Issuer-related Denominator Properties

This article describes issuer-related denominator properties and gives examples of how they should be understood. These properties can broadly be grouped into Shares and Voting Rights categories.


Shares

ClassSharesOutstanding
ClassSharesOutstanding represents the number of shares of a particular class (e.g. 1p Ord) from an issuer that is currently in circulation and not held in treasury with the issuer. Shares held in treasury refers to shares that are held on the issuer's own balance sheet. 

TotalSharesOutstanding
TotalSharesOutstanding is the number of all the shares in issue from a certain issuer (regardless of voting or non-voting, share class, etc), which are not held in treasury with the issuer. 
Read on for an example of this.
If sourcing the TotalSharesOutstanding value from Bloomberg, please reach out to them. We have heard from some clients that Bloomberg value can include Treasury Shares for certain countries in which case your denominator can be overstated, leading to inaccurate holding calculations.

ClassSharesOutstanding vs TotalSharesOutstanding
ClassSharesOutstanding is the total amount of shares in circulation for this share class. While TotalSharesOutstanding is the total amount of issued shares in circulation (held by investors) for an issuer, includes the outstanding shares from all share classes (excludes treasury stock). This means if the issuer has multiple share classes, TotalSharesOutstanding will always be greater than ClassSharesOutstanding. 

TotalSharesInTreasury
: TotalSharesInTreasury represents the number of issued shares that are bought back and held in treasury by the issuer. Note that the inclusion of treasury shares varies among major shareholding jurisdictions, and will be reflected in the relevant rule(s).

In a number of jurisdictions, the denominator in the ownership calculations should include treasury shares for an issuer. This is driven by the regulatory requirements in each country. In short, TotalSharesInTreasury is technically required in all calculations for the EU Short-Selling regime, and for 11 other jurisdictions.

We understand from working with our clients that treasury share data is difficult to obtain. However, we must ensure that our rules include these amounts as it can result in a different percentage result. We've also heard that many clients choose to omit treasury shares (and only use the outstanding share amount, for example) but for obvious reasons, don't endorse this decision. Ultimately, this is an issue of how accurate you'd like your compliance results to be, as not having the correct denominator can theoretically lead to missed disclosures.

 

Voting Rights

TotalVotingShares
TotalVotingShares are the number of outstanding shares that have the right to vote attached to them across all share classes issued by an issuer. It is different from "Total Voting Rights of an Issuer" as the latter is the number of (each) share class multiplied by their votes per share. The number of total voting shares will therefore be lower (assuming that there are no fractional votes).

Total voting shares is required in Korea, Hungary, India, Malaysia, Ireland (Companies Act), Kenya, Kazakhstan, Kuwait, Lebanon, Sri Lanka, and Vietnam. These are jurisdictions where one must use the total voting shares, and the use of total voting rights as a proxy may lead to incorrect calculations.


TotalVotingRights

This value is the total number of voting rights in issue across all share classes of an issuer. The TotalVotingRights value can naturally be different from TotalVotingShares because not all shares have voting rights attached to them and some shares can have multiple votes attached. How many votes a specific share class carries with it is specified by the FundApps property VotesPerShare.

Note on total voting rights in treasury: There are a number of jurisdictions where the memo indicates that voting rights attached to treasury shares (even if they are suspended) should be included in the denominator when considering total voting rights. Although FundApps could include the voting rights held in treasury in the rules that require it, we have found that treasury share voting rights data is not available on the market. Without such data, treasury shares cannot be correctly applied to voting rights denominators. If you are able to find a data source for this, please let us know! 

Example

ClassSharesOutstanding for Share Class A and B is 4000 and 6000 for Class C. Please note that this property only considers only the shares issued to the market.
TotalSharesOutstanding is the sum of all share classes, i.e. Share Class A + B +C [4000+4000+6000] = 14000. Again, this property should not include any shares held in treasury.

  VotesPerShare ClassSharesOutstanding
Share Class A 1 4000
Share Class B 0 4000
Share Class C 2 6000

In this example only share class A and C are voting shares.
The TotalVotingShares will therefore be:
ClassSharesOutstanding(class A) + ClassSharesOutstanding(class C) = 4000 + 6000 = 10,000 
However the TotalVotingRights will add the VotesPerShare to the equation:
4000 x VotesPerShare(class A) + 6000 x VotesPerShare(class C) = 4000 x 1 + 6000 x 2 = 16,000

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