Corporate action events
CAPD: Capital Distribution
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CAPD is a cash payment to shareholders that comes from the company’s capital account rather than from its profits. The number of shares and their face value stay the same.
- Code
- CAPD
- Usually announced as
- MAND (CHOS with a currency choice)
What CAPD means
Companies normally pay shareholders out of profits, as a dividend. Sometimes they return capital instead, for example after selling a business or when they have more capital than they need. CAPD is used when the cash comes from a capital account and neither the nominal value per share nor the number of shares is reduced.
Economically the holder receives cash per share, just as with a dividend. The difference is mostly legal and fiscal: in many countries a return of capital is not taxed as income but reduces the tax cost of the shares. Entitlement follows the usual ex date and record date.
When you see it
- An MT564 with
:22F::CAEV//CAPD, normally:22F::CAMV//MANDwith aCASHoption, a gross rate per share, ex date, record date and payment date. When holders may choose the payment currency, the SMPG grid uses CHOS with several CASH options. - The SMPG return of capital matrix separates four events by the source of the cash: CAPD (capital account, no change in nominal value), SHPR (share premium reserve), DECR (nominal value reduced) and CAPG (gains from selling assets). An ordinary dividend out of profits is DVCA.
What to do next
- No instruction unless a currency choice is offered. Book the cash on the payment date and reconcile the MT566 amount with holding times rate.
- Do not treat the payment as income by default. Check how the issuer and the local tax rules classify it; often it reduces the book cost of the holding instead, and withholding tax may not apply.