Corporate action events
DECR: Decrease in Value
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DECR is a reduction in the face (nominal) value of each share, or in the value of a fund’s assets, while the number of shares or units stays the same. The reduction is often paid back to holders in cash.
- Code
- DECR
- Usually announced as
- MAND (CHOS with a currency choice)
What DECR means
A company can return capital by reducing the nominal value of each share and paying the difference to shareholders. A fund can do something similar by reducing the value of its assets and distributing the proceeds. The holding quantity does not change, but each share or unit now represents less capital.
Holders entitled on the record date receive the cash per share. Because the payment is a return of capital, many tax systems treat it as a reduction of the cost of the shares rather than as income, but this depends on local law.
When you see it
- An MT564 with
:22F::CAEV//DECRand:22F::CAMV//MAND, aCASHoption, a gross amount per share and the ex date, record date and payment date (the Swedish column of the SMPG grid makes all three mandatory, with an optional value date). With a currency choice the event is CHOS. - The SMPG return of capital matrix sets DECR apart from CAPD and SHPR: only DECR changes the nominal value. Its opposite is INCR. A reduction combined with a change in the number of shares is usually announced as a split (SPLF or SPLR).
What to do next
- No instruction unless a currency option is offered. Book the cash on the payment date and reconcile it with holding times rate in the MT566.
- Update the nominal value in the security master from the effective date, and check the tax classification before reporting the payment as income.