FAQs
FAQs on Stapled Securities
- What is meant by stapling?
Stapling is a legal concept which involves two or more securities being contractually bound together usually via a stapling deed. The two or more securities that are attached together are called stapled securities. A stapled security is quoted in a single price and cannot be traded or transferred independently.
- What is a stapling deed?
- A deed that governs the stapled securities and sets out the stapling arrangement of the stapled securities, including the rights and obligations attached to the stapled securities.
- Generally, in the event of any inconsistencies, the Stapling Deed will prevail over the respective issuers’ constituent documents.
- What are the general terms of a stapling deed?
- Issuers of stapled securities must cooperate with each other in all matters concerning the stapled securities.
- Provide identical Board of Directors and management team.
- Securities holders’ right of calling for meetings/notice periods, voting/resolutions.
- Issuance of new securities - any corporate action will not prejudice the stapling of securities.
- What are the governing constitutions of a stapled security?
The governing constitutions of a stapled security are the respective governing constitutions of each issuer, such as the companies’ M&A.
- When does the stapling take effect?
It is effective on the stapling commencement date under the stapling deed, to contractually bind the two or more securities that will be stapled together.
- What are the securities that can be stapled together?
It is usually a share in one company and a unit in a trust related to that company, a share and bond, or a unit of business trust and a unit of REITs. For example, a property trust may have its units stapled to the shares of the company that manages the trust’s properties. The trust is the legal owner of the property assets. The related company manages the fund and development opportunities, and charges the trust a fee.
- What is meant by unstapling?
Unstapling happens when the stapled securities are no longer stapled to each other under certain circumstances as stipulated in the stapling deed.
- Why are such investments brought to the market using this structure? There are a number of reasons why issuers make use of this investment structure.
- Stapled securities can be used to separate operations from asset ownership and to allow distributions to be made to investors in excess of accounting profits.
- Stapled securities structures can link a passive income security with one that provides more active income.
- Stapled securities structures can link a security with a more stable income (i.e. REITs) to the other one that provides variable income (i.e. shares).
- Stapled securities structures can link a passive income security with a security that provides growth story.
- What type of distribution can an investor expect from stapled securities?
Since stapled securities generally comprise a share and a unit, an investor can expect to receive dividends from the company and distributions from the unit trust. If a stapled security contains a listed property trust, an investor is likely to receive distributions of non-assessable income (such as return of capital amount).
- When is the stapled securities holder General Meeting required to be convened?
For example, if the stapled securities consist of two securities, and requires a General Meeting to be convened;
- Where the matters affect both issuers, then a General Meeting for both issuers must be convened.
- Where the matter affects just one of the issuers, then only the affected issuer must convene the General Meeting. However, both issuers of the stapled securities should mutually consult each other on the matters in question.
- Will there be multiple statements, announcements, dividend payout dates, shareholder notices?
Since stapled securities issuers are separate legal entities, they may issue individual statements, announcements, dividend payout dates and shareholder notices. However as issuers are expected to act consistently with one another, they would typically issue joint statements, announcements, shareholder notices, annual reports and announce corresponding distribution dates, where available.
- How is the Trading Price of stapled securities quoted on Bursa Securities?
- The stapled securities will be listed and quoted on the Main Market as one security, with a single price quotation.
- An investor is allowed to trade on the single price quotation instead of dealing with the individual components of the stapled securities.
- Is there any sector classification for stapled securities?
No. The sector is to be classified following the anchor issuer sector classification.
- How does an investor buy stapled securities?
Investors can invest in stapled securities during the initial public offering, or by buying stapled security units listed on the exchange. Stapled securities are traded just like stocks, subject to the same trading, payment and settlement rules (T+3). The stapled securities will be subjected to normal transaction costs that apply to typical equity trades on the Main Market such as brokerage and stamp duty.
Investors will be required to have a Central Depository System (CDS) account and a trading account maintained with a broker. They may buy or sell stapled securities through the broker, remisier or via online trading during trading hours.
- Product Comparison
- Periodic Disclosure
Quarterly Report
The anchor issuer of stapled securities must announce to the Exchange the quarterly report of the stapled group on a consolidated or combined basis.
Annual Audited Financial Statements and Annual Report
- The anchor issuer must issue its annual reports that include annual audited financial statements of the stapled group on a consolidated or combined basis as the case may be, together with the auditors’ and directors’ report of the stapled group.
- If the other stapled issuer issues annual reports, it must also announce its annual reports to the Exchange and forward them to the stapled securities holders.