An Overview of Upcoming Changes To FINRA’S Corporate Action Notification Process

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FINRA

Financial institutions and other clients who need to comply with the Financial Industry Regulatory Authority (FINRA) rules and regulations should be aware of upcoming changes to its Corporate Actions Management Platform.

Introduction to the New Corporate Actions Management Platform

FINRA is introducing a new system for ADR depository banks, Issuers, and other parties to provide notice of company-related actions in compliance with SEA Rule 10b-17 and FINRA Rule 6490.

As of June 5, 2023, the current ADR notification and Electronic Issuer system will be replaced with the new Corporate Actions Management Platform. This platform will be accessible via FINRA’s gateway. Existing users will be able to access this new platform using their current login information to submit notices of company-related actions.

The new Corporate Actions Management Platform will provide more transparency into the submission review status and adds a variety of new functionalities to make the process easier for users. It will be easier to make edits to submissions and follow documents as they make their way through the system.

Transition Timeline

The transition will occur over the weekend of June 2-5, 2023. Here are the key dates:

  • Friday, June 2, 2023: The system currently in place for electronic Issuers and ADR notifications will be closed.
  • Monday, June 5, 2023: When business opens on Monday, any action notifications will have to be submitted using the new platform.

Navigating this transition can be challenging for some financial institutions, which is why it is beneficial to rely on an experienced transfer agent.

How to Use the New Platform

When the new system goes into effect on June 5th, FINRA will not accept email, paper, or facsimile copies. The new system will streamline the notification process.

To submit a company-related action, the steps companies need to follow include:

  1. Log on through the Corporate Actions Management System.
  2. Locate requests and filings, which will be on the left side of the screen.
  3. Create a case using the button on the right side of the screen
  4. Fill out the various fields. Provide any information that might be required to process the questions.
  5. Submit the form once it has been filled out. Provide a payment if required. Payment can be accepted using either an ACH payment or a credit card.

There is a chance that some additional documentation might be required to complete the filing process, depending on the nature of the document. This is another situation where working with an experienced transfer agent can be helpful.

The Importance of Corporate Action Notification Process

The corporate action notification process is an integral part of a company’s communication strategy with its stakeholders, notably shareholders, and plays a critical role in maintaining transparency and corporate governance.

For Shareholders

From the perspective of shareholders, the corporate action notification process is vital for several reasons:

  • Informed Decision-Making: Shareholders need to know about corporate actions such as dividends, stock splits, mergers, and acquisitions as they can significantly impact the value of their investment. The notifications allow shareholders to make informed decisions about their holdings.
  • Rights and Obligations: Certain corporate actions, such as rights issues or share buybacks, require active participation from shareholders. Timely notifications ensure shareholders can exercise their rights or fulfill their obligations.
  • Transparency and Trust: Regular and clear communication about corporate actions helps build trust between the company and its shareholders. This transparency can contribute to a healthier, more positive relationship between the two.

For Corporations

From the corporation’s point of view, the corporate action notification process is equally important:

  • Regulatory Compliance: Most jurisdictions have regulations requiring companies to promptly and publicly disclose any significant corporate actions. Failure to comply can lead to legal consequences, reputational damage, and loss of investor confidence.
  • Investor Relations: By communicating corporate actions in a timely and clear manner, companies can manage investor expectations and prevent misunderstandings that could affect their stock price.
  • Market Perception: How a company communicates its corporate actions can influence market perception. Clear, timely, and transparent communication can help shape a positive image of the company in the market, attracting potential investors and partners.

At Colonial Stock Transfer, we understand the importance of the corporate action notification process for both shareholders and companies, and we can help you navigate the transition.

Reach Out To Colonial Stock Transfer for the Top Transfer Agent Services

Major changes are coming to the Corporate Action Notification Process, and you must make sure that your financial institution is prepared. At Colonial Stock Transfer, we have a significant amount of experience working with clients of all backgrounds. Our stock transfer agent and cap table services are second to none, and we can help you stay compliant with all relevant rules and regulations. Give us a call today to learn more about how we can help you with all of your paperwork and regulatory needs.

An Overview of Upcoming Changes To FINRA’S Corporate Action Notification Process
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