, a dividend
value of zero will be used.
Clarification for South Korean companies - For those South Korean companies that have not
provided advanced notice of their ex-dividend date, FTSE Russell will assume that such
companies will follow the general practice in South Korea of using an ex-date of two business
days prior to the fiscal year end (e.g. 28 December 2016). If no dividend has been confirmed
four months after the ex date, it is assumed that no dividend is being paid, and a corrective
negative adjustment is applied.
4.4 Special dividends Tax Adjustments
Where the special cash distribution is 10% or greater against the share price, and subject to FTSE
Russell identifying that there are withholding tax implications, a compensating negative XD adjustment will
be applied to provide the correct return net-of-tax. FTSE Russell withholding tax rates are used to
calculate the adjustment. There is also an associated adjustment to the Total Return Index to reflect the
tax liability. Note: tax adjustments for special cash dividends are not implemented within the Russell
3000E Index Series.
Example Special Cash Dividend of USD 61 (subject to 25% withholding tax)
Capital Repayment
Ex-Capital Repayment Price = 112 - 61 = USD 51

Ex-Capital Repayment Shares in issue = 300m
Adjustment factor = 51/112 = 0.45
Negative XD adjustment
Withholding Tax = 25%
Tax liability = 61 * 25% = USD 15.25
Net special dividend = 61 - 15.25 = USD 45.75
Compensating negative XD adjustment = [15.25 / (1-0.25)] = USD 20.33
Underlying tax rate information and the FTSE Russell Withholding Tax Guide are available from the
FTSE Russell website (link below) or by contacting [email protected].
FTSE_Russell_Withholding_Tax_Guide.pdf
4.5 REIT Conversions
For US index constituents converting to a REIT structure, a capital repayment representing the value
of the cash and stock distribution will be applied to the index constituent on the effective date of the
distribution. Concurrently a separate stock distribution dummy line will be added to the same indexes
as the index constituent to reflect the value of the stock proportion of the distribution until the stock
distribution ratio is confirmed. Subsequently, the dummy line will be deleted and the shares in issue
of the index constituent will be increased by the stock distribution ratio.
4.6 Non-Ranking for Dividend Lines
In the event that an existing index constituent issues new shares which do not rank for the next
dividend, FTSE Russell may include these in the index on a separate temporary non-ranking for
dividend line.
Where the non-ranking for dividend line ceases trading on or before the ex dividend date,
the temporary line will be deleted from FTSE Russell indexes on the open of the ex
dividend date and the new shares consolidated into the main line. FTSE Russell will also
make an adjustment to the declared dividend in order to reflect that only the existing shares
were entitled to the dividend.
Where the non-ranking for dividend line ceases trading after the ex dividend date, the
temporary line will be deleted from FTSE Russell indexes at close of the ex dividend date
and the new shares consolidated into the main line. As a result no adjustment to the
declared dividend is necessary.
4.7 Scrip Issues & Stock Distributions
A scrip issue (also called a capitalisation or a bonus issue) and a stock distribution (also known as a
dividend in specie) are the automatic distribution of shares (existing or newly issued) to existing
shareholders at no charge, pro rata to existing holdings.
Index Divisor
Event Type Adjustment Adjustment Factor Timing of application
Scrip issue of same No Number of shares held before Ex date
stock (No Change in issue
Market
(See Example 1) Capitalisation) Number of shares held after
issue
Scrip issue of No Price of company after Ex date
different eligible deducting capital repayment
stock Price of company before
capital repayment
(See Example 2)
Scrip issue of No Price of company after Ex date. The ineligible stock will
different ineligible deducting capital repayment be temporarily added to the FTSE
stock where a Russell Indexes and
valuation is Price of company before subsequently deleted at market
available capital repayment price t+2 after settlement can
reasonably be assumed to have
occurred. Where the ineligible
stock is listed, but a settlement
date cannot be confirmed, the
distribution will be reviewed every
20 business days. If settlement
can be confirmed, or can
reasonably be assumed to have
occurred, the distribution shares
will be removed from the index at
market price. If settlement cannot
be confirmed within 80 business
days, the distribution shares will
be removed from the index at
zero value with T+2 notice.
Scrip issue of No No price adjustment is applied Ex date. The ineligible stock will
different ineligible be temporarily added to the FTSE
stock where no Russell Indexes at zero value and
valuation is subsequently deleted at market
available and stock price t+2 after settlement. If the
is timetabled to list settlement date remains unknown
after the ex date after 20 business days from the
ex date, the ineligible stock will be
removed from the index at zero
value with t+2 notice.
Scrip issue of No No price adjustment is applied No price adjustment will be
different ineligible applied and the ineligible stock
stock where no will not be added to the FTSE
valuation is Russell Indexes.
available and stock
is expected to
remain unlisted
Note: An adjustment to free float may be required when no newly issued shares are being distributed
into another index constituent.
Example 1: Scrip Issue of same stock Example 2: Scrip Issue of different eligible
stock
Terms: 1 for 1 Terms: 1 B share for 3 A

shares
(equivalent to 2 for 1 stock split)
Current Price A USD 300
Current Price = USD 300 Current Price B = USD 120
Shares in Issue = 300m Shares in Issue A = 300m
Ex-Scrip Price = USD 150 New B Shares = 100m
Ex-Scrip Shares = 600m
in issue
Adjustment factor = 150/300 = 0.5 Ex-Scrip Price =[(3x300)- = USD 260
(1x120)]/3
Ex-Scrip Shares in issue = 300m
4.8 Compulsory Partial Share Buy Back
A compulsory partial tender/buy back of shares at a set ratio and price.

Example 1: Partial tender of 51 out of every 100 shares at USD 140
Pre-Tender
Market Capitalisation = 900m
Shares Tendered = 153m [ (300/100) x 51 ]

Tender price = USD 140
Market Capitalisation = 214.2m
Post Tender
=
Adjusted Shares in Issue = 147m (300m - 153m)
Market Capitalisation = 685.8m (900m - 214.2m)
Adjusted Price = USD 466.53 (685.8m/147m)
4.9 Rights Issues / Entitlement Offers
These are an entitlement issued to shareholders which give them the right to buy additional shares
directly from the company in proportion to their existing holdings. FTSE Russell will only adjust the
index to account for a right if the subscription price of the rights is at a discount to the market price of
the stock. Provided FTSE Russell has been alerted to the rights offer prior to the ex-date, a price
adjustment and share increase proportionate to the terms of the offer will be implemented before the
open on the ex-date (Example 1). Exceptions to the standard treatment are detailed below:
4.9.1 Accelerated Rights Offers
In certain markets, most commonly in Australia, accelerated rights offerings (e.g. RAPIDs) have
become more frequent. During an accelerated rights offer, the ex-date is theoretical and typically not
quoted by the exchange. Typically, the stock is halted on the theoretical ex-date, at which time the
company begins a two tranche offer to shareholders in the form of an Institutional Offer followed by a
Retail Offer. Shares are increased and a price adjustment is applied according to the terms of the
offer, before the open on the day the security resumes trade.
4.9.2 The Subscription Price is Unknown Prior to Ex-date (Example 2)
Where the rights issue/entitlement offer subscription price remains unconfirmed on the ex date, an
estimated price will be used. FTSE Russell will estimate the subscription price using the value being
raised and the offer terms. Where there is a range of values the mid value will be used to estimate
the subscription price. Where the value being raised and/or offer terms are unknown no adjustment
will be made on the ex-date. If those details are subsequently announced, a price adjustment and
share increase will be applied with appropriate notice, provided that the rights are being offered at a
discount to the prevailing market price.
4.9.3 Highly Dilutive Rights Issues (Example 3)
If the terms of a rights issue are greater than 10 for 1, FTSE Russell will consider this highly
dilutive. To facilitate replication, FTSE Russell will include on the ex-date: 1) a separate temporary
line to track the market value of the rights; and 2) a temporary line at a fixed value to reflect the
subscription cash.
The temporary lines are included within the index calculation until the end of the rights subscription
period at which point they will be deleted and the new shares consolidated into the existing share
line. The temporary rights line will be deleted at its last traded price and the opening price of the
ordinary line will be adjusted to ensure there is no divisor change as a result of the consolidation of
the temporary lines into the ordinary line.
4.9.4 New Shares are not Entitled to the Next Dividend (Example 4)
Where the shares being issued are not entitled to the next dividend, FTSE Russell will deviate from
the standard index treatment and include on the ex-date: 1) a separate temporary line to track the
market value of the rights; and 2) a temporary line at a fixed value to reflect the subscription cash.
The temporary lines will be deleted and the rights shares will be aggregated with the ordinary shares
as described below:
If the dividend ex-date occurs prior to the end of the rights subscription period, the
temporary lines will be deleted and the new shares assimilated into the ordinary line at the
open on the dividend ex-date.
If the dividend ex-date occurs after the expiration of the rights subscription period, the
temporary rights and cash lines will be deleted after the close on the last day of the rights
subscription period, and replaced by a temporary dummy line equal to the ordinary line close
price minus the upcoming dividend. If an active non-ranking for dividend constituent exists,
this will be temporarily included instead of a dummy line. On the open of the ex-dividend
date, the dummy line (or NRD constituent) is deleted and the shares are aggregated with the
ordinary line.
4.9.5 Rights Issue into Another Constituent
When an index constituent distributes rights to buy discounted shares in another index constituent, a
price adjustment will be applied to the company or companies distributing the rights and the shares
will be increased in accordance with the terms of the rights offer.
4.9.6 Rights Issue into a Non-Constituent
In the event that the rights issue involves a non-constituent (inclusive of non-equity) and where the
value of the right cannot be determined, there will be no adjustment on the ex-date. If the rights line
is not scheduled to trade, there will be no further action. If the rights are scheduled to trade, a rights
line will be added to the index at zero value on the ex-date and will be deleted from the index at the
market price when it commences trade, with the provision of appropriate notice. No cash temporary
line will be included as the index will not subscribe to the rights.
4.9.7 Late Notifications
Where a company announces an open offer (typically in the UK) or a rights issue with an ex-
entitlement date on the same day, FTSE Russell will apply an index adjustment either before the
market-open on the ex-entitlement day or as an intra-day adjustment as soon as possible thereafter.
The adjustment will be applied based on the previous days closing price with the new shares
included in the index weighting at the offer price. The index may be temporarily held whilst the
adjustment is being applied. FTSE Russell will issue an intra-day notice and affected products will be
re-issued so that clients are informed of the action having taken place together with the amended
index divisors. The same treatment would be followed where a company announces a rights issue
after its ex-date. The close price the day previous to the announcement would be used to calculate
the adjustment, rather than the cum price prior to ex-date.
Event Type Index Divisor Adjustment Factor Timing of application
Rights Issue / Yes Yes - shares and price Ex date
Entitlement Offer adjusted in accordance with
where subscription offer terms.
price is at a discount
to the market price
Rights Issue / Yes when shares No adjustment on the ex- On or after Listing date T+5
Entitlement Offer are added date. Shares will only be (subject to the share
where subscription included once they have been increment increase being
price is equal to or at listed, concurrent with any 10% or greater or USD2bn
a premium to the investability weight change, in market capitalisation)
market price and will be added at the
prevailing market price.
Rights Issue where Yes - on ex date open Yes on ex-date open to Temporary lines added and
offer is considered only. account for the rights offer, PAF applied on the ex-date.
highly dilutive (terms and again when the Temporary lines deleted
are greater than 10 temporary lines are deleted to and PAF applied at the
for 1) ensure zero divisor change. expiration of the
subscription period.
Rights Issue / Yes Yes - where the subscription T+1
Entitlement Offer price is unknown but a (applied at close of
where subscription reasonable estimate can be subscription price
price is unknown calculated using the amount announcement date)
before ex date of cash to be raised relative
to the offer terms.
Where a reasonable
subscription price cannot be
estimated, no adjustment will
be applied on the ex-date.
Upon subscription price
discovery and subject to the
subscription price
representing a discount to the
cum-price, an adjustment will
be applied T+1 to the
prevailing market price.
Rights Issue / Yes Subsequent adjustment by
Entitlement Offer removing new rights shares
cancelled after ex from companys shares in
date issue at the subscription price
on a T+1 basis.
Example 1: : Standard Rights Issue
Terms: 1 for 4 at USD 260
Ex-rights shares = 375m (300m + (300m x 1/4)
Theoretical ex-rights = [ (4300) + (1260) ] / 5
= USD 292
Price Adjustment factor = Ex-Rights Price/Cum-Rights Price

= 292/300
= 0.9733
Example 2: Rights Issue where subscription price is unknown and has been estimated

Terms: 1 for 4 at unknown price; USD 2bn being raised
Estimated Price = [ (300m / 4 = 75m) (USD 200m / 75m = USD 267)
Theoretical ex-rights = [ (4300) + (1x267) 5
= USD 293.3
Ex-rights shares = 375m (300m + (300m x 1/4)
= 293.3/300
= 0.9778
Ord line = 300m shares; USD 293.3 adjusted price

Nil Paid line = 75m shares; USD 26.3 price (i.e. USD 293.3- USD 267)
Following confirmation of the subscription price the Nil Paid line will be deleted and the new shares will
be added to the ordinary line at the subscription price T+1.
Example 3: Highly dilutive Rights Issue (i.e.the terms are greater than 10 for 1)

Theoretical ex-rights = [ (1224) + (13x43) ] 14
= USD 55.9

= 55.9/224
= 0.24968

Nil Paid line = 1,300m shares; USD 12.9 price (i.e. USD 55.9 - USD 43)
Call (dummy) line = 1,300m shares; USD 43 fixed subscription price
In order to include the newly enlarged capitalisation of the company (on a fully paid basis) it is
necessary to include the new shares on a separate line (together with the value of the outstanding
rights call price) until they trade on an equivalent basis to the existing ordinary line. This is expected to
occur at the end of the subscription period, after which the nil paid line will be deleted (together with
the fixed call) and consolidated into the ordinary line.
Please note: Where the Nil Paid line trades as a lot (e.g. each right representing 13 shares as
opposed to each right representing 1 share) then the shares represented by the Nil Paid line will be
adjusted accordingly. For illustration purposes, using the example above:

Nil Paid line = 100m shares; USD 167.7 price
Call (dummy) line = 1,300m shares; USD 43 fixed subscription price
Example 4: Rights Issue where new shares are not entitled to the next dividend

Next dividend USD 16.5
Theoretical ex-rights = [ (4300) + (1x260) + (116.5) ] 5
= USD 295.3

= 295.3/300
= 0.9843

Nil Paid line = 75m shares; USD 18.8 price (i.e. USD 295.3 USD 260 USD 16.5)
Call (dummy) line = 75m shares; USD 260 subscription price
In order to include the newly enlarged capitalisation of the company (on a fully paid basis) it is
necessary to include the new shares on a separate line (together with the value of the outstanding
rights call price) until they trade on an equivalent basis to the existing ordinary line. This is expected to
occur once the existing ordinary shares trade ex dividend, after which the nil paid will be deleted
(together with the fixed call) and consolidated into the ordinary line.
4.10 Mergers, Acquisitions and Tender Offers
Mergers and acquisitions (M&A) activity may result in changes to index membership as well as to
the shares included within the index. Adjustments due to mergers and acquisitions are applied to the
index after the action is determined to be final, typically after the close of the last trade date of the target
company*, with provision of appropriate notice. To avoid unnecessary delays, FTSE Russell may
consider merger & acquisition transactions 'final', prior to shareholder approval, or prior to a delisting
notice. FTSE Russell will consider prevailing shareholder sentiment, board/director
recommendations, exchange notification, expected completion date, and stock price versus offer
value when making this decision.
* In the event that a constituent is being acquired for cash or delisted subsequent to an index review,
it will be removed from the index concurrent with the index review assuming that the event can be
considered final and a minimum of two days notice can be provided. e.g. the last trade date of a
constituent being acquired is confirmed for the day following the index review. The constituent will be
removed from the index in conjunction with the index review, assuming that two days notice can be
provided.
Tender offers are generally implemented immediately after all prerequisites (detailed below) have
been achieved, with appropriate notice. Note: When non-tradable Contingent Value Rights (CVRs)
are included within the tender offer terms, FTSE Russell may consider a tender offer 'final' prior to
the expiration date of the offer. Doing so minimizes the risk of index implementation moving into
delayed status, and prevents managers who are passively investing in the index from receiving
CVRs that do not carry a confirmed and realizable economic value. FTSE Russell will establish the
likelihood of tender offer completion using confirmed tendered shares, board/director
recommendations, exchange notifications, stock price versus deal value, and any other available
information.
4.10.1 Acquisition of an Index Constituent for Cash
The target company is deleted from the index at the last traded price. In the event that trading in the
target company has halted at the time of index implementation, it will be deleted from the index using
the cash terms.
4.10.2 Merger between Index Constituents for Stock
The target company is deleted from the index and the shares of the acquiring stock are increased,
according to the offer terms. FTSE Russell effects the action after it has considered the transaction
as final with the provision of a minimum two days notice. In the absence of an active market for the
target company at the time of index implementation, the target company will be deleted from the
index using a synthetic price based on the offer terms.
4.10.3 Merger between Index Constituents for Cash or Stock, or a Combination Thereof
The target company is deleted from the index and the shares of the acquiring company are
simultaneously increased per the election results and the announced number of shares being issued
(adjusted to account for FTSE Russells current float factor of the target). If the terms are cash and
stock (no option); then the shares of the acquirer will be increased per the offer terms. In the
absence of an active market for the target company at the time of index implementation, the target
company will be deleted from the index using a synthetic price based on the default offer terms (the
consideration an investor will receive for non election)..
4.10.4 Constituent Acquired by a Non-Constituent
Where a company has been acquired by a non-constituent for shares, or a combination of cash and
shares, the acquiring company will be included in the targets index provided it is eligible in all other
respects at the time of the merger, regardless of previous eligibility screenings. Note, the merged
company will also be assumed to inherit the target companys liquidity and a previous liquidity
screening fail will not be recognised. If the acquiring company has a different nationality
assignment, it will be transferred to the appropriate country index, with suitable notice after the listing
of the new shares. Only the shares received as a result of the acquisition will be included in the
index on the effective date; any shares previously attributed to the non-constituent will be added
subsequently in accordance with the shares in issue update policy (see Section 5.0). The new
company will be added to the index on the effective date using the offer terms (i.e. last close of the
target company multiplied by the offer terms).
4.10.5 Tender Offers: Guidance on Circumstances Which Will Trigger a Target Company Deletion or Free
Float Change:
Target Company Deletion
The target company will normally be removed from the index with a minimum T+ 2 notice when
either:
a) Offer acceptances reach 90% (initial, extension or subsequent); and
Shareholders have validly tendered and the shares have been irrevocably accepted for
payment; and
All pertinent offer conditions have been reasonably met and the acquirer has not explicitly stated
that it does not intend to acquire the remaining shares; or
b) Where offer acceptances are below 90%, there is reason to believe that the remaining free float
is under 5% based on information available at the time; or
c) Following completion of the offer the acquirer has stated intent to finalise the acquisition via a
short-form merger, squeeze-out, top-up option or any other compulsory mechanism*.
The target company is deleted from the index at the last traded price. In the event that trading in the
target company has halted at the time of index implementation it will be deleted from the index at a
price based on the offer terms.
In the event where a company has been deleted from the index but retains a listing with a float
greater than 5% it will be considered for index eligibility as a new issue following a period of 12
months.
(*) For constituents of the FTSE UK Index Series, the qualifying announcement is that the offer has
been declared wholly unconditional.
Target Company Free Float Change
Where the conditions for index deletion are not met, FTSE Russell may implement a free float
change based on the reported acceptance results at the expiration of the initial, subsequent, or final
offer period where:
The minimum acceptance level as stipulated by the acquirer has been met; and
Shareholders have validly tendered and the shares have been irrevocably accepted for
payment; and
All pertinent offer conditions have been reasonably met.

A minimum T+2 notice period of the change is generally provided. If the offer includes a stock
consideration, the acquiring companys shares will be increased proportionate to the free float
change of the target company. The target company will then be deleted as a second-step, if the
conditions for deletion are achieved at the expiration of a subsequent offer period.
4.10.6 Dividend Implications
Where a company involved in an acquisition or merger is paying a dividend to its existing

shareholders immediately ahead of or on completion of a merger, FTSE Russell will account for the
dividend in one of the following ways:
If the company in question has been suspended pending the acquisition or merger
becoming effective, a synthetic ex-dividend adjustment (concurrent with the index
application of the dividend) will be made to its last cum-price and that price will be
maintained in the index until the new shares begin trading.
If the company has not been suspended ahead of the acquisition or merger becoming
effective, and the newly issued shares have not been explicitly classed as Non-Ranking for
Dividend (NRD), FTSE Russell will create a synthetic dummy NRD line which will be
included in the index on the effective date of the merger only and then merged with the
ordinary line (now ex-div) effective for the next trading day.
If the new merger shares are not entitled to the next dividend and an active Non-Ranking for
Dividend (NRD) line exists, this will be added to the index on the effective date of the merger
per the offer terms and retained until the ordinary line trades ex-div; at which time the NRD
line will be deleted and aggregated with the ordinary line.
Please note: the previous practice of applying pro-rata dividends has been discontinued except for
certain headline indices as index families with different weighting schemes require different pro-
ration.
Event Type Index Treatment
Constituent acquired for Target company deleted from indexes at last traded price (if trading) or at
cash offer price (if not trading)
Index divisor adjustment

Constituent acquired by Target company deleted at last traded price (if trading) or at default offer
another constituent for terms
shares or a combination of (if not trading)
cash and shares
Shares of acquiring company increased in accordance with the announced
transaction results
No divisor adjustment only if target is acquired for shares and deleted at

offer terms
Constituent acquired by a Target company deleted at last traded price (if trading) or at default terms
quoted non-constituent for (if not trading)
shares or a combination of
cash and shares Shares of acquiring company received as a result of the transaction added
to the same indexes as the target company in accordance with the offer
terms provided the acquiring company is eligible in all other respects
Shares of the acquiring company will be updated subsequently as per the

shares in issue update policy (Section 5.0).
If acquiring company has a different nationality, it will be transferred to the

appropriate country classification with appropriate notice.
4.11 Voluntary exchange offers (commonly known as Split-Offs in the U.S.)
A publicly traded company may offer to exchange or split-off some or all of its ownership in a
separate publicly traded company. Shareholders are given the option to retain their shares; or to
exchange them, in full or in part, for shares of the 'split-off' company. Once the offer expires, FTSE
Russell will decrease the available shares in the offering company, and increase the available
shares of the 'split-off' company, based on the results of the offering. FTSE Russell will effect this
change based on, but not limited to, preliminary results, company filings, and exchange notices.
Outside of the Russell 3000E and the Russell Global Index, these events will be applied in
accordance with the share update guidelines detailed in Section 5.
4.12 Spin-offs (including demergers)
If a constituent company is split and forms two or more companies by issuing new equity to existing
shareholders, then the resulting companies may be eligible to continue as constituents in the same
FTSE Russell Indexes as their predecessor company (refer to Index Series ground rules for specific
conditions). FTSE Russell recognises two distinct scenarios which will be implemented as follows:
4.12.1 Spin-off of an Eligible Security
The spin-off entity will be added to the same indexes as the parent company, per the terms, on the
ex-date of the distribution. The spin-off entity will be retained in the same indexes until the next
quarterly review (FTSE) or annual reconstitution (Russell), where it will be re-ranked or deleted, if
below the exit threshold (FTSE)/evaluated for inclusion (Russell). Where the spin-off entity has not
commenced trading within 20 business days from the ex-date of the distribution and no firm trading
date has been announced, then it will normally be deleted at zero value with T+2 notice.
Note: the ICB/RGS classifications and Free Float of the spun-off entity will initially mirror that of the
parent. Any subsequent required change to either the parent or the spun-off entity will be applied
with the appropriate notice period. The free float within the Russell indexes will be evaluated at
annual reconstitution.
4.12.2 Spin-off of an Ineligible Security
The spin-off entity will be added to the same indexes as the parent company, per the terms, on the
ex-date of the distribution. It will remain in the index for two business days and then deleted at
market price. If the ineligible security does not trade on the ex-date it will remain in the index until it
commences trading and then deleted after two business days at market price. Where the spin-off
entity has not commenced trading within 20 business days from the ex-date of the distribution and
no firm trading date has been announced, then it will normally be deleted at zero value with T+2
notice.
4.12.3 Taxation of Spin-offs
The distributed stock in some spin-off transactions can be subject to a withholding tax on the value
of the distribution. If this is determined to be the case, FTSE Russell may reflect an adjustment to
reflect the tax payable.
4.12.4 Spin-off Valuation
FTSE Russell will assign an estimated price to the spin-off company on the ex-date open using the
following valuation hierarchy, listed in order of preference:
A When-Issued price will be used where available (child or parent);

If no When-Issued price is available, a primary exchange estimate will be used;
If a primary exchange estimate is unavailable, a company valuation will be used;
If a company valuation is unavailable, a broker estimate will be used;
If a broker estimate is unavailable, the terms of the action will be used to determine an
arbitrary value for the spin-off company.
Providing an active market exists for both the parent and spin-off companies on the ex date, FTSE
Russell will make no further adjustments, regardless of the actual trading price of the companies. If a
valuation has been assigned per the valuation hierarchy and either the parent or spin-off has not
traded on the ex-date, the open positions on the ex-date may be revised:
If the spin-off company does not trade on ex-date and its estimated valuation is incorrect by
10% as measured at the ex-date open using the parents drop in price.
If the parent company does not trade on ex-date and the estimated valuation of the spin-off
is incorrect by 10% as measured at the ex-date open comparing the price of the spin-off
company against the adjustment made to the parent.
If the 10% threshold is triggered but the impact is deemed to be potentially insignificant, the basis
point impact at headline index level will be evaluated per the recalculation guidelines.
If an arbitrary value has been assigned to the spin-off company and the opening price of the parent
company does not drop on ex-date, a revision may be made to show no price adjustment to the
parent company. In these circumstances the spin-off company will remain in the index at nominal
value. If the child does not trade, it will be reviewed under the suspended stocks rule.
If FTSE Russell can determine that the parent company in a spin-off is to consolidate its shares
concurrently in order to maintain its pre spin-off market price, the terms of the action will be used to
determine an accurate valuation of the child company. This is common practice in South Korea
where each share of a parent company may be split proportionately between the parent and child
companies. The pre spin-off price of the parent company is assigned to both the parent and the child
on the ex-date open.
Event Type Index Divisor Adjustment Timing of application

Existing constituent is split and No A price adjustment will be applied to the Ex date
forms two or more companies parent company on the ex date by way of a
by issuing new equity to capital repayment.
existing shareholders Spun off entity is initially included in the same
benchmarks as the parent company.
4.13 Tracker Stocks
A line of stock issued to track the fortunes of a particular division, business unit, subsidiary or
group of assets of the issuing company (the parent) is generally referred to as a tracker stock. A
distribution into a tracker stock that is scheduled to list will commonly be implemented in accordance
with the spin-off guidelines within the FTSE Russell Indexes. A distribution into an already listed
tracker stock will be implemented per the scrip issue guidelines detailed in Section 4.7.
4.14 Stock Conversion
Timing of
Event Type Index Treatment application
Company mandatorily Shares of Class A are increased in accordance with the Ex date
converts existing constituent conversion ratio.
share Class B into existing
Class B deleted at last traded price (if trading) or a
constituent share Class A
synthetic price based on the conversion ratio (if not
trading).
No divisor adjustment only if Class B is deleted at the
conversion terms.
Where only a proportion of a share class is being
converted, shares of Class B will be reduced and shares of
Class A will be increased proportionately in accordance
with the conversion terms.
A non-constituent share class No change on the ex date. The shares of the constituent
converting into a constituent will be updated in accordance with the share update
share class procedures for the applicable index series.
Timing of
Event Type Index Treatment application
A constituent share class If the non constituent share class is eligible for index Ex date
converting into a non inclusion, it will replace the existing share class in
constituent share class accordance with the conversion ratio.
Note: Where a Chinese company publicly announces its intention to mandatorily convert Class B shares
into ineligible Class A shares, the Class B shares will be deleted with a minimum T+2 notice.
4.15 Deletions
A stock will be deleted as a constituent if it is delisted from all eligible exchanges, becomes
bankrupt, files for bankruptcy protection, is insolvent or is liquidated, or where evidence of a change
in circumstances makes it ineligible for index inclusion.
For example, in the U.S., companies filing for Chapter 7 bankruptcy or that have filed a liquidation
plan will be removed from the FTSE Russell indexes at the time of filing. When shareholder approval
is required to finalise the liquidation plan, FTSE Russell will remove the security once shareholder
approval has been granted. Companies filing for Chapter 11 reorganisation bankruptcy will remain
members of the index, unless the companies are delisted from the primary exchange. In that case,
normal delisting rules will apply. If a company files for bankruptcy and is delisted and if it can be
confirmed that it will not trade on any market (including OTC), FTSE Russell may remove the stock
at a nominal price of 0.0001. If a price on an ineligible market is available, the constituent may be
removed using this price.
4.16 Suspended Companies*
If a constituent is suspended, FTSE Russell will determine its treatment as follows:

If a constituent is declared bankrupt without any indication of compensation to shareholders,
the last traded price will be adjusted down to zero value and it will subsequently be removed
from the index with T+2 notice.
In all other cases, the constituent will continue to be included in the index for a period of up
to 20 business days at its last traded price.
If the constituent continues to be suspended at the end of that period, it will be subject to
review and a decision will be taken to either allow the constituent to remain in the index for a
further period of up to 20 business days or to remove it at zero value. In making this
determination, FTSE Russell will take into account the stated reasons for the suspension.
These reasons may include announcements made by the company regarding a pending
acquisition or restructuring, and any stated intentions regarding a date for the resumption of
trading.
This procedure will be repeated at successive 20 business day intervals thereafter until
either trading recommences or the suspension period reaches 80 business days.
If the suspension period reaches 80 business days FTSE Russell will provide notice that the
constituent will be removed at zero value at the index review immediately following the
expiry of a minimum 40 business day notice period.
In certain limited circumstances where the index weight of the constituent is significant and
FTSE Russell determines that a market-related value can be established for the suspended
constituent, for example because similar company securities continue to trade, deletion may
take place at the market-related value instead. In such circumstances, FTSE Russell will set
out its rationale for the proposed treatment of the constituent at the end of the 80 business
day period.
If following the end of the 80 business day period, a suspended constituent resumes trading
before the Wednesday before the first Friday of March, June, September or December, the
deletion notice will be rescinded and the constituent will be retained in the index. If the
constituent resumes trading after these dates but before the review effective date, the
constituent will continue to be removed from the index as previously announced but in these
circumstances the deletion may instead be implemented at market value.
If a constituent has been removed from the index and trading is subsequently restored, the
constituent will only be re-considered for inclusion after a period of 12 months from its
deletion. For the purposes of index eligibility it will be treated as a new issue.
*The Suspended Companies policy also applies to constituents which have a price that FTSE
Russell considers to be unreliable. This includes Indonesian constituents that have reached the
minimum allowable trade price of IDR 50 per share.
Section 5
Share and Float Updates

5.0 Share and Float Updates FTSE Indexes and Russell 3000E and Russell
Global Index Series
5.1 Share Updates - FTSE Indexes
The number of shares in issue for each constituent security is expressed to the nearest share and,
to prevent a large number of insignificant weighting changes, the number of shares in issue for each
constituent security is amended only when the total shares in issue held within the index system
changes by more than 1% on a cumulative basis. Changes will be made quarterly after the close of
business on the third Friday of March, June, September and December. The data for these changes
will be taken from the close of business on the third Wednesday of the month prior to the review
month.
If accumulated changes in the number of shares in issue add up to 10% or greater, or when an
accumulated share change represents USD 2bn of a companys total market capitalisation, they are
implemented between quarters. WM/Reuters Closing Spot Rates will be used to convert the market
capitalisation into USD. The USD 2bn threshold may be adjusted in December. If an adjustment is
made, it will be applied for the first time at the next semi-annual review in March.
Please note: shares in issue is defined as the number of shares outstanding excluding shares held
in treasury and unissued shares.
Event Type Index Divisor Adjustment Timing of application

Share update resulting in a Yes T+5
change of 10% or greater / See notes 1,2,3 & 4
USD2bn or more (Adjustment to shares)
Share update resulting in a Yes After the close of business on the
change greater than 1% but third Friday of March, June,
less than 10% or USD2bn (Adjustment to shares) September and December (in line
with index reviews)
Notes:
1. Any related Investability Weighting Change will be effective at the same time.
2. If a corporate action is applied to an index constituent which involves a change in the number of shares, the
change in shares will be applied simultaneously with the corporate action.
3. In the event that T+5 falls after the announcement date of index review changes but before the index
review effective date, the implementation of the share update will be delayed to coincide with the index
review effective date.
4. In the event that T+5 falls subsequent to the index review effective date, the implementation of the share
update will be brought forward to coincide with the index review effective date (subject to providing a
minimum of two days notice).
5.1.1 Investability Weighting Changes
Free float represents the availability of stock in the market for public investment. Each constituent
weighting is adjusted to omit restricted shareholdings to ensure an accurate representation of
investable market capitalisation.
Free float restrictions will be calculated using available published information.

Following the application of an initial free float restriction, a constituents free float will only be
changed if its rounded up free float moves to more than 3 percentage points above or below the
existing rounded free float. Where a companys actual free float moves to above 99%, it will not be
subject to the 3 percentage points threshold and will be rounded up to 100%.
A constituent with a free float of 15% or below will not be subject to the 3 percentage points
threshold.
The timing of free float changes is illustrated below:

Corporate Events Implementation Date
Takeover / Merger (inclusive of any resulting constituent share increase) - See
Effective Date
note 3
Foreign ownership restriction changes for specific constituents Quarterly Review
Foreign ownership restriction changes at industry sector or country level Quarterly Review
Expiry of lock in agreements - See note 2 Quarterly Review

Share change < 10% resulting in free float change (e.g. dilution of restricted
Quarterly Review
holder)
Free float change only, not related to a corporate event Quarterly Review
Government sale of shares T+5 notice

Government bail out T+5 notice
Secondary Placing T+5 notice
Share change 10% T+5 notice
Share change 10% and free float change following review of shareholder
T+5 notice
structure
Notes:
1. Free float data is continuously monitored and any non-corporate event changes will be updated in line with
the periodic index reviews.
2. Free Float changes resulting from the expiry of a lock-in will be implemented at the next quarterly review
subsequent to there being a minimum of 20 business days between the lock-in expiry date and the
Tuesday before the first Friday of the review month. If the previously locked-in shares are sold by way of a
corporate event (such as a secondary offering), any change to the free float will be applied T+5 following
completion and therefore will not be subject to the minimum 20 business day rule.
3. Following a takeover or merger involving one or more index constituents any free float restriction will be
based on restricted holdings in the successor company. For the avoidance of doubt, any holding or
holdings which are treated as restricted in the index because they exceed 10% in any party to the takeover
or merger will continue to be treated as restricted unless such holding or holdings fall below 7% in the
successor company.
4. In the event that a company is subject to a takeover or merger offer, any change in free float restriction will
be implemented when the offer has completed (or lapsed) unless it directly reflects a corporate action
independent of and not conditional on the takeover or merger completing or lapsing.
5. Greenshoes (over allotment option): those shares potentially to be offered as a greenshoe will not be
included in the initial calculation of the free float of a company offering shares to the market. Following the
offering, if the greenshoe option is exercised, any change to the free float will be applied at the next
quarterly review.
6. In the event that T+5 falls after the announcement date of index review changes but before the index
review effective date, the implementation of the float update will be delayed to coincide with the index
review effective date.
7. In the event that T+5 falls subsequent to the index review effective date, the implementation of the float
update will be brought forward to coincide with the index review effective date (subject to providing a
minimum of two days notice).
5.2 Share Updates Russell 3000E and Russell Global Index Series
Changes to shares outstanding due to buybacks, secondary offerings, and other potential corporate
activity are updated at the end of each month. For FTSE Russell to implement a month-end change
to available shares outstanding, the cumulative change to available shares must be greater than 5%.
Share changes that are confirmed by our vendors and verified by FTSE Russell by use of a primary
source (e.g. filing, exchange confirmation) at least six days prior to month end are implemented and
communicated to clients who subscribe at the Premier level five trading days prior to month end. The
float factor last determined (either at reconstitution or due to a corporate action implementation) is
applied to the new shares. If the float factor has been updated since reconstitution due to the
implementation of a corporate action, the updated float factor will be used. If any new shares issued
are deemed to be unavailable according to the filing, that portion will not be added to the index.
Changes to available shares outstanding due to merger activity between index and non-index
members will be implemented if the availability of the newly issued shares can be confirmed within
the appropriate filings or press releases. When the new shares are partially available, FTSE Russell
will increase shares per the available amount if the cumulative change to available shares
outstanding is greater than 5%. When the availability of new shares cannot be confirmed with an
appropriate source, FTSE Russell will defer any increase to the next reconstitution, allowing for
further information to be announced. Note, this applies to mergers with both publicly listed and
privately held non-index members.
November and December month-end share changes will be processed as one event after the close
on the third Friday of each December along with fourth quarter IPO additions. This date is used
rather than December month end due to low liquidity in the financial markets at year end and the
proximity of a separate November month-end process. The Russell 3000E and the Russell Global
Index quarterly IPO process is detailed within the Construction & Methodology documents. Because
annual reconstitution occurs in June, month-end share changes are not scheduled for the month of
June. Residual changes to shares outstanding that are not addressed as part of the annual
reconstitution process are rolled into the following July month-end process.
Note: free float factors will not be reviewed and updated outside of annual reconstitution within the
Russell 3000E and the Russell Global Index series, unless the implementation of a corporate action
triggers a change in accordance with the associated corporate action guidelines. Corporate actions
will not be used to update previously outdated free float data.
Appendix A: Further Information
A Glossary of Terms used in FTSE Russells Ground Rule documents can be found using the following link:
Glossary.pdf
For contact details please visit the FTSE Russell website or contact FTSE Russell client services at
[email protected].
Website: www.ftserussell.com
2017 London Stock Exchange Group plc and its applicable group undertakings (the LSE Group). The LSE Group includes (1) FTSE
International Limited (FTSE), (2) Frank Russell Company (Russell), (3) FTSE TMX Global Debt Capital Markets Inc. and FTSE TMX
Global Debt Capital Markets Limited (together, FTSE TMX) and (4) MTSNext Limited (MTSNext). All rights reserved.
FTSE Russell is a trading name of FTSE, Russell, FTSE TMX and MTS Next Limited. FTSE, Russell, FTSE Russell MTS,
FTSE TMX, FTSE4Good and ICB and all other trademarks and service marks used herein (whether registered or unregistered)
are trade marks and/or service marks owned or licensed by the applicable member of the LSE Group or their respective licensors and
are owned, or used under licence, by FTSE, Russell, MTSNext, or FTSE TMX.
All information is provided for information purposes only. Every effort is made to ensure that all information given in this publication is
accurate, but no responsibility or liability can be accepted by any member of the LSE Group nor their respective directors, officers,
employees, partners or licensors for any errors or for any loss from use of this publication or any of the information or data contained
herein.
No member of the LSE Group nor their respective directors, officers, employees, partners or licensors provide investment advice and
nothing in this document should be taken as constituting financial or investment advice. No member of the LSE Group nor their
respective directors, officers, employees, partners or licensors make any representation regarding the advisability of investing in any
asset. A decision to invest in any such asset should not be made in reliance on any information herein. Indexes cannot be invested in
directly. Inclusion of an asset in an index is not a recommendation to buy, sell or hold that asset. The general information contained in
this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.
No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic,
mechanical, photocopying, recording or otherwise, without prior written permission of the applicable member of the LSE Group. Use and
distribution of the LSE Group index data and the use of their data to create financial products require a licence with FTSE, Russell,
FTSE TMX, MTSNext and/or their respective licensors.

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Corporate Actions and Events Guide

for Market Capitalisation Weighted

This document applies to any index series where the guide is

ftserussell.com March 2017

2.0 Timing of Corporate Actions and Events

3.0 The use of Dummy Lines in FTSE Russell Indexes

4.0 Treatment of Index Events................................................... 8

5.0 Share and Float Updates

Appendix A: Further Information .............................................. 27

Purpose of the Guide

Timing of Corporate Actions and Events

The use of Dummy Lines in FTSE Russell

3.0 The use of Dummy Lines in FTSE Russell Indexes

Treatment of Index Events

Number of shares held

Example 1: Split (sub-division) Example 2: Reverse Split (consolidation)

Terms: 1 into 5 Terms: 5 into 1

Current Price = USD 300 Current Price = USD 300

Ex-Split Price = USD 60 Ex-Reverse Split Price = USD 1500

Adjustment factor = 100/500 = 0.2 Adjustment factor = 100/20=5

Capital Yes Example of price No

Example: Repayment of Capital/Special Dividend

Current Price = USD 100

Ex-Capital Repayment Price = USD 80

Adjustment factor = 80 / 100 = 0.8

If a company distributing an ordinary dividend subsequently announces a retraction (i.e. dividend

4.4 Special dividends Tax Adjustments

Example Special Cash Dividend of USD 61 (subject to 25% withholding tax)

Ex-Capital Repayment Price = 112 - 61 = USD 51

Adjustment factor = 51/112 = 0.45

Compensating negative XD adjustment = [15.25 / (1-0.25)] = USD 20.33

Terms: 1 for 1 Terms: 1 B share for 3 A

4.8 Compulsory Partial Share Buy Back

A compulsory partial tender/buy back of shares at a set ratio and price.

Shares Tendered = 153m [ (300/100) x 51 ]

4.9 Rights Issues / Entitlement Offers

Price Adjustment factor = Ex-Rights Price/Cum-Rights Price

Current Price = USD 300

Ord line = 300m shares; USD 293.3 adjusted price

Current Price = USD 224

Price Adjustment factor = Ex-Rights Price/Cum-Rights Price

Ord line = 100m shares; USD 55.9 adjusted price

Ord line = 100m shares; USD 55.9 adjusted price

Current Price = USD 300

Price Adjustment factor = Ex-Rights Price/Cum-Rights Price

Ord line = 300m shares; USD 295.3 adjusted price

4.10.1 Acquisition of an Index Constituent for Cash

4.10.2 Merger between Index Constituents for Stock

4.10.4 Constituent Acquired by a Non-Constituent

a) Offer acceptances reach 90% (initial, extension or subsequent); and

Target Company Free Float Change

All pertinent offer conditions have been reasonably met.

Where a company involved in an acquisition or merger is paying a dividend to its existing

Index divisor adjustment

No divisor adjustment only if target is acquired for shares and deleted at

Shares of the acquiring company will be updated subsequently as per the

If acquiring company has a different nationality, it will be transferred to the

4.11 Voluntary exchange offers (commonly known as Split-Offs in the U.S.)

4.12.1 Spin-off of an Eligible Security

4.12.2 Spin-off of an Ineligible Security